Foundations of Economics (Scarcity & Choice)
Why does the basic economic problem of scarcity exist?
A) Governments restrict production
B) Human wants are unlimited, but resources are limited
C) Consumers spend too much mone
D) Sellers hold back supply to raise prices
B) Human wants are unlimited, but resources are limited
A store offers a "Buy One, Get One 50% Off" promotion. In economics, this offer is an example of an:
A) Incentive
B) Opportunity cost
C) Unintended consequence
D) Elasticity metric
A) Incentive
An individual or business that creates and supplies goods or services to the market is a:
A) Consumer
B) Buyer
C) Producer
D) Borrower
C) Producer
According to the Law of Demand, when the price of a good increases, the quantity demanded:
A) Decreases
B) Increases
C) Shifts right
D) Remains completely unchanged
A) Decreases
Which factors cause the entire demand curve to shift?
A) Changes in the price of the good itself
B) Changes in manufacturing input costs
C) Non-price factors such as consumer income and preferences
D) Improvements in producer technology
C) Non-price factors such as consumer income and preferences
Which statement regarding scarcity is true?
A) Scarcity only affects low-income individuals
B) Scarcity affects only developing nations
C) Scarcity affects everyone because total resources are finite
D) Scarcity can be completely eliminated through technology
C) Scarcity affects everyone because total resources are finite
Which statement about economic incentives is true?
A) Incentives can only be positive (rewards)
B) Incentives can only be negative (penalties)
C) Incentives have no impact on consumer behavior
D) Incentives can be both positive (rewards) and negative (penalties)
D) Incentives can be both positive (rewards) and negative (penalties)
A person who purchases or uses goods and services to satisfy personal wants is a:
A) Producer
B) Supplier
C) Entrepreneur
D) Consumer
D) Consumer
According to the Law of Supply, sellers will offer more of a product for sale when the price:
A) Decreases
B) Is capped by government policy
C) Drops to zero
D) Increases
D) Increases
Which factors cause the entire supply curve to shift?
A) Non-price factors such as input costs and technology
B) Changes in consumer taste and fashion trends
C) Changes in buyer income levels
D) Changes in the price of substitute consumer goods
A) Non-price factors such as input costs and technology
What term describes the next best alternative given up when making an economic choice?
A) Marginal cost
B) Absolute advantage
C) Trade incentive
D) Opportunity cost
D) Opportunity cost
The extra cost incurred from producing or consuming one additional unit of an item is called the:
A) Marginal sacrifice
B) Opportunity cost
C) Fixed cost
D) Marginal cost
D) Marginal cost
What occurs at market equilibrium?
A) Quantity supplied exceeds quantity demanded
B) Quantity supplied equals quantity demanded
C) Quantity demanded exceeds quantity supplied
D) Prices are fixed permanently by the state
B) Quantity supplied equals quantity demanded
How do sellers generally respond when the market price of their product rises?
A) They reduce the quantity supplied to create artificial scarcity
B) They increase the quantity supplied to earn higher revenue
C) They stop production entirely until prices fall
D) They shift their supply curve to the left
B) They increase the quantity supplied to earn higher revenue
Which of the following events will cause a shift in the demand curve for coffee?
A) A change in the retail price of coffee beans
B) An increase in the wages paid to coffee shop baristas
C) An improvement in commercial coffee roasting machinery
D) A widespread consumer preference shift toward tea
D) A widespread consumer preference shift toward tea
What is the opportunity cost of choosing to spend 2 hours playing video games instead of studying for an economics exam?
A) The purchase price of the video game
B) The enjoyment gained from playing the game
C) The higher test score you could have earned by studying
D) The total time spent doing both activities
C) The higher test score you could have earned by studying
Marginal decision-making involves comparing which of the following?
A) The additional benefits and additional costs of one extra unit
B) The total benefits and total costs of an entire business
C) Sunk costs and future potential income
D) Fixed costs and variable revenues
A) The additional benefits and additional costs of one extra unit
What occurs at market surplus?
A) Quantity supplied exceeds quantity demanded
B) Quantity supplied equals quantity demanded
C) Quantity demanded exceeds quantity supplied
D) Prices are fixed permanently by the state
A) Quantity supplied exceeds quantity demanded
A shift of the supply curve to the left represents:
A) A decrease in total supply at every price level
B) An increase in total supply at every price level
C) A movement along the curve caused by a price drop
D) An increase in consumer demand for the product
A) A decrease in total supply at every price level
Which event will shift the supply curve for smartphones to the right?
A) A technological advancement that lowers assembly costs
B) An increase in corporate taxes on phone manufacturers
C) A natural disaster damaging battery factories
D) A rise in the cost of microchip raw materials
A) A technological advancement that lowers assembly costs
Which statement about economic choices and opportunity costs is correct?
A) Only monetary choices have opportunity costs
B) Government choices do not involve opportunity costs
C) Opportunity costs only occur during financial crises
D) Every economic choice involves an opportunity cost
D) Every economic choice involves an opportunity cost
Which individual is best described as an entrepreneur?
A) A risk-taker who combines resources to start a new business
B) A worker earning an hourly wage on an assembly line
C) A government official regulating factory safety
D) A consumer shopping for household groceries
A) A risk-taker who combines resources to start a new business
When buyers and sellers negotiate freely in an open market, what metric adjusts to balance supply and demand?
A) Government subsidies/grants
B) Corporate tax rates
C) Market price
D) Import tariffs
C) Market price
When a demand curve shifts to the right, it signifies that:
A) Demand has decreased at every price level
B) Demand has increased at every price level
C) The price of the good has increased
D) The price of the good has decreased
B) Demand has increased at every price level
A new fertilizer allows farmers to grow twice as many apples per acre. How does this shift the apple supply curve, and what does the shift signify?
A) Shifts Left — Supply decreased because farming costs rose
B) Shifts Right — Supply increased due to improved productivity
C) Shifts Right — Demand increased because apples taste better
D) Shifts Left — Quantity demanded dropped at high prices
B) Shifts Right — Supply increased due to improved productivity