#1
What is the law of demand?
As price increases, quantity demanded decreases
ExplanationInverse relationship between price and quantity demanded
#2
Which of the following is not a factor of production?
Profit
ExplanationProfit is a result of production, not a factor of it
#3
Which of the following is not a determinant of supply?
Price of substitutes
ExplanationFactors influencing supply: substitutes aren't directly related
#4
What is the law of supply?
As price increases, quantity supplied increases
ExplanationDirect relationship between price and quantity supplied
#5
What is the concept of elasticity?
The responsiveness of quantity demanded to a change in price
ExplanationSensitivity of demand to price changes
#6
Which of the following is not a characteristic of a perfectly competitive market?
Barriers to entry
ExplanationNo barriers to entry in a perfectly competitive market
#7
What is the formula for price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
ExplanationMeasure of responsiveness of quantity demanded to price changes
#8
What is the 'opportunity cost'?
The value of the next best alternative forgone
ExplanationCost of foregoing the next best alternative
#9
What is the law of diminishing marginal utility?
As consumption increases, marginal utility decreases
ExplanationDecrease in satisfaction from consuming additional units
#10
What is the difference between explicit and implicit costs?
Explicit costs are monetary, while implicit costs are not
ExplanationMonetary vs. non-monetary costs
#11
What does the production possibility frontier represent?
The maximum output combination achievable given limited resources
ExplanationBoundary of attainable production levels
#12
Which market structure is characterized by one firm dominating the market?
Monopoly
ExplanationSingle firm controls the market
#13
What is the main determinant of elasticity of supply?
Time horizon
ExplanationExtent to which suppliers can adjust to price changes over time
#14
What is the Coase theorem?
The principle that externalities can be efficiently resolved through bargaining between affected parties
ExplanationSolution to externalities via negotiation
#15
What is the difference between explicit and implicit collusion?
Explicit collusion involves formal agreements, while implicit collusion involves tacit understandings
ExplanationFormal vs. informal coordination among competitors