#1
Which of the following is a characteristic of a perfectly competitive market?
Many buyers and sellers
ExplanationPerfectly competitive markets have a large number of buyers and sellers, promoting free competition.
#2
Which of the following is NOT a factor of production?
Money
ExplanationMoney is not considered a factor of production; it is a medium of exchange.
#3
What does the term 'opportunity cost' represent in economics?
The cost of forgoing the next best alternative when making a decision
ExplanationOpportunity cost is the value of the best alternative foregone when a decision is made.
#4
In a production possibilities curve (PPC), what does a point inside the curve indicate?
Underutilization of resources
ExplanationA point inside the PPC indicates that resources are not fully utilized, resulting in inefficiency.
#5
What is the law of demand in economics?
As the price of a good or service increases, the quantity demanded decreases, ceteris paribus
ExplanationThe law of demand states that, all else being equal, as the price of a good rises, the quantity demanded decreases.
#6
In economics, what does the term 'elasticity' refer to?
The responsiveness of quantity demanded to a change in price
ExplanationElasticity measures how much the quantity demanded changes in response to a change in price.
#7
Which of the following statements is true regarding the law of diminishing marginal returns?
As more of a variable input is added to fixed inputs, marginal product eventually declines
ExplanationThe law of diminishing marginal returns states that adding more of a variable input to fixed inputs will lead to a decline in marginal product.
#8
What is the primary function of a resource market?
To facilitate the exchange of resources, such as labor and capital, between households and firms
ExplanationResource markets enable the exchange of resources like labor and capital between households and firms.
#9
Which of the following is a characteristic of a monopoly market structure?
Single seller with significant market power
ExplanationMonopoly market structures feature a single seller with substantial control over the market.
#10
What is the 'invisible hand' concept in economics associated with?
Self-interested individuals unintentionally promoting the public good through their actions
ExplanationThe invisible hand concept suggests that individuals pursuing self-interest inadvertently contribute to the overall public good.