#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 is the concept of elasticity in economics?
The measure of responsiveness of quantity demanded to a change in price
ExplanationHow quantity demanded changes in response to price changes.
#5
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.
#6
What is a characteristic of a monopolistic competition market structure?
Product differentiation
ExplanationFirms differentiate their products to gain market share and influence prices.
#7
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.
#8
Which of the following is a characteristic of a pure monopoly?
A single seller with significant control over price
ExplanationOne seller dominates the market and sets prices.
#9
What is the formula for calculating total revenue?
Price × Quantity Demanded
ExplanationTotal income from selling a given quantity of goods.
#10
What is the difference between explicit costs and implicit costs?
Explicit costs are incurred and require a direct monetary payment, while implicit costs represent opportunity costs
ExplanationExplicit costs involve actual payments, implicit costs are opportunity costs.
#11
Which of the following is a characteristic of an oligopoly market structure?
Few large firms dominating the market
ExplanationMarket controlled by a small number of firms.
#12
What is the formula for calculating marginal cost?
Change in Total Cost / Change in Quantity
ExplanationAdditional cost of producing one more unit of a good.
#13
What is the difference between accounting profit and economic profit?
Accounting profit includes explicit costs only, while economic profit includes both explicit and implicit costs
ExplanationAccounting profit considers only monetary costs, economic profit considers opportunity costs as well.
#14
Which of the following is a characteristic of a monopolistic competition market structure?
Product differentiation
ExplanationFirms differentiate products to distinguish themselves in the market.
#15
Which of the following is a characteristic of a command economy?
Centralized planning by the government
ExplanationGovernment dictates production, distribution, and pricing.
#16
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.
#17
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.