#1
What is the primary focus of microeconomics?
Individual economic units and their behavior
ExplanationFocus on individual economic agents and their actions.
#2
What is the opportunity cost in economics?
The value of the best forgone alternative
ExplanationCost of choosing one option over the next best alternative.
#3
What is the difference between a normal good and an inferior good?
Normal goods are purchased more as income increases, while inferior goods are purchased less as income increases
ExplanationConsumer behavior regarding goods and income changes.
#4
What is the difference between a positive economic statement and a normative economic statement?
Positive statements are based on facts and data, while normative statements involve value judgments and opinions
ExplanationObjective observations versus subjective opinions.
#5
In microeconomics, what is the concept of consumer surplus?
The difference between the highest price a consumer is willing to pay and the actual price paid
ExplanationExcess benefit consumers receive from paying less than they were willing to.
#6
Which of the following is an example of a microeconomic decision?
Household consumption choices
ExplanationDecisions made by households regarding consumption.
#7
What does the law of demand state?
As prices decrease, demand decreases
ExplanationInverse relationship between price and demand.
#8
Which market structure is characterized by a large number of sellers, identical products, and easy entry and exit?
Perfect competition
ExplanationMarket with numerous buyers and sellers, homogeneous products, and free entry and exit.
#9
What is the law of diminishing marginal returns?
As input increases, the marginal product decreases
ExplanationDecrease in additional output per unit increase in input.
#10
What is the production possibility frontier (PPF) in economics?
A graph illustrating the maximum combinations of two goods that can be produced with available resources
ExplanationGraph showing maximum output given limited resources.
#11
What is the formula for calculating elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
ExplanationMeasure of responsiveness of demand to price changes.
#12
In microeconomics, what is the concept of utility?
The satisfaction or pleasure derived from consuming a good or service
ExplanationMeasure of satisfaction gained from consuming goods or services.
#13
What is the difference between explicit and implicit costs?
Explicit costs are monetary, while implicit costs are opportunity costs
ExplanationMonetary expenses versus foregone alternatives.
#14
What is the role of a price ceiling in a market?
To prevent prices from falling below a certain level
ExplanationLimit imposed on how high a price can be charged.
#15
What is the purpose of a production function in economics?
To illustrate the relationship between inputs and outputs in the production process
ExplanationFunction showing inputs and outputs in production.