QUIZ WITH ANSWERS
ROUND 1
1) What is economics
o Economics is the study of the ALLOCATION of SCARCE resources to meet UNLIMITED
human wants.
2) What is microeconomics?
o concerned with decision-making by individual economic agents such as firms and
consumers.
3) Why do firms advertise? Even when goods are interchangeable?
o Many firms advertise their goods or services, but are they wasting economic resources?
Some economists reckon that advertising merely manipulates consumer tastes and
creates desires that would not otherwise exist. By increasing product differentiation and
encouraging brand loyalty advertising may make consumers less price sensitive,
moving the market further from perfect competition towards imperfect competition
(see monopolistic competition) and increasing the ability of firms to charge more than
marginal cost. Heavy spending on advertising may also create a barrier to entry, as a
firm entering the market would have to spend a lot on advertising too.
o However, some economists argue that advertising is economically valuable because it
increases the flow of information in the economy and reduces the asymmetric
information between the seller and the consumer. This intensifies competition, as
consumers can be made aware quickly when there is a better deal on offer.
4) Is economics value free? Name 2 value decisions might economics make about what is
important? e.g. XX is preferred to XX
o Individual utility maximization versus social betterment
o Efficiency versus fairness
o More is preferred to less
5) Is economics goal free? Name 3 goals might economics seek to achieve?
o Economic efficiency
o Economic growth
o Economic freedom,
o Economic security
o Equitable distribution of income
o Full employment
o Price level stability
o Reasonable balance of trade.
6) What is the fundamental problem of economics as a discipline?
a. The allocation of resources among competing wants because there are unlimited wants
limited resources
b. How to ensure continuous economic growth in the face of uncertainty
c. How to maximise profits for companies and consumer value for citizens
d. How to balance the needs of the economy with society and the environment
7) What characterizes a laissez faire approach to economics? (select all that apply)
o Government hands-off
o Markets relied-upon to perform allocations
o Reallocation of resources according to need
, o High taxes
8) What characterizes a command economy (select all that apply)
o Government makes the decisions
o Markets relied-upon to perform allocations
o Reallocation of resources according to need
o Decisions enforced with force of law (and sometimes martial force)
9) Name three functions of money
o medium of exchange
o store of value
o measure of worth
10) What is a market?
o A market is nothing more or less than the locus of exchange; it is not necessarily a place,
but simply buyers and sellers coming together for transactions.
MACRO 1
11) What is MACRO-economics?
Macroeconomics can be thought of as the “big picture” of economics. It focuses on aggregate
production and consumption in an economy. Topics that macroeconomists might study include:
Effects of general taxes such as income and sales taxes on output and prices
Causes of economic upswings and downturns
Effects of monetary and fiscal policy on economic health
Effects of and process for determining interest rates
Causes for some economies growing faster than others
12) With what kinds of topics does macroeconomics concern itself?
a. Economic activities of individual firms, households, and other organizations
b. Forces of supply and demand in a particular market
c. Consumer behavior and firms output decisions
d. The labor market, wages, and hiring decisions.
e. Aggregate economic phenomena like the rate of unemployment and inflation.
13) Outline the difference between positive and normative questions?
Positive economics focuses on the description, quantification, and explanation of economic
developments, expectations, and associated phenomena. It relies on objective data analysis,
fact-based (precise, descriptive and clearly measurable) and associated figures. It attempts to
establish any cause-and-effect relationships or behavioral associations which can help ascertain
and test the development of economics theories. An example of a positive economic statement:
"Government-provided healthcare increases public expenditures."
Normative economics focuses on the ideological, opinion-oriented, prescriptive, value
judgments, and "what should be" statements aimed toward economic development, investment
projects, and scenarios. Its goal is to summarize people's desirability (or the lack thereof) to
various economic developments, situations, and programs by asking or quoting what should
happen or what ought to be. Normative economics is subjective and value-based, originating
from personal perspectives, feelings, or opinions involved in the decision-making process (often
rigid, prescriptive and comes across as authoritarian). An example is: "The government should
provide basic healthcare to all citizens."
14) Which of the following is an example of a normative question?
a. What is the nation’s rate of economic growth?
