Basic Economics Terms
What is the term for the satisfaction or pleasure derived from consuming a product or service?
A) Supply
B) Demand
C) Utility
D) Value
C) Utility
What is it called when you set aside a portion of your income for future needs or emergencies?
A) Investing
B) Saving
C) Spending
D) Earning
B) Saving
What does the term "utility" mean in economics?
A) The usefulness of a product or service
B) The price of a product or service
C) The amount of money a consumer has
D) The time it takes to produce a product
A) The usefulness of a product or service
Why is it important to track your spending?
A) To ensure you spend more
B) To make sure you are investing enough
C) To understand where your money goes and adjust your budget
D) To avoid paying taxes
C) To understand where your money goes and adjust your budget
Which of the following is an example of a need?
A) Designer clothing
B) Bottled water
C) A winter coat in a cold climate
D) A smartphone
C) A winter coat in a cold climate
Which term describes the resources used to produce goods and services?
A) Capital
B) Income
C) Value
D) Interest
A) Capital
What financial tool helps you plan and manage your expected income and expenses over a period?
A) Balance Sheet
B) Income Statement
C) Budget
D) Credit Report
C) Budget
Read the scenario: Imagine you're eating slices of pizza. The first slice is incredibly satisfying, but as you eat more slices, each one gives you slightly less satisfaction than the one before. By the fourth or fifth slice, you’re not enjoying the pizza as much as you did when you started.
What does this situation illustrate about marginal utility?
A) Marginal utility is the total satisfaction received from all the slices of pizza.
B) Marginal utility is the change in satisfaction you get from eating one more slice of pizza.
C) Marginal utility is the amount of money saved by eating more slices of pizza.
D) Marginal utility is the cost associated with making each additional slice of pizza.
B) Marginal utility is the change in satisfaction you get from eating one more slice of pizza.
Which of the following expenses is most appropriate to cover using an emergency fund?
A) Going out for a special dinner
B) Buying a new laptop
C) Paying for a car repair
D) Purchasing new workout equipment
C) Paying for a car repair
How does the concept of scarcity influence the distinction between needs and wants?
A) Scarcity makes all wants become needs
B) Scarcity ensures that needs are always met before wants
C) Scarcity creates the need to prioritize limited resources between essential needs and non-essential wants
D) Scarcity eliminates the need to make choices between needs and wants
C) Scarcity creates the need to prioritize limited resources between essential needs and non-essential wants
What is the concept of giving up one thing to gain another called?
A) Scarcity
B) Opportunity Cost
C) Supply
D) Utility
B) Opportunity Cost
What is the term for a regular payment made into a savings account?
A) Interest
B) Deposit
C) Withdrawal
D) Fee
B) Deposit
If a consumer experiences diminishing marginal utility, what happens?
A) They gain more satisfaction with each additional unit consumed
B) They gain less satisfaction with each additional unit consumed
C) The price of the product decreases as they consume more
D) The product becomes more useful as they consume more
B) They gain less satisfaction with each additional unit consumed
What are the five basic elements of a budget?
A) Income, Savings, Investments, Expenses, Taxes
B) Income, Fixed Expenses, Variable Expenses, Savings, Debt Repayment
C) Income, Assets, Liabilities, Equity, Expenses
D) Income, Credit Score, Loans, Taxes, Savings
B) Income, Fixed Expenses, Variable Expenses, Savings, Debt Repayment
Why is it important to distinguish between needs and wants?
A) To reduce spending on entertainment
B) To ensure that essential resources are prioritized
C) To avoid purchasing luxury items
D) To increase income
B) To ensure that essential resources are prioritized
Which term refers to the total amount of money a person earns before taxes?
A) Net Income
B) Gross Income
C) Revenue
D) Savings
B) Gross Income
Which term refers to the amount of money remaining after all expenses are paid?
A) Gross Income
B) Net Income
C) Principal
D) Savings
B) Net Income
Why do businesses care about consumer utility?
A) To increase the supply of their products
B) To reduce the time spent on marketing
C) To decrease the cost of production
D) To maximize their profits by aligning products with consumer satisfaction
D) To maximize their profits by aligning products with consumer satisfaction
Which type of expense is considered fixed?
A) Rent
B) Utilities
C) Groceries
D) Entertainment
A) Rent
Which of the following could be considered both a need and a want, depending on the situation?
A) Electricity
B) A car
C) A vacation
D) A television
B) A car
What do we call the market where buyers and sellers meet to exchange goods and services?
A) Stock Market
B) Labor Market
C) Financial Market
D) Product Market
D) Product Market
What does APR stand for in relation to loans?
A) Annual Percentage Rate
B) Annual Payment Rate
C) Applied Percentage Rate
D) Average Payment Rate
A) Annual Percentage Rate
Which scenario best illustrates the concept of "diminishing marginal utility"?
A) The more slices of pizza you eat, the less enjoyable each slice becomes
B) The more you use your phone, the more useful it becomes
C) The first sip of water is less satisfying than the second
D) Each additional cup of coffee you drink in the morning makes you more energized
A) The more slices of pizza you eat, the less enjoyable each slice becomes
What is a zero-based budget?
A) A budget with no variable expenses
B) A budget that starts with zero income
C) A budget that does not include savings
D) A budget where all income is allocated to expenses and savings, leaving zero balance
D) A budget where all income is allocated to expenses and savings, leaving zero balance
Which of these is an example of a discretionary expense?
A) Mortgage payment
B) Health insurance
C) Dining out
D) Utility bills
C) Dining out