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Fundamentals of Economics
1. What is the fundamental economic problem that forces societies to make choices?
A. Unlimited resources and unlimited wants
B. Limited resources and unlimited wants
C. Unlimited resources and limited wants
D. Limited resources and limited wants
2. The law of demand states that, holding other factors constant, an increase in price will
result in:
A. An increase in quantity demanded
B. A decrease in quantity demanded
C. A movement of the demand curve to the right
D. A decrease in quantity demanded
3. Which factor is least likely to shift the demand curve for a product?
A. Changes in consumer income
B. Changes in the price of related goods
C. Consumer preferences
D. Change in the product's own price
4. Which market structure best characterizes a large number of firms selling identical
products?
A. Monopoly
B. Oligopoly
C. Monopolistic competition
D. Perfect competition
5. Gross Domestic Product (GDP) measures:
A. The total value of all goods produced plus all services consumed
B. The total income earned by all citizens
C. The total market value of all final goods and services produced within a country
during a specific period
D. The total market value of all final goods and services produced within a country
, during a specific period
6. Marginal cost is defined as:
A. The average cost of producing all units
B. The total cost divided by the quantity produced
C. The cost of producing one additional unit of output
D. The cost of producing one additional unit of output
7. Price elasticity of demand measures:
A. The change in demand due to a change in consumer income
B. The percentage change in quantity demanded divided by the percentage change in
price
C. The slope of the supply curve
D. The percentage change in quantity demanded divided by the percentage change
in price
8. A substitute good is defined as:
A. A good consumed simultaneously with another
B. A good whose demand increases when the price of another good rises
C. A good with perfectly inelastic demand
D. A good whose demand increases when the price of another good rises
9. Fixed costs are costs that:
A. Vary with the quantity of output
B. Do not vary with the level of output in the short run
C. Are zero at zero production
D. Increase proportionally with output
10.Which market structure usually involves a few large firms dominating the market?
A. Perfect competition
B. Monopoly
C. Oligopoly
D. Monopolistic competition
11.If an increase in income causes the demand for a product to decrease, the product is
called:
A. A normal good
B. A complementary good
, C. A substitute good
D. An inferior good
12.Which of the following will shift the supply curve to the right?
A. Increase in the cost of raw materials
B. Advancements in technology that reduce production costs
C. Tax imposed on producers
D. Natural disasters that affect production
13.The opportunity cost of any decision is:
A. The total cost paid
B. The next best alternative foregone
C. The sunk costs
D. The next best alternative foregone
14.What happens when a price ceiling is set below the market equilibrium price?
A. Surplus of goods
B. Market equilibrium is maintained
C. Price floor effect
D. Shortage of goods
15.When a firm experiences economies of scale, its long-run average costs:
A. Increase as output increases
B. Are constant regardless of output
C. Decrease as output increases
D. Are unrelated to output
16.Which economic indicator measures consumer spending?
A. Gross Domestic Product
B. Consumer Price Index
C. Producer Price Index
D. Unemployment Rate
17.What effect does a decrease in the price of a complement have on the demand for related
goods?
A. Decrease in demand
B. No change in demand
C. Increase in demand
Fundamentals of Economics
1. What is the fundamental economic problem that forces societies to make choices?
A. Unlimited resources and unlimited wants
B. Limited resources and unlimited wants
C. Unlimited resources and limited wants
D. Limited resources and limited wants
2. The law of demand states that, holding other factors constant, an increase in price will
result in:
A. An increase in quantity demanded
B. A decrease in quantity demanded
C. A movement of the demand curve to the right
D. A decrease in quantity demanded
3. Which factor is least likely to shift the demand curve for a product?
A. Changes in consumer income
B. Changes in the price of related goods
C. Consumer preferences
D. Change in the product's own price
4. Which market structure best characterizes a large number of firms selling identical
products?
A. Monopoly
B. Oligopoly
C. Monopolistic competition
D. Perfect competition
5. Gross Domestic Product (GDP) measures:
A. The total value of all goods produced plus all services consumed
B. The total income earned by all citizens
C. The total market value of all final goods and services produced within a country
during a specific period
D. The total market value of all final goods and services produced within a country
, during a specific period
6. Marginal cost is defined as:
A. The average cost of producing all units
B. The total cost divided by the quantity produced
C. The cost of producing one additional unit of output
D. The cost of producing one additional unit of output
7. Price elasticity of demand measures:
A. The change in demand due to a change in consumer income
B. The percentage change in quantity demanded divided by the percentage change in
price
C. The slope of the supply curve
D. The percentage change in quantity demanded divided by the percentage change
in price
8. A substitute good is defined as:
A. A good consumed simultaneously with another
B. A good whose demand increases when the price of another good rises
C. A good with perfectly inelastic demand
D. A good whose demand increases when the price of another good rises
9. Fixed costs are costs that:
A. Vary with the quantity of output
B. Do not vary with the level of output in the short run
C. Are zero at zero production
D. Increase proportionally with output
10.Which market structure usually involves a few large firms dominating the market?
A. Perfect competition
B. Monopoly
C. Oligopoly
D. Monopolistic competition
11.If an increase in income causes the demand for a product to decrease, the product is
called:
A. A normal good
B. A complementary good
, C. A substitute good
D. An inferior good
12.Which of the following will shift the supply curve to the right?
A. Increase in the cost of raw materials
B. Advancements in technology that reduce production costs
C. Tax imposed on producers
D. Natural disasters that affect production
13.The opportunity cost of any decision is:
A. The total cost paid
B. The next best alternative foregone
C. The sunk costs
D. The next best alternative foregone
14.What happens when a price ceiling is set below the market equilibrium price?
A. Surplus of goods
B. Market equilibrium is maintained
C. Price floor effect
D. Shortage of goods
15.When a firm experiences economies of scale, its long-run average costs:
A. Increase as output increases
B. Are constant regardless of output
C. Decrease as output increases
D. Are unrelated to output
16.Which economic indicator measures consumer spending?
A. Gross Domestic Product
B. Consumer Price Index
C. Producer Price Index
D. Unemployment Rate
17.What effect does a decrease in the price of a complement have on the demand for related
goods?
A. Decrease in demand
B. No change in demand
C. Increase in demand
