Basic Economic Concepts | Practice Test / Quiz / MCQs

1. Your school decides to build a new performing arts center. What is the opportunity cost of the performing arts center?

The cost of building the performing arts center now rather than waiting until next yearCannot be determined without knowing what the next best option was for using the resources that went to the performing arts centerNone of the aboveThe money used in construction of the performing arts centerAny other good or service that cannot be provided right now due to resources used for the new performing arts center

2. Marginal analysis is best defined as

making decisions based upon the marginal benefits and marginal costs of that decisionwhen businesses use their resources to produce goods and services for which they have a comparative advantagethe additional benefit received from the consumption of the next unit of a good or serviceanalyzing the combination of goods and services that provide the best benefit to societythe additional cost from the consumption of the next unit of a good or service

3. The benefits of specialization likely include all of the following EXCEPT

improvements in productivityvital resources are used more efficientlygreater quantity of goods and services supplied to consumersall of the above are benefits of specializationan increased educational opportunity as the economy grows

4. Both Richard and Michele can mow the lawn and walk their dog on Sunday morning. For every half hour of walking the dog, Richard can mow twice the amount of lawn Michele can. According to this information,

Michele walks the dog because she has absolute advantage in mowing the lawnRichard walks the dog because he has comparative advantage in mowing the lawnMichele walks the dog because she has comparative advantage in walking the dogRichard mows the lawn because he has comparative advantage in mowing the lawnMichele mows the lawn because she has comparative advantage in mowing the lawn

5. Your school decides to build a new performing arts center. What is the opportunity cost of the performing arts center?

The money used in construction of the performing arts centerAny other good or service that cannot be provided right now due to resources used for the new performing arts centerCannot be determined without knowing what the next best option was for using the resources that went to the performing arts centerThe cost of building the performing arts center now rather than waiting until next yearNone of the above

6. The concave shape of the production possibilities curve implies the notion of

MB = MCopportunity costscomparative advantagemarginal analysisallocation of limited resources with unlimited material wants

7. After dedicating two hours to studying for the AP economics exam, Seth chooses to spend an additional hour studying. Which of the following is most likely TRUE?

Both the marginal benefit and marginal cost are always equal in this scenario.The marginal cost of the additional hour is less than the marginal benefit of the additional hour.The marginal benefit of the second hour is less than the marginal benefit of the additional hour.The marginal cost of the second hour is greater than the marginal cost of the additional hour. Brooks Industries is a leading producer of guitars and stereos. Use the following production possibilities curve for questions 4 and 5.The marginal benefit of the additional hour is at least as great as the marginal cost of the additional hour.

9. The benefits of specialization likely include all of the following EXCEPT

all of the above are benefits of specializationan increased educational opportunity as the economy growsimprovements in productivitygreater quantity of goods and services supplied to consumersvital resources are used more efficiently

10. A country is said to have a comparative advantage over another country when

it can produce a good using fewer resources per unit of output than another countrywhen comparing each country’s production possibilities frontiers, one country is operating at maximum efficiency and outputit can produce a good at a lower opportunity cost than another countrythere is a higher degree of specialization and division of labor compared to another countryone country’s production possibilities frontier is shifted farther to the right compared to another country’s production possibilities frontier

11. It is beneficial for two countries to trade only when there is

an absolute advantage in production between the two countriesa comparative advantage in production between the two countriesincreasing returns to scaledecreasing returns to scalea mutually beneficial trade agreement

12. If a society overallocates its resources, then

marginal benefit would be less than marginal costopportunity cost of producing one more unit would increase exponentiallymarginal benefit would be greater than marginal costconsumer spending would increase due to an increase in demandmarginal benefit would equal marginal cost

13. Mineral deposits, human capital, entrepreneurship, and use of technology and machinery are all examples of

material wants and needspublic goodssuperior and inferior goodsfactors of productionelements sometimes needed to move an existing company overseas

14. Both Richard and Michele can mow the lawn and walk their dog on Sunday morning. For every half hour of walking the dog, Richard can mow twice the amount of lawn Michele can. According to this information,

