#1
What does market equilibrium refer to?
A situation where quantity demanded equals quantity supplied
ExplanationBalance between demand and supply
#2
In a market, what tends to happen if the price is below the equilibrium?
Excess demand
ExplanationShortage due to high demand
#3
What does the concept of price elasticity of demand measure?
The responsiveness of quantity demanded to changes in price
ExplanationDemand sensitivity to price
#4
In which scenario is demand considered to be inelastic?
When the percentage change in quantity demanded is less than the percentage change in price
ExplanationDemand less affected by price changes
#5
What is the relationship between marginal cost and marginal revenue in perfect competition at the profit-maximizing level of output?
Marginal cost equals marginal revenue
ExplanationCost matches revenue
#6
What effect does an increase in production costs have on the supply curve?
Shifts the supply curve to the left
ExplanationReduction in supply
#7
What is the primary factor that drives the market towards equilibrium?
Price adjustments
ExplanationPrice changes bring balance
#8
How do shifts in demand and supply affect market equilibrium?
They cause changes in equilibrium price and quantity
ExplanationAlterations in price and quantity
#9
What does a price ceiling set below the equilibrium price lead to in a market?
Shortage
ExplanationShortfall in supply
#10
What is the primary consequence of a price floor set above the equilibrium price?
Decrease in quantity demanded
ExplanationReduction in demand
#11
What is a characteristic of a perfectly competitive market?
Numerous buyers and sellers
ExplanationAbundance of both buyers and sellers
#12
In a monopolistic market, what typically characterizes the demand curve?
It is downward-sloping
ExplanationDemand decreases as price increases
#13
What is a characteristic of a stable market equilibrium?
Low responsiveness to changes in supply and demand
ExplanationResistance to fluctuations
#14
In a market with perfectly elastic supply, how does the market respond to an increase in demand?
Price remains constant
ExplanationNo change in price despite demand increase
#15
What is the main reason behind the existence of economies of scale?
Decrease in average total costs
ExplanationCost efficiency in large-scale production
#16
What is the main characteristic of a natural monopoly?
High barriers to entry
ExplanationLimited competition due to barriers
#17
What is a characteristic of a perfectly inelastic demand curve?
It is vertical
ExplanationDemand does not change with price