#1
Which of the following is a characteristic of a perfectly competitive market?
Numerous buyers and sellers
ExplanationLarge number of buyers and sellers leads to minimal market control.
#2
What is the law of demand?
As price decreases, quantity demanded increases
ExplanationConsumers buy more of a good when its price decreases.
#3
What is the law of supply?
As price increases, quantity supplied increases
ExplanationProducers offer more of a good as its price rises.
#4
What does the law of diminishing marginal returns state?
As more units of a variable input are added to fixed inputs, eventually marginal product decreases
ExplanationIncreasing a variable input in production eventually yields less additional output.
#5
What is a characteristic of a monopolistic competition market structure?
Product differentiation
ExplanationFirms differentiate their products to gain market share and influence prices.
#6
In economics, what is the opportunity cost of a decision?
The value of the next best alternative foregone
ExplanationThe value of what you give up when choosing one option over another.
#7
Which of the following is a characteristic of a command economy?
Centralized planning by the government
ExplanationGovernment dictates production, distribution, and pricing.
#8
Which of the following is a characteristic of a mixed economy?
Private ownership of resources alongside government intervention
ExplanationCombination of private enterprise and government involvement.
#9
Which of the following is a characteristic of a traditional economy?
Economic activities based on custom and tradition
ExplanationEconomic decisions based on customs and beliefs.