Economics Foundations and Principles Quiz

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What is the basic difference between microeconomics and macroeconomics?

Microeconomics is concerned with global economic trends, while macroeconomics examines supply and demand.

Microeconomics focuses on individual units in the economy, while macroeconomics studies the economy as a whole. (correct)

Microeconomics studies government policies, while macroeconomics analyzes consumer behavior.

Microeconomics deals with inflation and unemployment, while macroeconomics focuses on business models.

Which of the following is NOT one of the Five Foundations of Economics?

Trade-offs

Incentives

Marginal Thinking

Market Demand (correct)

What principle states that as production shifts from making one good to another, the opportunity cost increases?

Law of Diminishing Marginal Utility

Law of Supply

Law of Increasing Relative Cost (correct)

Law of Demand

What does a movement along the demand curve signify compared to a shift in demand?

A movement along the curve indicates a change in quantity demanded due to price, while a shift represents a change in demand due to other factors. Signup and view all the answers

Which economic principle suggests that people face trade-offs when making decisions?

Opportunity Cost Signup and view all the answers

What concept involves comparing the additional benefits and additional costs of a decision?

Marginal Thinking Signup and view all the answers

If a society moves from producing more capital goods to more consumption goods, according to the Law of Increasing Relative Cost, what can be expected?

Increase in opportunity cost Signup and view all the answers

When a demand curve shifts to the right, what does it indicate about market demand?

Increase in quantity demanded at all price levels Signup and view all the answers

In economics, what do voluntary trade and specialization aim to achieve?

Increased efficiency and mutual benefit Signup and view all the answers

What is the key difference between microeconomics and macroeconomics?

Microeconomics focuses on individual units, while macroeconomics studies the broader economy. Signup and view all the answers

What is the concept of opportunity cost in economics?

The cost of something is what you give up to get it. Signup and view all the answers

Why is it important for individuals and businesses to apply marginal thinking?

To evaluate whether the benefit of one more unit of something exceeds the cost. Signup and view all the answers

Which of the following situations best exemplifies an opportunity cost?

Deciding to go to a movie instead of studying for an exam. Signup and view all the answers

How do positive and negative incentives influence individual behavior?

Positive incentives motivate actions, while negative incentives deter certain behaviors. Signup and view all the answers

What is the difference between scarcity and shortage?

Scarcity refers to unlimited wants while shortage refers to the limited nature of resources. Signup and view all the answers

In economics, why is it mentioned that 'more is generally preferred to less'?

Because people typically prefer to have greater quantities of goods and services. Signup and view all the answers

What is the primary focus of microeconomics according to the text?

Examining decisions made by individuals, households, and businesses. Signup and view all the answers

When discussing macroeconomics, which of the following is examined according to the text?

The broader economy including inflation, growth, and employment. Signup and view all the answers

Why is analyzing costs, benefits, and future consequences emphasized in daily life decisions according to the text?

To help individuals make rational choices by evaluating potential outcomes. Signup and view all the answers

Economics Foundations and Principles Quiz

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