#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 difference between a monopolistic competition market and an oligopoly market?
Monopolistic competition has many sellers with differentiated products, while oligopoly has few sellers with similar or identical products
ExplanationMonopolistic competition features differentiated products, while oligopoly has similar or identical products with few sellers.
#14
What does the term 'elasticity of supply' refer to in economics?
The measure of how much quantity supplied responds to a change in price
ExplanationElasticity of supply assesses responsiveness of quantity supplied to price changes.
#15
What is the difference between absolute advantage and comparative advantage?
Absolute advantage refers to the ability of a country to produce a good using fewer resources, while comparative advantage refers to the ability to produce a good at a lower opportunity cost
ExplanationAbsolute advantage focuses on efficiency; comparative advantage on opportunity cost.
#16
Which of the following is an example of a positive externality?
Education benefiting society
ExplanationPositive externality occurs when a third party benefits from an economic transaction.
#17
What is the difference between a subsidy and a tariff?
A subsidy reduces the price of imported goods, while a tariff increases the price of imported goods
ExplanationSubsidies lower domestic prices, tariffs raise prices on imported goods.
#18
What is the law of diminishing returns?
As the quantity of a variable input increases, the marginal product of that input decreases, assuming all other inputs are held constant
ExplanationIncreasing a variable input while holding others constant leads to declining marginal returns.
#19
What is the difference between a public good and a private good?
Public goods are non-excludable and non-rivalrous, while private goods are excludable and rivalrous
ExplanationPublic goods can't be excluded from consumption, and one person's consumption doesn't reduce availability for others; private goods are the opposite.
#20
What is the difference between a progressive tax and a proportional tax?
A progressive tax imposes a higher tax rate on higher incomes, while a proportional tax imposes the same tax rate on all incomes
ExplanationProgressive taxes increase with income; proportional taxes have a constant rate for all incomes.
#21
What is the difference between a trade surplus and a trade deficit?
A trade surplus occurs when a country exports more than it imports, while a trade deficit occurs when a country imports more than it exports
ExplanationSurplus is exporting more than importing; deficit is importing more than exporting.
#22
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.
#23
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.
#24
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.
#25
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.