1. What is the basic economic problem?
- Incomes are decreasing which means people suffer from a worse quality of life.
- Resources are scarce but wants are unlimited.
- There is not enough jobs to provide the world
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2. What is income elasticity of demand?
- A measure of the responsiveness of demand to a change in income.
- A measure of the responsiveness of demand for one good to a change in the price of another good.
- How much a person earns in a year.
3. An example of a merit good is:
- Christmas trees
- Health care
4. Public goods are:
- Rival and excludable
- Non-rival and non-excludable
- Non-rival but excludable
5. The demand curve shows:
- How much people are willing and able to buy at each price
- How much suppliers are willing to supply at each price
- Whether a firm is making a profit
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