ROUND 1
1) What is economics
o Economics is the study of the ALLOCATION of SCARCE resources to meet UNLIMITED
human wants.
2) What is microeconomics?
o concerned with decision-making by individual economic agents such as firms and
consumers.
3) Why do firms advertise? Even when goods are interchangeable?
o Many firms advertise their goods or services, but are they wasting economic resources?
Some economists reckon that advertising merely manipulates consumer tastes and
creates desires that would not otherwise exist. By increasing product differentiation and
encouraging brand loyalty advertising may make consumers less price sensitive,
moving the market further from perfect competition towards imperfect competition
(see monopolistic competition) and increasing the ability of firms to charge more than
marginal cost. Heavy spending on advertising may also create a barrier to entry, as a
firm entering the market would have to spend a lot on advertising too.
o However, some economists argue that advertising is economically valuable because it
increases the flow of information in the economy and reduces the asymmetric
information between the seller and the consumer. This intensifies competition, as
consumers can be made aware quickly when there is a better deal on offer.
4) Is economics value free? Name 2 value decisions might economics make about what is
important? e.g. XX is preferred to XX
o Individual utility maximization versus social betterment
o Efficiency versus fairness
o More is preferred to less
5) Is economics goal free? Name 3 goals might economics seek to achieve?
o Economic efficiency
o Economic growth
o Economic freedom,
o Economic security
o Equitable distribution of income
o Full employment
o Price level stability
o Reasonable balance of trade.
6) What is the fundamental problem of economics as a discipline?
a. The allocation of resources among competing wants because there are unlimited wants
limited resources
b. How to ensure continuous economic growth in the face of uncertainty
c. How to maximise profits for companies and consumer value for citizens
d. How to balance the needs of the economy with society and the environment
7) What characterizes a laissez faire approach to economics? (select all that apply)
o Government hands-off
o Markets relied-upon to perform allocations
o Reallocation of resources according to need
, o High taxes
8) What characterizes a command economy (select all that apply)
o Government makes the decisions
o Markets relied-upon to perform allocations
o Reallocation of resources according to need
o Decisions enforced with force of law (and sometimes martial force)
9) Name three functions of money
o medium of exchange
o store of value
o measure of worth
10) What is a market?
o A market is nothing more or less than the locus of exchange; it is not necessarily a place,
but simply buyers and sellers coming together for transactions.
MACRO 1
11) What is MACRO-economics?
Macroeconomics can be thought of as the “big picture” of economics. It focuses on aggregate
production and consumption in an economy. Topics that macroeconomists might study include:
Effects of general taxes such as income and sales taxes on output and prices
Causes of economic upswings and downturns
Effects of monetary and fiscal policy on economic health
Effects of and process for determining interest rates
Causes for some economies growing faster than others
12) With what kinds of topics does macroeconomics concern itself?
a. Economic activities of individual firms, households, and other organizations
b. Forces of supply and demand in a particular market
c. Consumer behavior and firms output decisions
d. The labor market, wages, and hiring decisions.
e. Aggregate economic phenomena like the rate of unemployment and inflation.
13) Outline the difference between positive and normative questions?
Positive economics focuses on the description, quantification, and explanation of economic
developments, expectations, and associated phenomena. It relies on objective data analysis,
fact-based (precise, descriptive and clearly measurable) and associated figures. It attempts to
establish any cause-and-effect relationships or behavioral associations which can help ascertain
and test the development of economics theories. An example of a positive economic statement:
"Government-provided healthcare increases public expenditures."
Normative economics focuses on the ideological, opinion-oriented, prescriptive, value
judgments, and "what should be" statements aimed toward economic development, investment
projects, and scenarios. Its goal is to summarize people's desirability (or the lack thereof) to
various economic developments, situations, and programs by asking or quoting what should
happen or what ought to be. Normative economics is subjective and value-based, originating
from personal perspectives, feelings, or opinions involved in the decision-making process (often
rigid, prescriptive and comes across as authoritarian). An example is: "The government should
provide basic healthcare to all citizens."
14) Which of the following is an example of a normative question?
a. What is the nation’s rate of economic growth?
