Economic Systems and Scarcity Quiz
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Questions and Answers

Which type of economics focuses on the behavior of individual households and firms?

  • Applied economics
  • Macroeconomics
  • Microeconomics (correct)
  • Normative economics

    • What is a key characteristic of every economy?

  • Unlimited wants and needs (correct)
  • Unlimited material resources
  • Limited energy resources
  • Abundant productive labor

    • Which statement represents a normative economics viewpoint?

  • Economics is a social science that studies human behavior
  • The United States spends $1 trillion on national defense
  • Scarcity is the central problem of economics
  • The federal minimum wage should be raised to $4.50 per hour (correct)

    • What does the concept of opportunity cost arise from?

    <p>Scarcity</p> Signup and view all the answers

    Which of the following is NOT a feature of a mixed economy?

    <p>Complete government ownership</p> Signup and view all the answers

    Which reasoning method proceeds from general to specific?

    <p>Deductive method</p> Signup and view all the answers

    In a capitalist economy, which factor overwhelmingly drives decisions?

    <p>Market forces</p> Signup and view all the answers

    What is the primary aim of an entrepreneur?

    <p>To earn as much profit as possible</p> Signup and view all the answers

    In which type of economy are consumers and producers influenced by market forces of demand and supply?

    <p>Market economy</p> Signup and view all the answers

    Which economic system features a monopoly of state on production and investment?

    <p>Socialist economy</p> Signup and view all the answers

    Which of the following statements regarding market economy is not true?

    <p>The government controls production and distribution of goods</p> Signup and view all the answers

    Who provided the scarcity definition of economics?

    <p>Samuelson</p> Signup and view all the answers

    Which definition states that 'Science which deals with the wealth of a nation'?

    <p>Adam Smith</p> Signup and view all the answers

    Which option is not a feature of capitalism?

    <p>No profit, no loss motive</p> Signup and view all the answers

    Why is there a need for economic study?

    <p>Both A and B</p> Signup and view all the answers

    What is a benefit of economic study?

    <p>It enables examination of a problem in its right perspective</p> Signup and view all the answers

    What does managerial economics primarily provide?

    <p>Tools to explain various concepts</p> Signup and view all the answers

    Which statement accurately describes microeconomics?

    <p>It focuses on individual firms and households.</p> Signup and view all the answers

    What approach is a consultant likely using if they suggest changes regarding loan availability to a business?

    <p>Microeconomics</p> Signup and view all the answers

    What is macroeconomics concerned with?

    <p>Economic conditions of a country</p> Signup and view all the answers

    Which of the following statements is incorrect regarding managerial economics?

    <p>It only deals with theoretical aspects.</p> Signup and view all the answers

    In a free market economy, what determines the allocation of resources?

    <p>Consumer preference</p> Signup and view all the answers

    What is one disadvantage of allocating resources in the market system?

    <p>Income will tend to be unevenly distributed</p> Signup and view all the answers

    In a capitalist economy, which factor primarily influences resource allocation?

    <p>Demand</p> Signup and view all the answers

    Which statement does not apply to a market economy?

    <p>Households can dictate production entirely</p> Signup and view all the answers

    What is the primary focus of firms in a market economy?

    <p>Profit maximization</p> Signup and view all the answers

    Which of the following statements correctly describes economic decisions in a mixed economy?

    <p>Economic decisions involve both firms and households</p> Signup and view all the answers

    The allocation of resources in a market economy relies significantly on which of the following?

    <p>Consumer choices and preferences</p> Signup and view all the answers

    In a capitalist system, what are the consequences of resource allocation based on market demand?

    <p>Higher profit margins for firms</p> Signup and view all the answers

    What is the central problem in economics related to the allocation of resources?

    <p>Allocating scarce resources to satisfy society's unlimited wants.</p> Signup and view all the answers

    In which type of economy would a capital-intensive technique be chosen due to lower relative prices of capital?

    <p>Capital surplus economy.</p> Signup and view all the answers

    Which of the following is NOT one of the four central questions that an economic system aims to answer?

    <p>What is the price of goods?</p> Signup and view all the answers

    What type of goods would lead to a higher production in the future?

    <p>Capital goods.</p> Signup and view all the answers

    Which economic system is characterized by all means of production being owned by private individuals for profit?

    <p>Capitalism.</p> Signup and view all the answers

    Macro Economics primarily focuses on which aspect of the economy?

    <p>The national economy and the global economy as a whole.</p> Signup and view all the answers

    What is the advantage of freedom of choice primarily associated with?

    <p>Capitalism.</p> Signup and view all the answers

    Which question addresses how goods are produced in an economic system?

    <p>How are goods produced?</p> Signup and view all the answers

    Study Notes

    Economic Systems and Scarcity

    • Economics is the study of how people make choices when facing scarcity.
    • Scarcity means that resources are limited, but wants are unlimited. This creates a fundamental problem of allocating resources to meet wants

    Types of Economic Systems

    • Market economy: Resources are allocated based on the forces of supply and demand. Consumers and producers make choices based on market forces (prices).
    • Command economy: The government controls the allocation of resources, deciding what is produced, how much is produced, and what prices are charged.
    • Mixed economy: A blend of market and command elements. Features both private ownership and government intervention.

    Key Concepts in Economics

    • Opportunity cost: The value of the next best alternative that is forgone when making a choice.
    • Microeconomics: The study of individuals, households, and firms in the economy.
    • Macroeconomics: The study of the economy as a whole, including topics such as inflation, unemployment, and economic growth.

    Economic Methods

    • Inductive method: Reasoning that moves from specific observations to general conclusions.
    • Deductive method: Reasoning that moves from general principles to specific conclusions.

    Normative vs. Positive Statements

    • Positive statements: Objective and factual statements about how the economy works.
    • Normative statements: Subjective statements about how the economy should work.

    Economic Goals

    • Efficiency: Making the best possible use of resources.
    • Equity: Ensuring that everyone has a fair share of resources.
    • Growth: Increasing the production of goods and services over time.

    The Role of the Entrepreneur

    • Entrepreneurs play a key role in a capitalist economy by creating new businesses and taking risks. Their goal is to maximize profits.

    Economics and Business

    • Managerial economics: The application of economic theory to decision-making in business. This field bridges the gap between economic theory and business practice.

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    CA Foundation Economics Module Multiple Choice Questions PDF

    Description

    Test your understanding of economic systems and the concept of scarcity. This quiz covers key types of economies, opportunity costs, and the distinctions between microeconomics and macroeconomics. Challenge yourself to see how well you grasp these fundamental economic principles.

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