#1
Which of the following is a characteristic of perfect competition?
Many buyers and sellers
ExplanationLarge number of firms with no market power.
#2
Which economic concept refers to the total market value of all final goods and services produced within a country in a given period?
Gross Domestic Product (GDP)
ExplanationMeasure of a country's economic output.
#3
What is the term used to describe a situation where a single firm controls the entire supply of a particular product or service?
Monopoly
ExplanationOne seller with significant market power.
#4
Which of the following is a characteristic of a command economy?
Central planning by the government
ExplanationState directs economic activity and resource allocation.
#5
Which of the following is a characteristic of a market economy?
Private ownership of resources
ExplanationDecisions made by individuals and businesses, not the government.
#6
What is the main purpose of a cartel in an industry?
To increase prices by reducing output
ExplanationTo limit competition and control prices.
#7
What is a 'natural monopoly'?
A monopoly that arises from economies of scale, making it more efficient to have one firm providing the good or service
ExplanationOccurs when one firm can produce at lower costs than multiple firms.
#8
Which of the following is NOT a characteristic of monopolistic competition?
Barriers to entry
ExplanationMany firms with differentiated products, but easy entry and exit.
#9
What is the term for a situation where one party in a transaction has more information than the other, giving them an advantage in the deal?
Asymmetric information
ExplanationInformation imbalance leading to market inefficiency.
#10
What is the term used to describe a situation where there is a sudden, widespread increase in prices, causing a decline in purchasing power?
Inflation
ExplanationGeneral increase in prices.
#11
Which economic theory argues that individuals, firms, and institutions act in their own self-interest and make decisions to maximize their own welfare?
Neoclassical economics
ExplanationFocuses on rational behavior and efficient allocation of resources.
#12
In economics, what does the term 'opportunity cost' refer to?
The value of the next best alternative that is forgone when a decision is made
ExplanationCost of the best alternative given up.
#13
According to the law of demand, what happens to quantity demanded when price increases, assuming all other factors remain constant?
Quantity demanded decreases
ExplanationInverse relationship between price and quantity demanded.
#14
Which of the following is NOT a determinant of supply?
Consumer preferences
ExplanationFactors affecting producers' ability and willingness to sell.
#15
Which of the following is an example of a regressive tax?
Sales tax
ExplanationTax rate decreases as the amount subject to taxation increases.