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Quizzes > Business & Finance > Finance & Economics

Introduction to Economics Quiz: Test Your Fundamentals

Ready to dive into introduction to economics online practice?

Difficulty: Moderate
2-5mins
Learning OutcomesCheat Sheet
Paper cut style icons of graphs coins books and question marks on sky blue background for economics quiz

Step into the world of supply and demand, fiscal policy, and opportunity cost with our Introduction to Economics Online Practice - your go-to free economics quiz online designed to boost your confidence in core concepts. Perfect for students and self-learners, this resource blends clear explanations with a fun basic economics quiz. Tackle a curated set of introduction to economics questions and answers and put your skills to the test in a dynamic economics practice quiz . Whether you're prepping for exams or simply exploring, this test-now format makes learning efficient and enjoyable. Ready to see how you stack up? Click "Start Quiz" now to unlock insights, track your progress, and ace your next econ test!

Which term describes the condition of limited resources available to satisfy unlimited human wants?
Choice
Efficiency
Scarcity
Capital
Scarcity is the fundamental economic condition in which resources are finite while human wants are unlimited. All economic decisions involve scarcity because resources like labor, land, and capital must be allocated among competing uses. This concept is central to understanding why trade-offs and opportunity costs exist in every decision. Investopedia: Scarcity
What is the definition of opportunity cost?
The total money spent on a purchase
The amount of profit lost
The fixed cost of production
The value of the next best alternative forgone
Opportunity cost is the benefit you give up when choosing one option over the next best alternative. It highlights the trade-offs inherent in every decision because using resources for one purpose means they can't be used elsewhere. Recognizing opportunity cost aids in more informed, efficient decision-making. Investopedia: Opportunity Cost
A downward-sloping demand curve indicates that as the price of a good decreases, the quantity demanded will:
Become unpredictable
Decrease
Increase
Remain constant
The law of demand states that, ceteris paribus, price and quantity demanded move in opposite directions. A downward-sloping demand curve graphically represents this inverse relationship. Consumers tend to buy more of a good when its price falls and less when its price rises. Investopedia: Demand Curve
Which term refers to the quantity of a good or service that producers are willing and able to sell at various prices?
Demand
Supply
Revenue
Utility
Supply describes how much of a good or service producers are willing and able to offer at different price levels. It is typically represented by an upward-sloping curve because higher prices incentivize producers to supply more. Supply analysis helps in understanding market dynamics alongside demand. Investopedia: Supply
According to the law of supply, ceteris paribus, what happens when the price of a good increases?
Demand curve shifts to the right
Quantity supplied increases
Quantity demanded increases
Supply curve shifts to the right
The law of supply states that, all else equal, an increase in a good's price leads producers to offer more for sale. This relationship is depicted as an upward-sloping supply curve. It reflects the higher potential revenue that encourages increased production. Investopedia: Law of Supply
Market equilibrium is reached when:
Quantity demanded equals quantity supplied
Price elasticity is zero
Demand curve shifts upward
Supply curve shifts downward
Market equilibrium occurs at the price where the amount consumers want to buy equals the amount producers want to sell. At this point, there is no tendency for price to change unless an external factor shifts supply or demand. It ensures all trades that benefit both parties occur. Investopedia: Market Equilibrium
Price elasticity of demand measures which of the following?
The percentage change in quantity demanded divided by the percentage change in price
The total revenue at a given price
The absolute change in price
The slope of the supply curve
Price elasticity of demand (PED) quantifies how sensitive the quantity demanded of a good is to a change in its price. It is calculated by dividing the percentage change in quantity demanded by the percentage change in price. Values greater than one indicate elastic demand, while values less than one indicate inelastic demand. Investopedia: Price Elasticity of Demand
Gross Domestic Product (GDP) is best defined as:
The total amount of money in circulation
The sum of all government expenditures
The market value of all final goods and services produced within a country during a specific period
The accumulated value of all financial assets
GDP measures the monetary value of all final goods and services produced within a country's borders in a given time frame, typically a year or quarter. It is a key indicator of economic health and growth. Intermediate goods are excluded to avoid double counting. Investopedia: GDP
Comparative advantage arises when a producer can:
Achieve absolute efficiency in production
Produce more output with the same inputs
Produce a good at a lower opportunity cost than another producer
Control prices in an international market
Comparative advantage occurs when one party can produce a good at a lower opportunity cost than another. It is the basis for beneficial trade because each party specializes in what they give up least. This concept explains how countries gain from trade even if one is more efficient in all goods. Investopedia: Comparative Advantage
Marginal cost refers to:
Total cost divided by total output
The fixed cost spread over all units produced
The cost of the first unit only
The additional cost of producing one more unit of output
Marginal cost is the increase in total cost that arises from producing one additional unit of a good. It is crucial for profit maximization decisions, as firms compare marginal cost to marginal revenue. When marginal cost equals marginal revenue, profit is maximized. Investopedia: Marginal Cost
Fiscal policy involves government decisions regarding:
Taxation and public spending to influence economic activity
Price controls and regulations
Interest rates and money supply
International exchange rates
Fiscal policy refers to the use of government spending and taxation to affect macroeconomic conditions like growth, inflation, and unemployment. Expansionary fiscal policy lowers taxes or increases spending to stimulate demand. Contractionary policy does the opposite to cool an overheating economy. Investopedia: Fiscal Policy
The Laffer Curve illustrates the relationship between:
Money supply and interest rates
Government spending and budget deficits
Tax rates and tax revenue
Inflation rate and unemployment rate
The Laffer Curve plots tax rates against the amount of tax revenue collected by governments. It suggests there is an optimal tax rate that maximizes revenue without discouraging productivity and work. Beyond that point, higher rates can actually reduce total revenue. Investopedia: Laffer Curve
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Study Outcomes

