Basic Concepts in Microeconomics and Government Policies Quiz
Test your knowledge of microeconomics with questions on elasticity, market structures, fiscal policy, and more. Get ready for the quiz!
#1
What does the term 'opportunity cost' represent in economics?
The cost of goods and services
The value of the best alternative foregone
The total revenue of a firm
The total profit earned by a firm
#2
What does the 'law of demand' state?
As the price of a good increases, the quantity demanded increases
As the price of a good decreases, the quantity demanded decreases
As income increases, the demand for normal goods decreases
As income decreases, the demand for inferior goods decreases
#3
In microeconomics, what does the term 'elasticity' measure?
The responsiveness of quantity demanded to a change in price
The total revenue of a firm
The quantity of goods produced by a firm
The cost of production
#4
Which of the following is an example of a positive externality?
Pollution from a factory
Education benefiting society as a whole
A tax on imported goods
A subsidy for tobacco farmers
#5
What is the main objective of government intervention in a market economy?
To maximize profits for firms
To minimize consumer welfare
To correct market failures
To promote monopoly power
#6
Which of the following is an example of a regressive tax?
Income tax
Sales tax
Property tax
Corporate tax
#7
What is the primary function of a production possibilities frontier (PPF) in economics?
To illustrate the distribution of income in society
To demonstrate the maximum output combinations attainable with limited resources
To determine the equilibrium price in a market
To measure consumer surplus
#8
Which of the following is a characteristic of a perfectly competitive market?
Many buyers and one seller
Product differentiation
Barriers to entry
Price takers
#9
What is the 'Laffer curve' used to illustrate in economics?
The relationship between inflation and unemployment
The relationship between government revenue and tax rates
The impact of technological innovation on economic growth
The effect of changes in interest rates on investment
#10
What is the main function of price ceilings in a market?
To encourage producers to increase supply
To prevent prices from rising above a certain level
To allocate resources efficiently
To promote competition among firms
#11
What is the primary goal of antitrust laws in economics?
To promote collusion among firms
To increase market power of monopolies
To prevent monopolistic practices and promote competition
To restrict international trade
#12
What is the concept of 'moral hazard' in economics?
The tendency of consumers to hoard goods during times of scarcity
The risk that insured parties may act more recklessly than they would if they didn't have insurance
The situation where the government intervenes in a market to correct a negative externality
The inability of a firm to exit the market due to high barriers to entry
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