Quiz
1. What is the fundamental economic problem?
A) Inflation
B) Scarcity
C) Unemployment
D) Trade
[Link] of the following best defines
opportunity cost?
A) The cost of a resource
B) The value of the next best alternative
forgone
C) The total expenditure made
D) The profit from an investment
[Link] type of resource includes natural
resources like minerals and forests?
A) Labor
B) Capital
C) Land
D) Entrepreneurship
4. In which economic system do market prices
and competition primarily guide resource
allocation?
A) Command Economy
B) Market Economy
C) Mixed Economy
D) Traditional Economy
5. Efficiency in resource allocation means:
A) Maximizing waste
B) Minimizing output
C) Maximizing output from available
resources
D) Maximizing costs
6. What is productive efficiency?
A) Producing the right mix of goods
B) Producing at the lowest possible cost
C) Achieving maximum equity
D) None of the above
7. Allocative efficiency is achieved when:
A) Total production is maximized
B) Resources are distributed to maximize
overall benefit
C) Prices are set by the government
D) Production costs are minimized
8. Which mechanism relies on supply and
demand for resource allocation?
A) Central Planning
B) Market Mechanism
C) Socialism
D) Command Mechanism
9. What represents the maximum possible
output combinations of two goods?
A) Demand Curve
B) Supply Curve
C) Production Possibility Frontier (PPF)
D) Market Equilibrium
10. In a mixed economy, what role does the
government play?
A) No role
B) Sole decision-maker
C) Facilitator of market outcomes
D) Primary producer
11. Which economic system emphasizes
individual ownership and market-driven
allocation?
A) Command Economy
B) Mixed Economy
C) Market Economy
D) Socialist Economy
12. What is a characteristic of a command
economy?
A) High consumer choice
B) Central authority making economic
decisions
C) Limited government intervention
D) Private property rights
13. Which of the following is a goal of
economic activity?
A) Equity
B) Monopolization
C) Decreased output
D) Market failure
14. In a market economy, prices are
determined primarily by:
A) Government regulation
B) Supply and demand
C) Labor unions
D) International trade
15. Which system aims to balance the
advantages of both market and command
economies?
A) Pure Capitalism
B) Traditional Economy
C) Mixed Economy
D) Market Socialism
[Link] is a key consideration in the allocation
of resources?
A) Unlimited wants
B) Market monopolies
C) Scarcity
D) Inflation
17. Which of the following is NOT a factor of
production?
A) Capital
B) Labor
C) Time
D) Land
18. When a factory chooses to produce cars
instead of motorcycles, the motorcycles
represent:
A) Fixed costs
B) Opportunity cost
C) Marginal cost
D) Sunk cost
19. Which type of economy often struggles with
innovation due to a lack of competition?
A) Market Economy
B) Command Economy
C) Mixed Economy
D) Traditional Economy
20. The government intervenes in the economy
to:
A) Ensure monopoly power
B) Increase market fluctuations
C) Address inequalities
D) Limit consumer choices
21. What is the primary goal of production in
economics?
A) To maximize waste
B) To transform resources into goods and
services
C) To increase prices
D) To minimize output
22. Which factor of production includes human
skills and efforts?
A) Land
B) Labor
C) Capital
D) Entrepreneurship
23. Which is a benefit of technological
innovation in production?
A) Higher costs
B) Increased inefficiency
C) Streamlined processes
D) Reduced output
24. Deciding what to produce is primarily
influenced by:
A) Government mandates
B) Consumer demand
C) Resource depletion
D) Market monopolies
25. How can a company achieve higher
production efficiency?
A) Increasing waste
B) Adopting outdated technology
C) Optimizing production processes
D) Reducing labor costs indiscriminately
26. What does distribution in economics refer
to?
A) How goods are produced
B) How goods are allocated among individuals
C) How markets function
D) How resources are extracted
27. Equity in distribution means:
A) Equal distribution of resources
B) Fairness in resource allocation
C) Maximizing profit for businesses
D) Limiting consumer access
28. Income distribution affects:
A) Resource allocation
B) Consumer purchasing power
C) Economic stability
D) All of the above
29. In market economies, distribution is often
determined by:
A) Government control
B) Purchasing power
C) Resource availability
D) Population size
30. Government intervention in distribution
aims to:
A) Create monopolies
B) Increase income inequality
C) Address disparities
D) Reduce consumer choice
31. What does economic efficiency entail?
A) Maximizing resource waste
B) Minimizing total output
C) Using resources effectively to achieve
optimal outcomes
D) Increasing government intervention
32. What does allocative efficiency require?
A) The price of a good equals its total cost
B) The price of a good equals its marginal cost
C) All goods are produced equally
D) Resources are wasted
33. What is a characteristic of inefficient
outcomes?
A) Maximizing societal benefits
B) Minimizing resource use
C) Higher costs or wasted opportunities
D) Optimal resource allocation
34. A factory that uses outdated machinery is
likely exhibiting:
A) Allocative efficiency
B) Productive inefficiency
C) High productivity
D) Market superiority
35. Which is an example of productive
efficiency?
A) A company producing goods at a high cost
B) A factory using the latest technology to
minimize costs
C) A market with high prices
D) Government-controlled production
[Link] is the primary focus of Managerial
Economics?
A) Understanding market failures
B) Analyzing business decisions using
economic principles
C) Predicting government policies
D) Reducing competition
37. What does the concept of trade-offs
emphasize?
A) The ability to have everything
B) The need to make choices due to scarcity
C) The importance of monopolies
D) The irrelevance of resource allocation
38. In economics, what does "mixed economy"
imply?
A) Complete government control
B) Combination of market and command
principles
C) No market forces
D) Sole reliance on traditional practices
39. Which of the following is NOT a goal of
economic activity?
A) Stability
B) Efficiency
C) Scarcity
D) Growth
[Link] of the following best describes the
concept of a "Production Possibility
Frontier"?
A) A line showing supply and demand
B) A graph depicting maximum production
capabilities
C) A method for price determination
D) A tool for resource allocation
41. What does the Production Possibility
Frontier (PPF) illustrate?
• A) Consumer preferences
• B) Maximum output combinations
• C) Market equilibrium
• D) Income distribution
42. Which of the following is NOT a
fundamental economic question?
A) What to produce?
B) How to produce?
C) When to produce?
D) For whom to produce?
43. In which type of economy do market
signals determine production?
A) Command economy
B) Mixed economy
C) Market economy
D) Traditional economy
44. What does productive efficiency imply?
A) Maximum social welfare
B) Lowest cost of production
C) Equal income distribution
D) Optimal resource allocation
45. What represents the opportunity cost in
production?
A) The price of goods
B) The value of the next best alternative
C) The total cost of production
D) The total revenue
46. Which point on the PPF indicates
inefficient use of resources?
A) On the curve
B) Inside the curve
C) Outside the curve
D) At the origin
47. What does an outward shift in the PPF
represent?
A) Decrease in production
B) Economic growth
C) Increase in unemployment
D) Resource depletion
48. Which of the following is a measure of
economic growth?
A) Inflation rate
B) Real GDP
C) Unemployment rate
D) Interest rate
49. What is allocative efficiency?
A) Minimum cost production
B) Maximizing total value of output
C) Optimal resource use
D) Equal distribution of income
50. Which of the following is an example of
economic efficiency?
A) A factory with excess labor
B) A company reducing costs without improving
output
C) A healthcare system maximizing patient
benefits
D) A market with fixed prices
