Economics basics unit test

Answer 1

Sure! Here’s a basic unit test on economics concepts. This test can include multiple-choice questions, short answer questions, and problem-solving questions. You can adjust the difficulty as needed.

Economics Basics Unit Test

Multiple Choice Questions (1 point each)

1. What is the fundamental problem of economics? a) Scarcity
   b) Inflation
   c) Unemployment
   d) Trade

2. Which of the following is a positive statement? a) The government should lower taxes.
   b) A minimum wage increase will lead to higher unemployment.
   c) The economy is not doing well.
   d) People should save more money.

3. What does the Law of Demand state? a) As price increases, demand decreases.
   b) As price decreases, demand decreases.
   c) Demand is independent of price.
   d) Demand increases as income decreases.

4. Gross Domestic Product (GDP) measures: a) The total income earned by a nation's residents.
   b) The total market value of all final goods and services produced within a country in a given period.
   c) The total revenue generated by the government.
   d) The total value of assets owned by a country.

5. Which of the following is NOT considered a factor of production? a) Land
   b) Labor
   c) Capital
   d) Money

Short Answer Questions (2 points each)

6. Define opportunity cost and provide an example.

7. Explain the difference between microeconomics and macroeconomics.

8. What is inflation, and what are its potential effects on the economy?

Problem-Solving Questions (3 points each)

9. Suppose the demand for oranges increases while the supply remains the same. Describe the impact on equilibrium price and quantity.

10. A consumer has a budget of $100 and needs to decide between two goods: Good A, which costs $20, and Good B, which costs $10. If the consumer decides to buy 3 Good A and 2 Good B, what is the total cost, and is the consumer able to stay within their budget?

Answer Key

Multiple Choice Answers

1. a
2. b
3. a
4. b
5. d

Short Answer Guidelines
6. Opportunity cost is the value of the next best alternative that is forgone when making a decision. Example: Choosing to go to college instead of working full-time incurs the opportunity cost of the salary that would have been earned.
7. Microeconomics focuses on individual markets and the decision-making of businesses and consumers, while macroeconomics looks at the economy as a whole and the aggregated outcomes of all economic agents.
8. Inflation is the rate at which the general level of prices for goods and services rises, eroding purchasing power. It can lead to uncertainty in the economy, decreased savings, and can hurt those on fixed incomes.

Problem-Solving Answers
9. If demand for oranges increases while supply remains constant, the equilibrium price of oranges will rise, and the equilibrium quantity will also increase as suppliers respond to the higher price.
10. The total cost of 3 Good A and 2 Good B is (3 x $20) + (2 x $10) = $60 + $20 = $80. The consumer stays within the $100 budget.

Feel free to modify or add more questions based on your specific curriculum needs!