  1. Understand Core Economic Concepts -

    Recognize and define key terms such as scarcity, opportunity cost, and market equilibrium to build a strong foundation in economics.

  2. Analyze Supply and Demand Dynamics -

    Examine how price changes and market forces impact supply and demand curves and influence consumer and producer behavior.

  3. Apply Production and Distribution Principles -

    Demonstrate how resources are allocated in production processes and how goods and services are distributed within an economy.

  4. Interpret Economic Data -

    Read and evaluate basic charts, graphs, and tables to draw meaningful conclusions about economic trends.

  5. Evaluate Quiz Responses -

    Use introduction to economics questions and answers to identify areas of strength and address knowledge gaps effectively.

  6. Reinforce Learning Through Practice -

    Engage with a free economics quiz online to solidify understanding and track progress in fundamental economic principles.

Cheat Sheet

  1. Scarcity and Choice -

    Scarcity is the fundamental concept that resources are limited while wants are infinite, forcing individuals and societies to make choices (Mankiw, 2018). Remember the mnemonic "W.I.S.E." (Wants, Items, Scarcity, Evaluate) to recall that evaluating wants against limited items is key. These basics will solidify your confidence during your introduction to economics online practice.

  2. Opportunity Cost -

    Opportunity cost measures the value of the next best alternative foregone, often expressed as OC = what you give up / what you gain (Khan Academy). For example, if studying for an exam means skipping a $20 shift, the opportunity cost is $20. Mastering this formula is crucial for both basic economics quizzes and introduction to economics questions and answers.

  3. Supply and Demand Equilibrium -

    Supply and demand curves intersect at equilibrium where Qd = Qs; if Qd = a - bP and Qs = c + dP, solve for P* = (a - c)/(b+d) to find market price. Use the phrase "Down with Demand, Up with Supply" to visualize shifts. Recognizing how shifts affect equilibrium will ace your free economics quiz online.

  4. Marginal Analysis & Diminishing Utility -

    The law of diminishing marginal utility states that MU = ΔTU/ΔQ decreases as consumption increases (University of Chicago Press). Picture that first slice of pizza brings big joy, but the fifth is just "meh." Applying marginal analysis helps you optimize decisions and shines in any basic economics quiz.

  5. Comparative Advantage & Trade -

    Comparative advantage occurs when a party can produce at a lower opportunity cost, underpinning gains from trade (Ricardo model). For instance, if Country A sacrifices 2 cars for 1 computer and Country B sacrifices 3 cars for 1 computer, A has the comparative advantage in computers. This key principle often appears in introduction to economics questions and answers and will elevate your quiz performance.

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