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Quizzes > Business & Finance > Finance & Economics

Introduction to Economics Quiz: Test Your Fundamentals

Tackle fundamentals of economics and resource allocation - start the quiz!

Difficulty: Moderate
2-5mins
Learning OutcomesCheat Sheet
Paper art illustration for an economics quiz on resource allocation, micro vs macro on a sky blue background.

This Introduction to Economics quiz helps you practice core ideas: scarcity, choices, resource allocation, and micro vs macro. Use it to spot gaps before a class or exam and build confidence; for extra help, try the guided practice set or the microeconomics quiz .

What does "opportunity cost" refer to in economics?
The sunk cost of past investments
The total benefits of all foregone alternatives
The value of the next best alternative forgone
The explicit monetary outlay spent on a choice
Opportunity cost represents what is foregone when a choice is made, focusing on the next best alternative. Unlike sunk costs, it emphasizes decision-making. It includes implicit and explicit costs lost.
Which of the following is considered a factor of production?
Price
Revenue
Land
Demand
Factors of production are the inputs used to produce goods, including land, labor, capital, and entrepreneurship. Land includes natural resources. Demand, price, and revenue are market concepts not factors of production.
What does the Law of Demand state?
As the price of a good increases, quantity demanded increases
Quantity demanded remains constant regardless of price
As the price of a good increases, quantity demanded decreases
Price and quantity demanded are unrelated
The Law of Demand describes the inverse relationship between price and quantity demanded, holding other factors constant. It shows the downward sloping demand curve. It is foundational in microeconomics.
Which best differentiates microeconomics from macroeconomics?
Microeconomics examines inflation rates; macroeconomics analyzes firm pricing
Microeconomics deals with fiscal policy; macroeconomics deals with individual decision making
Microeconomics focuses on unemployment; macroeconomics focuses on consumer choice
Microeconomics studies individual markets; macroeconomics studies the aggregate economy
Microeconomics analyzes individual decision makers, such as consumers and firms, and specific markets. Macroeconomics looks at aggregate indicators like GDP, inflation, and unemployment. Understanding the distinction guides appropriate analytical frameworks.
How is price elasticity of demand (PED) calculated?
Percentage change in price divided by percentage change in quantity demanded
Change in quantity demanded divided by change in price
Percentage change in quantity demanded divided by percentage change in price
Change in price over initial price
Price elasticity of demand is computed as the percentage change in quantity demanded over the percentage change in price, measuring responsiveness. The formula uses proportional changes for comparability. A value greater than one indicates elastic demand.
What does a production possibilities frontier (PPF) illustrate?
The point where aggregate demand equals aggregate supply
The inverse relationship between price and quantity demanded
The maximum feasible output combinations of two goods given resources
The distribution of income in an economy
The PPF shows the trade-offs between two goods and the concept of opportunity cost by illustrating maximum production given fixed resources. Points inside are inefficient, outside unattainable. The curve's shape reflects resource specialization.
Which of the following would shift the short-run aggregate supply (SRAS) curve to the left?
An increase in government spending
An increase in labor costs
A decrease in sales taxes
A reduction in consumer demand
A rise in labor costs increases production costs, reducing firms' willingness to supply at each price level, shifting the SRAS left. Tax changes and fiscal policy affect aggregate demand more directly. Aggregate supply shifts originate from input price changes or productivity.
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Study Outcomes

  1. Understand Core Economic Concepts -

    Grasp key terms and principles featured in introduction to economics questions and answers, from scarcity to opportunity cost.

  2. Analyze Resource Allocation -

    Evaluate how individuals and societies make choices about resource allocation quiz scenarios, weighing costs and benefits effectively.

  3. Differentiate Micro and Macro Economics -

    Distinguish between micro vs macro economics quiz topics, understanding their distinct scopes and methods of analysis.

  4. Identify Economic Systems -

    Recognize characteristics of various economic systems and answer economic systems questions with confidence.

  5. Apply Supply and Demand Principles -

    Use supply and demand curves to predict market changes and solve fundamentals of economics questions within the quiz.

  6. Assess Your Economic Knowledge -

    Test your grasp of introduction to economics questions and answers through interactive challenges that reinforce learning in real time.

Cheat Sheet

  1. Scarcity and Opportunity Cost -

    Scarcity is the bedrock of introduction to economics questions and answers, teaching that limited resources force trade-offs in every decision. Opportunity cost, defined as the value of the next best alternative, can be calculated with the formula OC = Sacrificed Benefit/Gained Benefit. As MIT OpenCourseWare emphasizes, remembering "No Free Lunch" helps you recall that every choice has a cost.

  2. Supply and Demand Fundamentals -

    Understanding supply and demand curves is key to acing fundamentals of economics questions; demand functions like Qd = a - bP and supply like Qs = c + dP illustrate how price shifts quantity. Equilibrium occurs where Qd = Qs, yielding the market-clearing price and quantity. The mnemonic "Sellers Supply, Shoppers Demand" helps you quickly recall each relationship during a resource allocation quiz.

  3. Micro vs. Macro Economics Distinctions -

    In a micro vs macro economics quiz, remember that micro focuses on individual agents (firms, households) while macro examines aggregate phenomena (GDP, inflation). The acronym "MICE" (Micro = Individual Choices & Economy) is a handy tool to separate the two fields. According to the National Bureau of Economic Research, clarity on these scopes is essential for deeper economic analysis.

  4. Economic Systems Compared -

    When tackling economic systems questions, contrast market, planned, and mixed systems by how they answer "what, how, and for whom" to produce goods. A simple chart or Venn diagram, as suggested by the IMF, can help visualize the role of government vs. private sector in allocation. Use the "PMM" mnemonic (Planned, Market, Mixed) to keep the three systems straight under time pressure.

  5. Production Possibilities and Resource Allocation -

    The Production Possibilities Frontier (PPF) model illustrates efficient resource allocation and opportunity cost of shifting between two goods. Points on the curve show maximum productive efficiency, while points inside indicate idle resources - perfect practice for a resource allocation quiz. Remember that "PPF bows out" due to increasing opportunity costs as resources reallocate from one good to another.

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