I am embedding images into quiz questions and the dimensions of the image within the quiz are so large that it is difficult to use. I want students to see the diagram and question in the same field of view on their computer screen. I tried adjusting the size of the image file I uploaded by making the image smaller before I saved it. The image was unchanged after I deleted all the old image files that were large and replaced them with the resaved smaller images. I edited the questions to change the file to the smaller image and the image is still huge. How do you adjust the size to a usable form?
A graphics editor such as gimp (http://gimp.org) or Photoshop can be used to resize images. I resize them so the width is 600 px.
But there is a second issue here. It's important to give the new image a different name prior to uploading it to Moodle. And you must also reference that new image as you write the question.
thanks. worked like a charm. I am wondering if that fact that the images
were saved as .png instead of .jpg or .gif made the difference. I changed
them all to .jpg and it worked.
were saved as .png instead of .jpg or .gif made the difference. I changed
them all to .jpg and it worked.
Glad to hear it! 
Regarding file type: I think I've had success with each of the three you've mentioned. What made it work was the fact that it's a new file name (such as the extension change.)