#1
Which of the following is a characteristic of a perfectly competitive market?
Many buyers and sellers
ExplanationPerfect competition entails numerous buyers and sellers engaging in the market.
#2
What does the law of demand state?
As price increases, quantity demanded decreases
ExplanationThe law of demand indicates an inverse relationship between price and quantity demanded.
#3
Which of the following is a determinant of supply?
Technology
ExplanationTechnological advancements can significantly impact the supply of goods and services.
#4
In economics, what does the term 'elasticity' refer to?
The responsiveness of quantity demanded or quantity supplied to changes in price, income, or other factors
ExplanationElasticity measures how responsive quantity demanded or supplied is to changes in various factors.
#5
What is the formula for calculating total revenue?
Price × Quantity Demanded
ExplanationTotal revenue is obtained by multiplying the price per unit by the quantity of goods or services sold.
#6
What is the concept of opportunity cost?
The cost of choosing one alternative over another
ExplanationOpportunity cost refers to the value of the next best alternative forgone when a decision is made.
#7
Which of the following is a characteristic of a monopoly market?
A single seller with significant control over the market
ExplanationMonopoly involves a sole seller dominating the market, often with considerable influence.
#8
What is the central assumption of the production possibilities frontier (PPF)?
Resources are fixed and fully utilized
ExplanationThe PPF assumes fixed resources being optimally utilized in the economy.
#9
What is the difference between a change in quantity demanded and a change in demand?
Change in quantity demanded is a movement along the demand curve, while change in demand shifts the entire curve
ExplanationA change in quantity demanded relates to movements along the demand curve, while a change in demand shifts the entire curve due to non-price factors.
#10
What is the income effect of a price increase?
Consumers buy less of a good because it now costs more relative to their income
ExplanationThe income effect refers to the impact of a price change on consumers' purchasing power, leading to adjustments in their buying behavior.
#11
What is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded divided by percentage change in price
ExplanationPrice elasticity of demand quantifies the responsiveness of quantity demanded to changes in price.
#12
Which of the following is a characteristic of oligopoly market structure?
Few large firms dominating the market
ExplanationOligopoly is characterized by a market dominated by a small number of large firms.
#13
In a perfectly competitive market in the long run, what happens to economic profits?
Economic profits are zero
ExplanationIn the long run of perfect competition, economic profits tend towards zero due to free entry and exit of firms.
#14
What is the price elasticity of demand for a perfectly elastic demand curve?
Infinite
ExplanationThe price elasticity of demand for a perfectly elastic demand curve is infinite due to any quantity being demanded at a specific price.
#15
What is the formula for calculating marginal revenue (MR) in a perfectly competitive market?
Change in total revenue ÷ Change in quantity
ExplanationMarginal revenue in perfect competition is determined by dividing the change in total revenue by the change in quantity.