CEA Economic Theory & Principles

Question 1

What does the law of demand state?

Accepted Answer

Demand decreases as price increases

Answer

Demand increases as price increases

Answer

Demand is unaffected by price

Answer

Demand increases with supply

Question 2

What is opportunity cost?

Accepted Answer

Value of the foregone alternative

Answer

The total cost of a choice

Answer

Sunk cost

Answer

Fixed cost

Question 3

What does the law of supply state?

Accepted Answer

Supply increases as price increases

Answer

Supply decreases as price increases

Answer

Supply is unrelated to price

Answer

Supply decreases with demand

Question 4

What is market equilibrium?

Accepted Answer

Demand equals supply

Answer

Price is highest

Answer

Supply exceeds demand

Answer

Demand exceeds supply

Question 5

What is elasticity of demand?

Accepted Answer

Sensitivity of demand to price

Answer

Total demand at any price

Answer

Fixed demand level

Answer

Demand at equilibrium

Question 6

What is a public good?

Accepted Answer

Non-excludable and non-rivalrous good

Answer

A good only some can use

Answer

Private product

Answer

Exclusive good

Question 7

What is the role of government in a market economy?

Accepted Answer

Regulate and correct failures

Answer

Control all businesses

Answer

Ignore markets

Answer

Eliminate competition

Question 8

What is comparative advantage?

Accepted Answer

Producing at lower opportunity cost

Answer

Producing more goods overall

Answer

Selling goods cheaply

Answer

Producing goods with highest cost

Question 9

What is the difference between microeconomics and macroeconomics?

Accepted Answer

Micro studies individuals, macro studies economy

Answer

Micro is bigger than macro

Answer

They are the same

Answer

Macro studies firms only