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Quizzes > Business & Finance

Economics Quiz: Test Key Topics and Core Concepts

Quick quiz on economics to check your knowledge. Instant results.

Editorial: Review CompletedCreated By: Samia AbdallaUpdated Aug 25, 2025
Difficulty: Moderate
Questions: 15
Study OutcomesAdditional Reading
3D voxel art illustrating the course Topics in Economics

Use this economics quiz to review core ideas in micro and macro with light math. Answer 15 questions for instant results and pointers on what to study next. If you're starting out, try the introduction to economics quiz, or build graph skills with the production possibilities curve quiz.

What is the best definition of opportunity cost?
The value of the next best alternative forgone (the trade-off)
The monetary price paid for a good
All alternatives sacrificed
The time spent making a decision
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A price ceiling set above the market equilibrium price is binding.
True
False
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Which event shifts the demand curve for a normal good to the right, ceteris paribus?
A rise in the price of the good itself
An increase in consumer income
A fall in consumer income
A decrease in population
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Which statement correctly distinguishes the CPI from the GDP deflator?
The CPI includes domestically produced capital goods
The GDP deflator includes prices of imported consumer goods
Both measure only food and energy prices
The CPI includes imported consumer goods; the GDP deflator covers domestically produced final goods and services
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What does the law of diminishing marginal utility state?
Marginal utility is constant
Marginal utility falls as additional units of a good are consumed (holding other goods constant)
Total utility eventually declines as consumption rises
Consumers always prefer variety to more of the same good
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In the short run, at least one factor of production is fixed.
True
False
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Which statement is true of an inferior good?
It must be of low quality
Demand increases when income falls (negative income effect)
Demand increases when income rises
Demand decreases when income falls
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For a normal good, when its price rises, which effect reduces quantity demanded, holding utility constant?
Income effect
Network effect
Endowment effect
Substitution effect (away from the relatively more expensive good)
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Which policy best internalizes a negative production externality?
Pigouvian tax equal to marginal external damage
Import quota
Subsidy to producers
Price ceiling
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According to the Coase theorem, efficient outcomes can arise when
Property rights are well-defined and transaction costs are zero or negligible
Only the government sets the efficient quantity
Property rights are undefined and transaction costs are high
There are many consumers
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When are government spending multipliers likely to be larger?
When imports are very responsive to income
When interest rates rise sharply in response
When the economy is at full employment
When the economy is in a liquidity trap with slack and monetary policy is accommodative
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Ricardian equivalence always holds in practice.
True
False
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In the long run, the Phillips curve is
Downward sloping
Vertical at the natural rate of unemployment
Horizontal
Upward sloping
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Under a fixed exchange rate with perfect capital mobility, domestic monetary policy is powerful for stabilizing output.
False
True
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Purchasing power parity implies, in levels, that the nominal exchange rate E (defined as units of domestic currency per one unit of foreign currency) equals which ratio?
The ratio of the domestic to foreign price levels (P/P*)
One
The ratio of foreign to domestic money supply
The ratio of domestic to foreign interest rates
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The revenue equivalence theorem requires risk-neutral bidders with i.i.d. private values and symmetric information to hold exactly as stated.
It holds regardless of risk attitudes or information structures
It requires risk neutrality and i.i.d. private values under certain regularity conditions
It requires collusion among bidders
It requires common values only
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What does the Herfindahl-Hirschman Index (HHI) measure?
Price-cost margins directly
Market concentration via the sum of squared market shares
Firm productivity
Elasticity of demand
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In Bertrand competition with homogeneous goods and identical marginal costs, the equilibrium price equals marginal cost.
True
False
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Ramsey optimal commodity taxation suggests tax rates should be
Zero on all goods
Equal across all goods
Higher on goods with inelastic demand to minimize excess burden (inverse elasticity rule)
Higher on goods with more elastic demand
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In a two-good optimal tax problem with separable utilities and no income effects, tax rates should be higher on the good with the more elastic demand.
False
True
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Study Outcomes

  1. Understand advanced economic theories and models presented in various topics.
  2. Analyze current economic issues using specialized frameworks and analytical tools.
  3. Evaluate empirical research methods and their applications to real-world economic problems.
  4. Apply critical thinking skills to assess policy implications across diverse economic areas.

Topics In Economics Additional Reading

Here are some engaging and reputable academic resources to enhance your understanding of advanced economics topics:

  1. This comprehensive collection from Econlib offers curated reading lists across various economics subjects, providing in-depth materials suitable for advanced study.
  2. Authored by Tim Roughgarden, this lecture series delves into the intersection of complexity theory and game theory, illuminating barriers in economics through a computational lens.
  3. This textbook by Thomas J. Sargent and John Stachurski introduces economic networks, emphasizing quantitative modeling with tools like graph theory and linear algebra, ideal for advanced learners.
  4. Offered by edX, this course explores intricate economic theories and applications, enhancing your analytical skills through real-world examples and problem-solving exercises.
  5. This guide provides resources and literature on health economics, offering insights into the complexities of health care markets and policies.
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