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!

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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

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

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

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

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

Which of the following is an example of a regressive tax?

Income tax

Sales tax

Property tax

Corporate tax

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

Which of the following is a characteristic of a perfectly competitive market?

Many buyers and one seller

Product differentiation

Barriers to entry

Price takers

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