#1
Which of the following is a fundamental concept in microeconomics?
Price elasticity of demand
ExplanationMeasures responsiveness of quantity demanded to changes in price.
#2
In microeconomics, what does the law of demand state?
As price decreases, demand decreases
ExplanationInverse relationship between price and demand.
#3
Which market structure is characterized by a large number of firms, identical products, and free entry and exit?
Perfect competition
ExplanationIdeal market scenario.
#4
What is the opportunity cost of a decision?
The next best alternative forgone as a result of making the decision
ExplanationCost of choosing one alternative over another.
#5
Which of the following is a characteristic of a perfectly competitive market?
There are many buyers and sellers
ExplanationMarket structure feature.
#6
What is the law of supply in microeconomics?
As price increases, supply increases
ExplanationPositive relationship between price and supply.
#7
What is the primary focus of microeconomics?
Individual markets and industries
ExplanationStudies behavior of individual economic units.
#8
Which of the following is NOT a determinant of demand?
Government regulations
ExplanationExternal factors affecting demand.
#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
ExplanationDecrease in additional satisfaction.
#10
What does the production possibilities frontier (PPF) illustrate?
The trade-offs between two goods that an economy can produce with its given resources
ExplanationOpportunity cost of production.
#11
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
ExplanationIncome elasticity of demand.
#12
What is a price ceiling in economics?
A price set by the government below the equilibrium price, leading to a shortage
ExplanationGovernment intervention in pricing.
#13
What is consumer surplus in microeconomics?
The difference between the price consumers are willing to pay and the price they actually pay
ExplanationMeasure of consumer benefit.
#14
What is the difference between explicit and implicit costs in economics?
Explicit costs are monetary costs, while implicit costs are opportunity costs
ExplanationMonetary vs. forgone alternative costs.
#15
What is the profit-maximizing rule for firms in perfect competition?
Produce until marginal cost equals marginal revenue
ExplanationOptimizing profit by balancing costs and revenue.
#16
What is the difference between accounting profit and economic profit?
Accounting profit includes explicit costs, while economic profit includes explicit and implicit costs
ExplanationProfit calculation methods.
#17
What is the difference between a monopoly and a monopolistic competition?
A monopoly has significant barriers to entry, while monopolistic competition has no barriers to entry
ExplanationMarket structure characteristics.
#18
What is a subsidy in economics?
A payment made by the government to producers to encourage production of a good
ExplanationGovernment financial support for producers.