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1. What is the law of demand in economics?
As prices increase, quantity demanded decreases
ExplanationHigher prices lead to a decrease in the quantity of a good or service demanded.
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8. What is the concept of 'utility' in economics?
The satisfaction or pleasure derived from consuming a good or service
ExplanationMeasure of satisfaction or pleasure from consuming.
#3
15. What is the concept of 'perfect competition' in market structure?
A market with many sellers offering identical products
ExplanationMarket structure with numerous sellers and homogeneous products.
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18. What is the concept of 'ceteris paribus' in economic analysis?
The assumption that all other relevant factors remain constant except the one being studied
ExplanationIsolating the impact of one variable by holding others constant in analysis.
#5
2. According to the opportunity cost principle, what is the cost of a decision?
The implicit cost
ExplanationThe true cost of a decision, accounting for foregone alternatives.
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3. What is the formula for calculating GDP (Gross Domestic Product)?
Consumption + Investment + Government Spending + Net Exports
ExplanationGDP measures the total economic output of a country.
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6. What is the Tragedy of the Commons in economics?
A situation where resources are overused and depleted due to lack of property rights
ExplanationShared resources exploited due to lack of ownership.
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7. According to the law of diminishing marginal returns, what happens as additional units of a variable input are added to a fixed input?
Total output increases at a decreasing rate
ExplanationDiminishing returns as more variable input is added to a fixed input.
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11. What is the concept of 'comparative advantage' in international trade?
A country's ability to produce a good at a lower opportunity cost than another country
ExplanationEfficiency in producing a good with a lower opportunity cost.
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4. What does the term 'elasticity of demand' measure?
The responsiveness of quantity demanded to changes in price
ExplanationHow sensitive the quantity demanded is to price changes.
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5. In game theory, what is a dominant strategy?
A strategy that is always the best regardless of the opponent's strategy
ExplanationOptimal strategy regardless of opponents' choices.
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9. What is the difference between a progressive tax and a regressive tax?
Progressive tax takes a higher percentage from high-income individuals, while regressive tax takes a higher percentage from low-income individuals
ExplanationTaxation based on income level, with different impacts on high and low earners.
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10. What is the difference between monetary policy and fiscal policy?
Monetary policy involves changes in the money supply, while fiscal policy involves changes in government spending and taxation
ExplanationTools to influence economic conditions: money supply vs. government actions.
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13. What is the concept of 'inflation targeting' in monetary policy?
A strategy where the central bank aims to achieve a specific inflation rate as its primary objective
ExplanationCentral bank's goal to maintain a specific inflation rate.