#1
Which of the following best defines the law of demand?
As the price of a good increases, the quantity demanded decreases.
ExplanationInverse relationship between price and quantity demanded.
#2
What is the concept of opportunity cost?
The value of the best alternative foregone when a choice is made.
ExplanationCost of the next best alternative forgone.
#3
What is the law of diminishing marginal utility?
As consumption of a good increases, the additional satisfaction from consuming one more unit decreases.
ExplanationDecrease in additional satisfaction with more consumption.
#4
What is the difference between a normal good and an inferior good?
Normal goods have an income elasticity of demand greater than zero, while inferior goods have an income elasticity of demand less than zero.
ExplanationNormal goods' demand increases with income, inferior goods' demand decreases.
#5
What is the law of supply?
As the price of a good increases, the quantity supplied increases.
ExplanationDirect relationship between price and quantity supplied.
#6
What does elasticity of demand measure?
The responsiveness of quantity demanded to a change in price.
ExplanationSensitivity of quantity demanded to price changes.
#7
In economics, what does the term 'complementary goods' refer to?
Goods that are used together, so when the price of one increases, the demand for the other decreases.
ExplanationGoods consumed together, impacting demand when one's price changes.
#8
What is the income effect in economics?
The change in quantity demanded due to a change in consumer income.
ExplanationChange in demand due to changes in consumer income.
#9
Which of the following is a characteristic of a perfectly competitive market?
Firms have no control over the price of the product.
ExplanationPrice is set by market forces, firms are price takers.
#10
What does the term 'utility' refer to in economics?
The satisfaction or pleasure derived from consuming a good or service.
ExplanationSatisfaction or pleasure from consuming goods or services.
#11
Which of the following is an example of a normal good?
Public transportation during an economic boom.
ExplanationGoods whose demand increases with income growth.
#12
What does the term 'externality' refer to in economics?
The unintended consequence of an economic activity that affects third parties.
ExplanationImpact of economic activity on third parties.
#13
What is a factor that can shift the supply curve?
Changes in technology.
ExplanationTechnological advancements impacting supply.
#14
Which of the following is a characteristic of perfect price discrimination?
It allows the monopolist to capture all consumer surplus.
ExplanationMonopolist charges each consumer their maximum willingness to pay.
#15
What is the difference between explicit and implicit costs?
Explicit costs are monetary payments for resources, while implicit costs are the opportunity costs of using resources.
ExplanationExplicit costs are paid in money, implicit costs are opportunity costs.