#1
Which of the following is a fundamental concept in microeconomics?
Aggregate demand
Price elasticity of demand
Gross domestic product
Macroeconomic equilibrium
#2
In microeconomics, what does the law of demand state?
As price increases, demand increases
As price decreases, demand increases
As price increases, demand decreases
As price decreases, demand decreases
#3
Which market structure is characterized by a large number of firms, identical products, and free entry and exit?
Perfect competition
Monopolistic competition
Oligopoly
Monopoly
#4
What is the opportunity cost of a decision?
The actual cost incurred in making the decision
The next best alternative forgone as a result of making the decision
The total cost of all available alternatives
The cost of the resources used in implementing the decision
#5
Which of the following is a characteristic of a perfectly competitive market?
There are significant barriers to entry
Firms can easily differentiate their products
Firms have control over the market price
There are many buyers and sellers
#6
What is the law of supply in microeconomics?
As price decreases, supply decreases
As price increases, supply increases
As quantity demanded increases, supply increases
As quantity supplied increases, price decreases
#7
What is the primary focus of microeconomics?
Individual markets and industries
National economy as a whole
Government policies
Income distribution
#8
Which of the following is NOT a determinant of demand?
Price of related goods
Income of consumers
Price of the product
Government regulations
#9
What is the law of diminishing marginal utility?
As the quantity of a good consumed increases, the total utility derived from consuming it decreases
As the quantity of a good consumed increases, the total utility derived from consuming it increases
As the quantity of a good consumed decreases, the total utility derived from consuming it increases
As the quantity of a good consumed decreases, the total utility derived from consuming it decreases
#10
What does the production possibilities frontier (PPF) illustrate?
The maximum level of production an economy can achieve
The combination of goods and services that a country should produce
The trade-offs between two goods that an economy can produce with its given resources
The impact of government intervention on production decisions
#11
What is the difference between a normal good and an inferior good?
Normal goods are luxury items, while inferior goods are necessities
Normal goods have a positive income elasticity of demand, while inferior goods have a negative income elasticity of demand
Normal goods are purchased more as income increases, while inferior goods are purchased less as income increases
Normal goods have a negative cross-price elasticity of demand, while inferior goods have a positive cross-price elasticity of demand
#12
What is a price ceiling in economics?
A maximum price set by the government above which a good cannot be sold
A minimum price set by the government below which a good cannot be sold
A price set by the market at which supply equals demand
A price set by the government below the equilibrium price, leading to a shortage
#13
What is consumer surplus in microeconomics?
The difference between the total revenue and total cost for a firm
The difference between the price consumers are willing to pay and the price they actually pay
The additional utility gained from consuming one more unit of a good
The total satisfaction derived from consuming all units of a good
#14
What is the difference between explicit and implicit costs in economics?
Explicit costs are monetary costs, while implicit costs are opportunity costs
Explicit costs are opportunity costs, while implicit costs are monetary costs
Explicit costs are costs incurred in the short run, while implicit costs are incurred in the long run
Explicit costs are variable costs, while implicit costs are fixed costs
#15
What is the profit-maximizing rule for firms in perfect competition?
Produce until marginal cost equals average total cost
Produce until marginal cost equals marginal revenue
Produce until total revenue equals total cost
Produce until average revenue equals marginal cost
#16
What is the difference between accounting profit and economic profit?
Accounting profit includes explicit costs, while economic profit includes explicit and implicit costs
Accounting profit includes explicit and implicit costs, while economic profit includes only explicit costs
Accounting profit considers only revenue and expenses, while economic profit considers opportunity costs as well
Accounting profit is calculated based on historical data, while economic profit is projected based on future expectations
#17
What is the difference between a monopoly and a monopolistic competition?
A monopoly has many firms producing identical products, while monopolistic competition has a single firm producing a unique product
A monopoly has significant barriers to entry, while monopolistic competition has no barriers to entry
A monopoly has complete control over the market, while monopolistic competition has no control over the market
A monopoly produces at the lowest point of its average total cost curve, while monopolistic competition produces where marginal cost equals marginal revenue
#18
What is a subsidy in economics?
A tax imposed on imported goods
A payment made by the government to producers to encourage production of a good
A price floor set by the government to support the price of a good
A restriction on the quantity of a good that can be imported