#1
Which of the following is a characteristic of a perfectly competitive market?
Many buyers and many sellers
Few buyers and few sellers
One buyer and many sellers
One seller and many buyers
#2
What is the equilibrium price?
The price at which quantity demanded equals quantity supplied
The price at which quantity demanded exceeds quantity supplied
The price at which quantity supplied exceeds quantity demanded
The price at which demand curve intersects the y-axis
#3
What is the primary goal of a firm operating in a perfectly competitive market?
Maximize profit
Maximize market share
Minimize production costs
Set the highest possible price
#4
Which of the following is a characteristic of a monopolistic competition?
Many buyers and many sellers
Few buyers and few sellers
One buyer and many sellers
One seller and many buyers
#5
What is the role of government in regulating monopolies?
To encourage monopoly formation
To prevent monopolies from forming
To set prices for monopolies
To provide subsidies to monopolies
#6
Which of the following is NOT a determinant of supply?
Input prices
Technology
Consumer preferences
Number of firms in the market
#7
Which factor does NOT cause a shift in the demand curve?
Change in consumer income
Change in the price of substitutes
Change in the price of the good
Change in the cost of production
#8
What is the effect of a price floor in a market?
It creates excess demand
It creates excess supply
It leads to a surplus of the good
It leads to a shortage of the good
#9
What is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
Percentage change in price / Percentage change in quantity demanded
Change in quantity demanded / Change in price
Change in price / Change in quantity demanded
#10
How does an increase in consumer income affect the demand for normal goods?
Increase in demand
Decrease in demand
No effect on demand
Shifts the demand curve to the left
#11
What is the law of diminishing marginal returns?
As the quantity of a variable input increases, the marginal product of that input increases
As the quantity of a variable input increases, the marginal product of that input decreases
As the quantity of a variable input decreases, the marginal product of that input increases
As the quantity of a variable input decreases, the marginal product of that input decreases
#12
Which of the following is an example of a positive externality?
Pollution
Education
Traffic congestion
Noise pollution
#13
In a monopolistic competition, firms compete by:
Selling identical products
Selling differentiated products
Colluding to fix prices
Acting as price takers
#14
What is a characteristic of a natural monopoly?
Many firms producing identical products
Few firms producing differentiated products
Many firms producing differentiated products
One firm producing at lower average costs than multiple firms
#15
What is the effect of a subsidy on the equilibrium price and quantity in a market?
Increases both price and quantity
Decreases both price and quantity
Increases price but decreases quantity
Decreases price but increases quantity
#16
What is the 'invisible hand' concept in economics?
Government control over the economy
Consumer preferences dictating market outcomes
Market forces leading to efficient allocation of resources
The role of corporations in shaping economic policies
#17
What is the concept of deadweight loss in economics?
The loss in consumer surplus due to a tax or regulation
The loss in producer surplus due to a tax or regulation
The overall loss in economic welfare due to market inefficiency
The loss in government revenue due to market inefficiency