,1. Economics is primarily the study of:
A. How governments collect taxes
B. How scarce resources are allocated to satisfy unlimited wants
C. Accounting procedures
D. Stock market investing only
Answer: B
Explanation: Economics examines how individuals, firms, and governments
allocate limited resources to satisfy unlimited human wants and needs.
2. Which of the following is an example of a microeconomic decision?
A. The Federal Reserve changes interest rates.
B. A company decides how much to charge for a new product.
C. The national unemployment rate increases.
D. GDP grows by 3%.
Answer: B
Explanation: Microeconomics focuses on decisions made by individuals and firms,
including pricing, production, and resource allocation.
3. Opportunity cost is best defined as:
A. The total cost of production
,B. The value of the next best alternative that is forgone
C. Fixed business expenses
D. Government taxation
Answer: B
Explanation: Every decision involves sacrificing another option. Opportunity cost
measures the value of the best alternative not chosen.
4. Which economic system relies primarily on market forces to allocate
resources?
A. Command economy
B. Market economy
C. Traditional economy
D. Socialist economy
Answer: B
Explanation: Market economies rely on supply, demand, and price signals rather
than central planning to allocate resources.
5. The law of demand states that:
A. Higher prices increase quantity demanded.
B. As price increases, quantity demanded decreases, all else equal.
, C. Demand never changes.
D. Supply determines price.
Answer: B
Explanation: Consumers generally purchase less of a good when its price rises,
assuming other factors remain constant.
6. Which factor would shift the demand curve for electric vehicles to the right?
A. Increase in vehicle prices only
B. Higher consumer income for a normal good
C. Reduced advertising
D. Higher interest rates only
Answer: B
Explanation: Increased income raises demand for normal goods, shifting the
entire demand curve to the right.
7. A movement along the demand curve occurs because of a change in:
A. Consumer income
B. Price of the product
C. Consumer preferences
D. Population
A. How governments collect taxes
B. How scarce resources are allocated to satisfy unlimited wants
C. Accounting procedures
D. Stock market investing only
Answer: B
Explanation: Economics examines how individuals, firms, and governments
allocate limited resources to satisfy unlimited human wants and needs.
2. Which of the following is an example of a microeconomic decision?
A. The Federal Reserve changes interest rates.
B. A company decides how much to charge for a new product.
C. The national unemployment rate increases.
D. GDP grows by 3%.
Answer: B
Explanation: Microeconomics focuses on decisions made by individuals and firms,
including pricing, production, and resource allocation.
3. Opportunity cost is best defined as:
A. The total cost of production
,B. The value of the next best alternative that is forgone
C. Fixed business expenses
D. Government taxation
Answer: B
Explanation: Every decision involves sacrificing another option. Opportunity cost
measures the value of the best alternative not chosen.
4. Which economic system relies primarily on market forces to allocate
resources?
A. Command economy
B. Market economy
C. Traditional economy
D. Socialist economy
Answer: B
Explanation: Market economies rely on supply, demand, and price signals rather
than central planning to allocate resources.
5. The law of demand states that:
A. Higher prices increase quantity demanded.
B. As price increases, quantity demanded decreases, all else equal.
, C. Demand never changes.
D. Supply determines price.
Answer: B
Explanation: Consumers generally purchase less of a good when its price rises,
assuming other factors remain constant.
6. Which factor would shift the demand curve for electric vehicles to the right?
A. Increase in vehicle prices only
B. Higher consumer income for a normal good
C. Reduced advertising
D. Higher interest rates only
Answer: B
Explanation: Increased income raises demand for normal goods, shifting the
entire demand curve to the right.
7. A movement along the demand curve occurs because of a change in:
A. Consumer income
B. Price of the product
C. Consumer preferences
D. Population
