19 Questions
What is the basic difference between microeconomics and macroeconomics?
Microeconomics focuses on individual units in the economy, while macroeconomics studies the economy as a whole.
Which of the following is NOT one of the Five Foundations of Economics?
Market Demand
What principle states that as production shifts from making one good to another, the opportunity cost increases?
Law of Increasing Relative Cost
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.
Which economic principle suggests that people face trade-offs when making decisions?
Opportunity Cost
What concept involves comparing the additional benefits and additional costs of a decision?
Marginal Thinking
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
When a demand curve shifts to the right, what does it indicate about market demand?
Increase in quantity demanded at all price levels
In economics, what do voluntary trade and specialization aim to achieve?
Increased efficiency and mutual benefit
What is the key difference between microeconomics and macroeconomics?
Microeconomics focuses on individual units, while macroeconomics studies the broader economy.
What is the concept of opportunity cost in economics?
The cost of something is what you give up to get it.
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.
Which of the following situations best exemplifies an opportunity cost?
Deciding to go to a movie instead of studying for an exam.
How do positive and negative incentives influence individual behavior?
Positive incentives motivate actions, while negative incentives deter certain behaviors.
What is the difference between scarcity and shortage?
Scarcity refers to unlimited wants while shortage refers to the limited nature of resources.
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.
What is the primary focus of microeconomics according to the text?
Examining decisions made by individuals, households, and businesses.
When discussing macroeconomics, which of the following is examined according to the text?
The broader economy including inflation, growth, and employment.
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.
Test your knowledge on key concepts in economics such as scarcity, incentives, opportunity cost, comparative advantage, and economic models. Explore topics like microeconomics, macroeconomics, voluntary trade, and the law of increasing relative cost.
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