#1
What is the law of demand?
As the price decreases, the quantity demanded increases.
ExplanationInverse relationship between price and quantity demanded.
#2
Which of the following is a characteristic of perfect competition?
Many buyers and many sellers
ExplanationNumerous buyers and sellers with homogeneous products.
#3
What is the formula for calculating total revenue?
Price × Quantity
ExplanationPrice of a good multiplied by the quantity sold.
#4
What does the term 'elasticity of demand' measure?
The responsiveness of quantity demanded to a change in price
ExplanationDegree of responsiveness of quantity demanded to price changes.
#5
What is the formula for calculating marginal cost?
Change in Total Cost / Change in Quantity
ExplanationRatio of change in total cost to change in quantity.
#6
In economics, what does the term 'opportunity cost' refer to?
The cost of an opportunity that is not chosen
ExplanationValue of the next best alternative forgone.
#7
Which of the following is NOT a characteristic of monopolistic competition?
Price taker
ExplanationFirms can influence market price.
#8
Which market structure is characterized by a few interdependent firms?
Oligopoly
ExplanationMarket with a small number of large firms.
#9
What is the relationship between marginal cost (MC) and marginal revenue (MR) for profit maximization?
MC = MR
ExplanationMC equals MR at the profit-maximizing output.
#10
What is the difference between economic profit and accounting profit?
Economic profit includes implicit costs, while accounting profit does not.
ExplanationAccounting profit minus implicit costs.
#11
Under what conditions will a perfectly competitive firm shut down in the short run?
When total revenue is less than variable cost
ExplanationTotal revenue insufficient to cover variable costs.
#12
In economics, what is the role of the production function?
To describe the relationship between inputs and outputs
ExplanationDefines how inputs translate into outputs.