#1
What is the law of demand in economics?
As price increases, quantity demanded decreases
ExplanationInverse relationship between price and quantity demanded.
#2
Which economic system relies on market forces to allocate resources?
Capitalism
ExplanationMarket-driven allocation of goods and services.
#3
In the context of international trade, what is a trade surplus?
When a country exports more goods than it imports
ExplanationExcess of exports over imports in international trade.
#4
Which of the following is a characteristic of a perfectly competitive market?
Price taker behavior
ExplanationFirms in a perfectly competitive market accept market price as given.
#5
In the context of market equilibrium, what happens if there is excess demand?
Prices increase
ExplanationMarket forces push prices up to balance demand and supply.
#6
What is the primary function of a central bank in an economy?
Regulating interest rates
ExplanationControl of interest rates to influence money supply and inflation.
#7
What is the impact of an increase in the minimum wage on the labor market?
Decrease in both employment and wages
ExplanationPotential reduction in jobs due to increased labor costs.
#8
What is the role of the government in controlling externalities?
Regulating or taxing activities causing negative externalities
ExplanationIntervention to mitigate harmful effects of certain activities.
#9
What is the concept of elasticity of demand?
How much quantity demanded changes in response to a change in price
ExplanationMeasure of responsiveness of quantity demanded to price changes.
#10
What is the difference between a monopoly and an oligopoly?
Monopoly has only one seller, while oligopoly has a few sellers
ExplanationMarket structure with single or few sellers.
#11
What does the term 'price elasticity of supply' measure?
How much quantity supplied changes in response to a change in price
ExplanationResponsiveness of quantity supplied to price changes.
#12
What is the Phillips Curve in economics?
A curve showing the relationship between inflation and unemployment
ExplanationIllustrates inverse relationship between inflation and unemployment.
#13
What is the Tragedy of the Commons?
A situation where private individuals exploit shared resources to the detriment of the group
ExplanationOveruse of common resources leading to depletion.