Here's the first question. What are the qualities needed to be the most exciting playwright in Britain today? Is it, a) talent b) wit c) opportunity or d) brains?

James Graham has all four and if there is any justice his new play Quiz, set in and around the popular quiz show, Who Wants to Be A Millionaire? will soon be joining his other hits Labour of Love, Ink and This House on an extended run in the West End.

This is another cracking play that sheds vivid light on the state of the nation while telling an engrossing story. This is the tale of the "Coughing Major", the scandal that hit the show in 2001 when army regular Charles Ingram, his wife Diana and a weird Welsh accomplice were accused of cheating their way to winning the top prize of a million pounds.

This was at the height of the show's popularity, when the entire nation seemed to be craning forward to answer every multiple choice question, and thousands of us were trying to get through the show's ‘randomised' entry system in order to bag overnight wealth on the basis of our general knowledge.

Graham cleverly harnesses this obsession in the shape and setting of his play. The audience are given both voting lanyards and a mini-clipboard for a pub quiz that begins as soon as the play does. We are soon whisked through a history of the television game show, a swift test of our own wits, and the case against Ingram and his quiz-obsessed wife. As characters and scenes flood across Robert Jones' snazzy set, with a neon-lit revolving cube at its centre, we learn about shady quiz rigging syndicates, the radical concept of Who Wants to be A Millionaire?, the way it made its producers rich, and the definition of democracy.

Arguably, in this first half, we learn a little too much. Graham tends to adopt a kitchen sink approach to drama, throwing in his research with the giddy abandon of a man fascinated by the world around him. But Daniel Evans' fluent, light-handed direction keeps things moving beautifully. And once Gavin Spokes' appealingly bumbling Major finds himself hesitating over questions posed by Chris Tarrant, his intonations and mannerisms perfectly impersonated by Keir Charles, the drama grips like Greek tragedy.

The second act – the case for the defence – is a tour de force, a brilliant blend of court case and quiz show which asks profound questions about the way the values of light entertainment have distorted our institutions. Under it all lies the most important question of all: what is true and what is false and how do we know the difference? Does our thirst for trivial facts conceal a contempt for actual understanding, which makes us quick to judge – the Ingrams were subjected to a horrific campaign of public harassment – but slow to understand?

The moral dilemma is, as Sarah Woodward (spectacularly powerful as the defending barrister) puts it, do we choose "a more entertaining lie over a less extraordinary truth."? Since Graham gently extends his analysis to the theatres of war, politics and the courts themselves, these are huge issues.

But what is so wonderful about his writing is that it tempers these big themes with such compassion and, when appropriate, a sense of fun. Quiz is simultaneously joyful entertainment (a team actually does win the mini pub quiz) and a profound, knowing work of art which makes it impossible not to feel compassion for the Major and his wife (tenderly played by Stephanie Street).

The excellent cast rise to all the challenges with aplomb. When they take their bows at the end, it is a surprise to see there are so few of them, given the verve with which they embody everyone from the world's press to Jim Bowen, and Hilda and Elsie from Coronation Street.

Question. What is James Graham's best quality as a playwright? Is it a) his humanity b)his power to entertain c) his ability to choose stories that illuminate and help us understand the way we live today or d) all of the above. My final answer? It has to be D.

Quiz runs at the Minerva Theatre until 9 December.