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Economics Practice Tests

These Grade 12 Social Studies practice tests develop Economics skills through scarcity, opportunity cost, production, markets, supply and demand, market structures, labor, public policy, externalities, international trade, and economic indicators.

Skills covered

  • Explaining scarcity, opportunity cost, factors of production, production possibilities, marginal analysis, incentives, economic systems, circular flow, GDP, and real GDP
  • Applying the laws of demand and supply, equilibrium, shortages, surpluses, demand and supply shifts, price controls, and elasticity
  • Comparing perfect competition, monopoly, oligopoly, monopolistic competition, barriers to entry, labor demand, human capital, minimum wage, unions, and income distribution
  • Evaluating externalities, public goods, common resources, tax incidence, progressive taxation, fiscal policy, market failure, regulation, and cost-benefit analysis
  • Analyzing comparative and absolute advantage, tariffs, quotas, exchange rates, trade balance, inflation, unemployment, interest, and consumer protection

How to use these practice tests

Identify the scarce resource or market relationship first. Then trace the incentive, curve shift, policy effect, opportunity cost, or economic indicator and check whether the conclusion follows from the model.

For more Grade 12 Social Studies practice, return to the Grade 12 Social Studies category.

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1. Test

Grade 12 Economics Practice Tests

Practice Grade 12 Social Studies questions about scarcity, opportunity cost, production, markets, supply and demand, labor, public policy, externalities, trade, and economic indicators.

Choose the best answer. Identify the scarce resource, incentive, market relationship, policy tool, or economic indicator and consider the relevant tradeoff.

10 Questions
0/10 Questions0 %
Correct 0
Incorrect 0
Unanswered 10
1. QuestionMultiple choice

What is scarcity?

Please select an answer first.

Correct answer: A

The correct answer is The condition that resources are limited relative to wants.

  1. Identify the economics concept: Determine whether the question concerns scarcity, incentives, markets, production, labor, public policy, international trade, or economic indicators.
  2. Apply the economic model: Scarcity exists because time, income, materials, and other resources are limited while human wants are extensive.
  3. Connect choice and tradeoffs: The correct answer is The condition that resources are limited relative to wants.

Scarcity exists because time, income, materials, and other resources are limited while human wants are extensive.

2. QuestionMultiple choice

What is opportunity cost?

Please select an answer first.

Correct answer: B

The correct answer is The value of the next-best alternative given up.

  1. Identify the economics concept: Determine whether the question concerns scarcity, incentives, markets, production, labor, public policy, international trade, or economic indicators.
  2. Apply the economic model: Every choice uses scarce resources, so opportunity cost measures the most valuable alternative not chosen.
  3. Connect choice and tradeoffs: The correct answer is The value of the next-best alternative given up.

Every choice uses scarce resources, so opportunity cost measures the most valuable alternative not chosen.

3. QuestionMultiple choice

Which is a factor of production?

Please select an answer first.

Correct answer: C

The correct answer is Labor.

  1. Identify the economics concept: Determine whether the question concerns scarcity, incentives, markets, production, labor, public policy, international trade, or economic indicators.
  2. Apply the economic model: The traditional factors of production are land, labor, capital, and entrepreneurship.
  3. Connect choice and tradeoffs: The correct answer is Labor.

The traditional factors of production are land, labor, capital, and entrepreneurship.

4. QuestionMultiple choice

What does a production possibilities curve illustrate?

Please select an answer first.

Correct answer: D

The correct answer is The maximum combinations of two goods an economy can produce with available resources and technology.

  1. Identify the economics concept: Determine whether the question concerns scarcity, incentives, markets, production, labor, public policy, international trade, or economic indicators.
  2. Apply the economic model: A production possibilities curve shows scarcity, tradeoffs, efficiency, and opportunity cost between two outputs.
  3. Connect choice and tradeoffs: The correct answer is The maximum combinations of two goods an economy can produce with available resources and technology.

A production possibilities curve shows scarcity, tradeoffs, efficiency, and opportunity cost between two outputs.

5. QuestionMultiple choice

What is marginal analysis?

Please select an answer first.

Correct answer: A

The correct answer is Comparing the additional benefit with the additional cost of an action.

  1. Identify the economics concept: Determine whether the question concerns scarcity, incentives, markets, production, labor, public policy, international trade, or economic indicators.
  2. Apply the economic model: Rational economic decisions often compare marginal benefit and marginal cost rather than only totals.
  3. Connect choice and tradeoffs: The correct answer is Comparing the additional benefit with the additional cost of an action.

Rational economic decisions often compare marginal benefit and marginal cost rather than only totals.

6. QuestionMultiple choice

How do incentives affect economic behavior?

Please select an answer first.

Correct answer: B

The correct answer is They change the expected benefits or costs of choices.

  1. Identify the economics concept: Determine whether the question concerns scarcity, incentives, markets, production, labor, public policy, international trade, or economic indicators.
  2. Apply the economic model: People and firms respond to rewards, penalties, prices, rules, and other incentives, although responses vary.
  3. Connect choice and tradeoffs: The correct answer is They change the expected benefits or costs of choices.

People and firms respond to rewards, penalties, prices, rules, and other incentives, although responses vary.

7. QuestionMultiple choice

What is a market economy?

Please select an answer first.

Correct answer: C

The correct answer is An economy in which many production and allocation decisions are coordinated through voluntary exchange and prices.

  1. Identify the economics concept: Determine whether the question concerns scarcity, incentives, markets, production, labor, public policy, international trade, or economic indicators.
  2. Apply the economic model: Market economies use decentralized decisions, property rights, exchange, and prices, with different levels of government involvement.
  3. Connect choice and tradeoffs: The correct answer is An economy in which many production and allocation decisions are coordinated through voluntary exchange and prices.

Market economies use decentralized decisions, property rights, exchange, and prices, with different levels of government involvement.

8. QuestionMultiple choice

What does the circular flow model show?

Please select an answer first.

Correct answer: D

The correct answer is The movement of resources, goods, services, and payments between households and firms.

  1. Identify the economics concept: Determine whether the question concerns scarcity, incentives, markets, production, labor, public policy, international trade, or economic indicators.
  2. Apply the economic model: Households supply resources and demand goods; firms demand resources and supply goods and services.
  3. Connect choice and tradeoffs: The correct answer is The movement of resources, goods, services, and payments between households and firms.

Households supply resources and demand goods; firms demand resources and supply goods and services.

9. QuestionMultiple choice

What is gross domestic product?

Please select an answer first.

Correct answer: A

The correct answer is The market value of final goods and services produced within a country during a period.

  1. Identify the economics concept: Determine whether the question concerns scarcity, incentives, markets, production, labor, public policy, international trade, or economic indicators.
  2. Apply the economic model: GDP measures current production within a geographic boundary and avoids double counting intermediate goods.
  3. Connect choice and tradeoffs: The correct answer is The market value of final goods and services produced within a country during a period.

GDP measures current production within a geographic boundary and avoids double counting intermediate goods.

10. QuestionMultiple choice

Why is real GDP useful?

Please select an answer first.

Correct answer: B

The correct answer is It adjusts production values for price changes to better compare quantities over time.

  1. Identify the economics concept: Determine whether the question concerns scarcity, incentives, markets, production, labor, public policy, international trade, or economic indicators.
  2. Apply the economic model: Real GDP uses base-period prices or another adjustment to separate changes in production from inflation.
  3. Connect choice and tradeoffs: The correct answer is It adjusts production values for price changes to better compare quantities over time.

Real GDP uses base-period prices or another adjustment to separate changes in production from inflation.

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