#1
Which economic model assumes that consumers act rationally to maximize their utility?
Neoclassical Economics
ExplanationAssumes rational consumer behavior for utility maximization.
#2
What does the 'law of demand' state?
As prices increase, quantity demanded decreases.
ExplanationPrice increase leads to decreased demand.
#3
What does the term 'ceteris paribus' mean in economics?
All other factors remaining constant.
ExplanationAssumes all other variables remain unchanged.
#4
Which of the following is NOT a characteristic of a monopolistic competition market structure?
Price taker
ExplanationNot being a price taker.
#5
Which economic concept refers to the additional cost incurred by producing one more unit of a good or service?
Marginal Cost
ExplanationCost of producing one more unit.
#6
What does the term 'elasticity' measure in economics?
The responsiveness of quantity demanded to changes in price.
ExplanationMeasures demand change relative to price change.
#7
Which economic model suggests that government intervention in the economy is necessary to achieve full employment and stabilize economic fluctuations?
Keynesian Economics
ExplanationAdvocates government intervention for full employment and stability.
#8
What is the 'Phillips Curve' relationship?
Inverse relationship between inflation and unemployment
ExplanationShows inverse relation between inflation and unemployment.
#9
What is the primary assumption of the Rational Expectations Theory?
Expectations of economic agents are formed based on all available information.
ExplanationAgents form expectations based on all available data.
#10
What is the primary focus of Game Theory in economics?
Analyzing strategic interactions between rational decision-makers
ExplanationAnalyzes strategic interactions of rational actors.
#11
What is the main idea behind the Tragedy of the Commons?
Individuals tend to overuse and deplete commonly owned resources.
ExplanationCommon resources depletion due to overuse.
#12
What is the primary assumption of the Perfect Competition model?
There are many buyers and many sellers in the market.
ExplanationAssumes many buyers and sellers.
#13
According to the Efficient Market Hypothesis, what happens in an efficient market?
Stock prices reflect all available information.
ExplanationStock prices reflect all available data.
#14
In the Solow Growth Model, what does the steady state represent?
A state of constant capital per worker
ExplanationState of unchanging capital per worker.
#15
What does the 'Laffer Curve' depict?
The relationship between tax rates and government revenue
ExplanationIllustrates tax rate and revenue correlation.
#16
What is the main objective of the Cobb-Douglas production function?
To describe the relationship between inputs and outputs in production.
ExplanationDescribes input-output relationship in production.
#17
What is the primary assumption of the Real Business Cycle theory?
Business cycles are caused by exogenous shocks to technology or productivity.
ExplanationBusiness cycle origins in external shocks.
#18
What is the primary assumption of the Ricardian Equivalence theorem?
Government deficits do not affect consumption decisions.
ExplanationGovernment deficits have no impact on consumption.