Quiz Bank — Module 1: Theory of Demand and Supply (ECON605)
QUESTION 1 OF 4
Which of the following best represents the concept of opportunity cost in economic analysis?
✅ Value of the next best alternative given up when making a choice
Scarcity forces choices; the opportunity cost of a choice is what you forgo — the value of the next best alternative. Total cost, benefit gained and marginal cost are different concepts.
QUESTION 2 OF 4
What distinguishes positive economic analysis from normative economic analysis?
✅ Positive analysis focuses on facts and cause-effect, while normative analysis involves opinions on what should be
Positive = what is (testable facts, cause and effect); normative = what ought to be (value judgements/opinions).
QUESTION 3 OF 4
Which topic falls under microeconomics?
✅ Pricing strategies of a smartphone company
Microeconomics studies individual units — firms, households, single markets and their pricing. Unemployment rates, Eurozone inflation and budget deficits are macroeconomic aggregates.
QUESTION 4 OF 4
What does behavioral economics primarily study?
✅ Psychological influences on financial decisions
Behavioral economics blends psychology with economics to explain how biases and emotions affect financial choices — not trade agreements, GDP calculation or logistics.