#1
What does the law of demand state?
As the price of a good increases, the quantity demanded decreases.
ExplanationHigher prices lead to lower demand.
#2
Which of the following is an example of a fixed cost?
Rent for factory space
ExplanationA cost that remains constant regardless of production levels.
#3
What is the opportunity cost of a decision?
The value of the next best alternative forgone
ExplanationThe value of what is given up to choose something else.
#4
In economics, what does 'ceteris paribus' mean?
All else being equal
ExplanationExamining the effect of one variable while holding others constant.
#5
What is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
ExplanationMeasure of responsiveness of demand to price changes.
#6
Which of the following is a characteristic of a monopolistic competition market structure?
Product differentiation
ExplanationFirms selling similar but differentiated products.
#7
What is the difference between a progressive tax and a regressive tax?
A progressive tax takes a larger percentage of income from high-income earners, while a regressive tax takes a larger percentage from low-income earners.
ExplanationTaxation based on income level, affecting different income groups differently.
#8
Which of the following is not a characteristic of a perfectly competitive market?
Barriers to entry
ExplanationA market structure with easy entry and exit for firms.
#9
What is the role of the central bank in a country's economy?
Control inflation through monetary policy
ExplanationRegulation of money supply and interest rates.
#10
What is the difference between microeconomics and macroeconomics?
Microeconomics focuses on individual markets, while macroeconomics studies the economy as a whole.
ExplanationStudy of small-scale versus large-scale economic factors.
#11
What is the difference between nominal GDP and real GDP?
Real GDP is adjusted for inflation, while nominal GDP is not.
ExplanationGDP measured with versus without inflation adjustments.
#12
What is fiscal policy?
The use of government spending and taxation to influence the economy.
ExplanationGovernment's use of revenue and spending to stimulate or stabilize the economy.