#1
What is market equilibrium?
A state of balance where demand equals supply
ExplanationDemand matches supply.
#2
In the context of market equilibrium, what is elasticity of demand?
The responsiveness of quantity demanded to a change in price
ExplanationIt measures demand's sensitivity to price alterations.
#3
What is the price elasticity of supply?
The responsiveness of quantity supplied to a change in price
ExplanationSupply's sensitivity to price adjustments.
#4
What is the Laffer curve used to illustrate?
The relationship between tax rates and tax revenue
ExplanationTax rate's impact on tax revenue is depicted.
#5
What is the Law of Diminishing Marginal Returns?
As production increases, marginal returns decrease
ExplanationMarginal returns decline with increased production.
#6
Which of the following can shift the demand curve for a product?
Change in consumer income
ExplanationConsumer income alteration influences demand.
#7
What is the Law of Supply?
As price increases, quantity supplied increases
ExplanationSupply rises with price hike.
#8
What is a black market?
A market where illegal goods are traded
ExplanationIllegal goods trade underground.
#9
How does a decrease in the price of a substitute affect the demand for a product?
Increases the demand
ExplanationSubstitute price decline boosts demand.
#10
What is the Cobb-Douglas production function used to represent?
The relationship between input factors and output
ExplanationInput-output correlation is captured.
#11
If the government imposes a price ceiling below the equilibrium price, what is likely to happen?
Excess demand or a shortage
ExplanationPrice control leads to demand outstripping supply.
#12
What is a non-price determinant of supply?
Change in technology used in production
ExplanationTechnological advancements influence supply.
#13
What is the income effect in economics?
The change in quantity demanded due to a change in income
ExplanationQuantity demanded alteration due to income change.
#14
What is a Giffen good?
An inferior good with inelastic demand
ExplanationUnique case where demand rises despite price hike.
#15
What is the concept of consumer surplus?
The difference between what consumers are willing to pay and what they actually pay
ExplanationGap between consumer's willingness and actual payment.