The Undercover Economist Strikes Back: A GCSE Economics Quiz

Test Your Understanding of Tim Harford's Economic Insights

Based on the book 'The Undercover Economist Strikes Back' by Tim Harford, this quiz will assess your grasp of key economic concepts and their practical applications. Harford's engaging writing style and real-world examples make economic principles accessible and relevant.

Section 1: Scarcity, Trade-offs, and Marginal Thinking

1. According to Harford, what is the fundamental economic problem faced by individuals and societies?
   • a) Unlimited wants but limited resources
   • b) Unlimited resources but limited wants
   • c) Limited resources but no wants
   • d) Unlimited resources and unlimited wants
2. What principle does Harford use to illustrate the idea of trade-offs in economics?
   • a) Opportunity cost
   • b) Diminishing returns
   • c) Economies of scale
   • d) Comparative advantage
3. In the example of choosing between cappuccinos and lattes, what concept does Harford use to determine the optimal choice?
   • a) Marginal cost
   • b) Marginal benefit
   • c) Marginal utility
   • d) All of the above

Section 2: The Price Mechanism and Market Forces

1. What role does the price mechanism play in a market economy, according to Harford?
   • a) It determines the allocation of resources
   • b) It ensures that supply equals demand
   • c) It provides incentives for producers and consumers
   • d) All of the above
2. In the example of the Christmas toy craze, what economic principle does Harford use to explain the shortage and high prices?
   • a) Supply and demand
   • b) Economies of scale
   • c) Monopolistic competition
   • d) Price discrimination
3. What does Harford suggest is the role of prices in solving the economic problem of scarcity?
   • a) Prices allocate scarce resources to their most valued uses
   • b) Prices ensure that everyone has equal access to resources
   • c) Prices encourage the production of more resources
   • d) Prices discourage the consumption of resources

Worked Example

Question: In the example of the Christmas toy craze, what economic principle does Harford use to explain the shortage and high prices?

Solution:

1. Harford describes a situation where a particular toy becomes highly sought after during the Christmas season, leading to a shortage in supply.
2. With high demand and limited supply, the price of the toy rises significantly due to the principles of supply and demand.
3. The correct answer is (a) Supply and demand.

This quiz covers key topics from 'The Undercover Economist Strikes Back,' including scarcity, trade-offs, marginal thinking, the price mechanism, and market forces. By applying Harford's accessible explanations and real-world examples to these questions, you can assess your understanding of economic principles and their practical applications.