#1
Which of the following is NOT a characteristic of perfect competition?
Limited market information
ExplanationPerfect competition entails full market transparency.
#2
What is a monopoly?
A market structure with only one seller
ExplanationMonopoly involves exclusive control over a market.
#3
What is the law of demand?
As the price of a good increases, the quantity demanded decreases
ExplanationThe law of demand reflects the inverse relationship between price and quantity demanded.
#4
Which of the following is NOT a determinant of demand?
Cost of production
ExplanationCost of production influences supply, not demand.
#5
What does the law of supply state?
As the price of a good increases, the quantity supplied increases
ExplanationThe law of supply describes the direct relationship between price and quantity supplied.
#6
Which market structure is characterized by few firms with differentiated products?
Monopolistic competition
ExplanationMonopolistic competition features product differentiation among firms.
#7
What is a barrier to entry in a market?
Factors that prevent new firms from entering a market
ExplanationBarriers to entry hinder the ability of new firms to enter a market.
#8
What is price discrimination?
Selling identical products at different prices to different customers
ExplanationPrice discrimination involves varying prices based on customer segments.
#9
In monopolistic competition, what role does product differentiation play?
It helps firms gain market power by making their products unique
ExplanationProduct differentiation enables firms to distinguish their offerings in the market.
#10
Which of the following is NOT a determinant of supply?
Number of buyers
ExplanationNumber of buyers affects demand, not supply.
#11
What is the equilibrium price?
The price at which quantity demanded equals quantity supplied
ExplanationEquilibrium price balances supply and demand in the market.
#12
Which market structure is characterized by interdependence among firms?
Oligopoly
ExplanationOligopoly involves firms' strategic decisions dependent on rivals' actions.
#13
What is a cartel?
A group of firms that collude to restrict output and raise prices
ExplanationA cartel involves coordinated actions among firms to manipulate prices.
#14
What is the Nash equilibrium?
A situation in which each firm's strategy is optimal given the strategies of others
ExplanationNash equilibrium occurs when no player has an incentive to change their strategy unilaterally.
#15
How does a natural monopoly differ from other types of monopolies?
It arises due to economies of scale
ExplanationNatural monopoly occurs when a single firm can serve the market more efficiently due to scale.
#16
What is a cross-price elasticity of demand?
A measure of the responsiveness of quantity demanded of one good to changes in the price of another good
ExplanationCross-price elasticity assesses how demand for one good changes with price changes in another.
#17
What is income elasticity of demand?
A measure of the responsiveness of quantity demanded to changes in income
ExplanationIncome elasticity shows how demand changes with shifts in consumer income.