#1
Which of the following is a characteristic of a perfectly competitive market?
Many buyers and many sellers
ExplanationLarge number of buyers and sellers
#2
In economics, what does the term 'opportunity cost' refer to?
The highest-valued alternative that must be sacrificed to engage in an activity
ExplanationThe best alternative foregone
#3
What is the main difference between short-run and long-run production decisions?
In the short run, some inputs are fixed; in the long run, all inputs are variable
ExplanationVariable inputs in long run, fixed in short run
#4
In economics, what is the 'short run'?
A period of time during which at least one input is fixed
ExplanationFixed inputs within a time period
#5
What does the term 'fixed costs' refer to in economics?
Costs that remain constant regardless of the quantity of output produced
ExplanationCosts unaffected by output quantity
#6
Which of the following is NOT a factor of production?
Demand
ExplanationNot a factor in production
#7
What does the law of diminishing marginal returns state?
As more units of a variable input are added to fixed inputs, the additional output eventually decreases
ExplanationOutput increase slows with more variable input
#8
Which of the following is a characteristic of monopolistic competition?
Product differentiation
ExplanationProducts are distinct from competitors
#9
What is the formula for calculating total revenue (TR)?
TR = Price × Quantity
ExplanationPrice multiplied by Quantity
#10
Which of the following statements best describes the concept of economies of scope?
It refers to the ability of a firm to produce multiple products at a lower cost than if each product were produced separately
ExplanationLower cost in producing multiple products together
#11
What is the relationship between economies of scale and long-run average cost?
Economies of scale occur when long-run average cost decreases as output increases
ExplanationCost decreases with increased output
#12
In the long run, which of the following statements is true for a perfectly competitive firm that experiences economic losses?
The firm will exit the market
ExplanationFirm exits due to losses
#13
What is the relationship between marginal cost (MC) and average variable cost (AVC) when AVC is at its minimum point?
MC = AVC
ExplanationMarginal cost equals average variable cost
#14
Which of the following is NOT a characteristic of perfect competition?
Barriers to entry
ExplanationNo barriers for market entry
#15
Which of the following statements best describes a perfectly elastic demand curve?
It is a horizontal line parallel to the quantity axis
ExplanationDemand unaffected by price changes