#1
Which of the following is a characteristic of a perfectly competitive market?
Many buyers and sellers
ExplanationLarge number of buyers and sellers with no individual market power.
#2
What does the law of demand state?
As price decreases, quantity demanded increases
ExplanationInverse relationship between price and quantity demanded.
#3
What is a characteristic of a monopolistic competition market structure?
Product differentiation
ExplanationSelling products that are differentiated from competitors.
#4
What is the primary goal of a firm operating in a market economy?
Maximizing profits
ExplanationAim to achieve highest possible earnings.
#5
What is the formula for calculating total revenue?
Price multiplied by quantity sold
ExplanationIncome from selling a given quantity of a product.
#6
Which of the following is NOT a factor of production?
Money
ExplanationFinancial capital used to acquire factors of production.
#7
What is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded divided by percentage change in price
ExplanationMeasure of responsiveness of quantity demanded to price changes.
#8
What is the opportunity cost of a decision?
The value of the next best alternative forgone
ExplanationCost of choosing one option over another.
#9
Which of the following is an example of a positive externality?
A beekeeper's bees pollinating neighboring farmers' crops
ExplanationBeneficial impact on third parties not directly involved in a transaction.
#10
What is the role of a production possibility frontier (PPF) in economics?
To illustrate the trade-offs between two goods that can be produced efficiently
ExplanationGraphical representation of maximum output combinations.
#11
In the context of managerial decision making, what is marginal analysis?
Evaluating the additional benefit of one more unit of an activity
ExplanationAssessment of incremental impact of a decision.
#12
What does a perfectly elastic demand curve look like?
A horizontal line
ExplanationDemand curve with infinite elasticity.
#13
What is the formula for calculating marginal cost?
Change in total cost divided by change in output
ExplanationIncremental cost of producing one more unit of output.
#14
Which of the following is an example of a perfectly elastic supply curve?
A vertical line
ExplanationSupply curve where quantity supplied remains constant.
#15
What is the main purpose of using indifference curves in consumer theory?
To show consumer preferences
ExplanationGraphical tool to represent consumer choices.