Test Your Knowledge About Economics! Quiz

Economic growth refers to an increase in the production and consumption of goods and services in an economy over time. When the economy experiences growth, it means that there is an expansion in economic activity, leading to higher levels of employment, income, and overall prosperity. Therefore, the correct answer is "increases" as economic growth positively impacts the economy by fostering development and improving living standards.

Absolute advantage refers to the ability of a producer to create a product or service using fewer resources compared to other producers. This means that the producer can achieve a higher level of efficiency and productivity, resulting in lower costs and higher output. It is not subjective, as it is based on objective measures of resource usage. While time and information may be important factors in achieving absolute advantage, they are not explicitly mentioned in the given options.

Opportunity cost refers to the value of the best alternative that is forgone when choosing one activity over another. It represents the benefits or profits that could have been gained from the next best alternative. In other words, opportunity cost measures the potential loss or sacrifice incurred by choosing a particular option. It is an important concept in economics and decision-making as it helps individuals and businesses assess the true cost and benefits of their choices.

Comparative Advantage refers to the ability of a company or producer to manufacture a product or provide a service at a lower opportunity cost compared to other producers. This means that the company can produce a good or service with fewer resources or at a lower cost in terms of alternative goods or services forgone. It implies that the company has a competitive edge in terms of efficiency and resource allocation, allowing it to specialize in the production of certain goods or services where it has a comparative advantage over others.

Private property rights allow owners to rent, sell, and use their property as they see fit. Renting allows owners to generate income by leasing their property to others. Selling allows owners to transfer ownership of their property in exchange for money. Using the property refers to the owner's right to utilize and enjoy their property for personal or commercial purposes. Therefore, the correct answer is "All of the Above" as private property rights encompass all these actions.

The correct answer is "Incurred and cannot be recovered." Sunk cost refers to a cost that has already been spent or incurred and cannot be recovered. It is a cost that has no influence on future decisions because it cannot be changed or recovered. Sunk costs are irrelevant in decision making as they are considered a past expense that should not factor into future choices.

The law of Comparative Advantage states that the individual firm, religion, or country that has the lowest opportunity cost of producing a particular good should specialize in producing that good. This means that if one producer can produce a good with fewer resources compared to other producers, they have a comparative advantage in producing that good. By specializing in the production of goods where they have a comparative advantage, producers can maximize their efficiency and overall output. This principle allows for mutually beneficial trade between producers with different comparative advantages.

Absolute advantage refers to the ability of a producer to produce more output using fewer resources compared to other producers. In this context, the correct answer suggests that the producer mentioned in the question is able to produce more output while utilizing fewer resources compared to other producers. This indicates that the producer has an absolute advantage over its competitors.

Barter refers to the direct exchange of goods without the involvement of money. In a barter system, individuals or entities trade goods or services directly with each other, without the need for currency. This practice was prevalent before the invention of money and is still used in some parts of the world today. Therefore, the correct answer is barter.