Richard walks the dog because he has comparative advantage in mowing the lawnMichele walks the dog because she has comparative advantage in walking the dogMichele mows the lawn because she has comparative advantage in mowing the lawnRichard mows the lawn because he has comparative advantage in mowing the lawnMichele walks the dog because she has absolute advantage in mowing the lawn

15. The basic economic questions being answered by the decisions of buyers and sellers in the marketplace occur in

a mixed economya market economya command economya traditional economya barter economy

16. The concave shape of the production possibilities curve implies the notion of

opportunity costscomparative advantagemarginal analysisallocation of limited resources with unlimited material wantsMB = MC

18. Marginal analysis is best defined as

analyzing the combination of goods and services that provide the best benefit to societythe additional cost from the consumption of the next unit of a good or servicemaking decisions based upon the marginal benefits and marginal costs of that decisionthe additional benefit received from the consumption of the next unit of a good or servicewhen businesses use their resources to produce goods and services for which they have a comparative advantage

19. As a result of the scarcity of resources,

every society must include elements of a market economy and government planningthe government must decide how best to use those resourcesevery society must commit to central planningevery society must choose how best to use those resourcesthere is the unavoidable reality of poverty

20. All of the following are microeconomic variables EXCEPT

marginal analysistax rates on cigarettes and alcohol in France between 2000 and 2010all of the above are microeconomic variablesthe unemployment rate from Great Britain in 1992the production possibilities frontier of television sets and radios in Sri Lanka in 1975

21. Scarcity is best defined as

all points lying outside the production possibilities curvean idea used by industrializing nations to satisfy unlimited wants and desires with limited natural resourcesmaterial resources are unlimitedlimited vital material resources compared with limited wants and needsthe idea that a society’s wants and needs are unlimited, and material resources are limited

22. A country is said to have a comparative advantage over another country when

when comparing each country’s production possibilities frontiers, one country is operating at maximum efficiency and outputit can produce a good using fewer resources per unit of output than another countrythere is a higher degree of specialization and division of labor compared to another countryit can produce a good at a lower opportunity cost than another countryone country’s production possibilities frontier is shifted farther to the right compared to another country’s production possibilities frontier

23. Deirdre has one free hour to practice the piano for an upcoming school concert or work at the library for $7 per hour or babysit her neighbor’s 12-year-old son for $10 per hour. She chooses to practice the piano. What is the opportunity cost of practicing the piano?

The opportunity cost would be $3 because it is the monetary difference between two alternative choices.The opportunity cost would be $20 because it is necessary to calculate one additional hour of babysitting to make it profitable.Without knowing the marginal value of practicing the piano, there is no way of knowing the true opportunity cost.The opportunity cost would be $17 because she chose not to participate in these activities.The opportunity cost would be $10 because it would be the most profitable alternative.

24. Scarcity is best defined as

limited vital material resources compared with limited wants and needsan idea used by industrializing nations to satisfy unlimited wants and desires with limited natural resourcesthe idea that a society’s wants and needs are unlimited, and material resources are limitedmaterial resources are unlimitedall points lying outside the production possibilities curve

25. Mineral deposits, human capital, entrepreneurship, and use of technology and machinery are all examples of

elements sometimes needed to move an existing company overseassuperior and inferior goodspublic goodsfactors of productionmaterial wants and needs

25 Questions

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25 Questions

❤ If you liked Fatskills, consider supporting us by checking out The Life Manuals You Never Got.

About | Explore | User Guide | Topics | Subjects | Doubt Solver | Career Aptitude Test | Answers | Free Tools | OSHA Basics Quiz | What Should We Know? Privacy | Terms |

Without work one finishes nothing. - Ralph Waldo Emerson© 2026 Fatskills.com

All trademarks, logos and brand names are the property of their respective owners. All company, product and service names used in this website are for identification purposes only. Use of these names, trademarks and brands does not imply endorsement.

About | Explore | User Guide | Topics | Subjects | Doubt Solver | Career Aptitude Test | Answers | Free Tools | OSHA Basics Quiz | What Should We Know?
Privacy | Terms |

Without work one finishes nothing. - Ralph Waldo Emerson
© 2026 Fatskills.com