#1
Which of the following is not a determinant of demand?
Price of the product
ExplanationPrice is a factor affecting quantity demanded, but not a determinant of demand.
#2
What does the law of demand state?
As the price of a good increases, quantity demanded decreases
ExplanationThe inverse relationship between price and quantity demanded.
#3
What does the term 'opportunity cost' refer to in economics?
The value of the next best alternative foregone
ExplanationOpportunity cost is the value of the best alternative sacrificed when making a choice.
#4
What is the law of diminishing marginal utility?
As consumption of a product increases, the marginal utility decreases
ExplanationThe declining additional satisfaction gained as more of a good is consumed.
#5
What is the difference between a fixed cost and a variable cost?
Fixed costs remain constant regardless of the level of production, while variable costs vary with the level of production
ExplanationFixed costs are constant, while variable costs change with production levels.
#6
What is the concept of utility in economics?
The total satisfaction or pleasure derived from consuming goods and services
ExplanationUtility is the overall satisfaction or pleasure gained from consuming goods and services.
#7
Which of the following is a characteristic of a perfectly competitive market?
Numerous buyers and sellers
ExplanationPerfect competition involves many buyers and sellers with identical products.
#8
What is the concept of elasticity in economics?
The measure of how much quantity demanded responds to a change in price
ExplanationElasticity assesses responsiveness of quantity demanded to price changes.
#9
What is the difference between microeconomics and macroeconomics?
Microeconomics studies individual markets, while macroeconomics studies the economy as a whole
ExplanationMicroeconomics focuses on specific markets, while macroeconomics examines the entire economy.
#10
What is the 'invisible hand' concept in economics?
The idea that individuals pursuing their self-interest can benefit society as a whole
ExplanationIndividual self-interest can unintentionally contribute to overall societal well-being.
#11
Which of the following is an example of a regressive tax?
Sales tax
ExplanationA regressive tax disproportionately affects lower-income individuals, like a sales tax.
#12
What is the difference between a normal good and an inferior good?
Normal goods have a positive income elasticity of demand, while inferior goods have a negative income elasticity of demand
ExplanationNormal goods' demand rises with income, while inferior goods' demand falls.
#13
What is the formula for calculating price elasticity of demand?
Percentage change in price / Percentage change in quantity demanded
ExplanationA mathematical expression for measuring price elasticity of demand.
#14
What is the Phillips curve in economics?
A graphical representation of the relationship between inflation and unemployment
ExplanationShows the inverse relationship between inflation and unemployment rates.
#15
What is the difference between monetary policy and fiscal policy?
Monetary policy involves changes in the money supply and interest rates, while fiscal policy involves changes in government spending and taxation
ExplanationMonetary policy controls money supply and interest rates; fiscal policy manages government spending and taxation.
#16
What is the difference between a recession and a depression?
A recession is a short-term economic downturn, while a depression is a long-term economic downturn
ExplanationRecession is a temporary economic decline, depression is a prolonged downturn.