Fundamentals of Economics Quiz
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Questions and Answers

Which of the following best defines scarcity?

  • The ability of a country to produce more goods and services than it consumes
  • The unlimited wants and needs of people with limited resources to satisfy them (correct)
  • The study of how individuals, businesses, and governments make choices about how to allocate scarce resources
  • The process of making decisions based on the costs and benefits of alternatives

    • What does a Production Possibilities Graph show?

  • The total value of all final goods and services produced within a country in a given time period
  • The amount of money that individuals and businesses are willing and able to spend on goods and services
  • The maximum amount of goods and services that an economy can produce given its resources and technology (correct)
  • The relationship between the price of a good and the quantity of that good that consumers are willing and able to buy

    • What are the 3 key economic questions?

  • How much to produce, when to produce, and where to produce
  • Who to produce for, why to produce, and when to produce
  • What to produce, how to produce, and for whom to produce (correct)
  • Where to produce, what to produce, and how to produce

    • Which of the following best defines opportunity cost?

    <p>The value of the next best alternative that is forgone when making a decision</p> Signup and view all the answers

    What is the main incentive for a business?

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

    How can an economy increase its production possibilities?

    <p>By investing in capital goods and improving technology</p> Signup and view all the answers

    What does the Circular Flow Model represent?

    <p>The flow of money and resources between households and businesses in an economy</p> Signup and view all the answers

    What is market failure?

    <p>When the market fails to allocate resources efficiently</p> Signup and view all the answers

    What are public goods?

    <p>Goods that are provided by the government and are available to everyone</p> Signup and view all the answers

    Give an example of a positive externality.

    <p>Education benefiting society as a whole</p> Signup and view all the answers

    How do consumers tell the government and businesses what they want?

    <p>Through purchasing decisions and market demand</p> Signup and view all the answers

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