#1
In economics, what is market equilibrium?
A situation where demand exceeds supply
A situation where supply exceeds demand
A situation where quantity demanded equals quantity supplied
A situation where price remains constant
#2
What happens to price and quantity when there is a shortage in the market?
Price increases, quantity decreases
Price decreases, quantity decreases
Price decreases, quantity increases
Price increases, quantity increases
#3
What is consumer surplus?
The difference between the maximum price a consumer is willing to pay and the market price
The difference between the market price and the minimum price a consumer is willing to pay
The difference between quantity demanded and quantity supplied
The difference between producer surplus and total surplus
#4
What is the main assumption of the law of demand?
Income remains constant
Prices remain constant
Tastes and preferences remain constant
There are no substitutes for the good
#5
What does the PPF (Production Possibilities Frontier) illustrate?
The combination of goods and services that can be produced with limited resources
The equilibrium price and quantity of a good
The demand curve for a product
The distribution of income in a society
#6
What is the main assumption of the law of supply?
Consumers have perfect information
The cost of production remains constant
Technology remains constant
Price remains constant
#7
What is the effect of a price floor in a market?
It creates a surplus
It creates a shortage
It leads to equilibrium
It increases competition
#8
How does an increase in income affect the demand curve?
Shifts the demand curve left
Shifts the demand curve right
Moves along the demand curve
Does not affect the demand curve
#9
What is the primary goal of a price ceiling?
To create a surplus
To eliminate competition
To prevent prices from rising above a certain level
To increase consumer demand
#10
What does the elasticity of demand measure?
How responsive quantity demanded is to changes in price
How responsive quantity supplied is to changes in price
How responsive price is to changes in quantity demanded
How responsive price is to changes in quantity supplied
#11
What is the formula for price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
Percentage change in price / Percentage change in quantity demanded
Change in quantity demanded / Change in price
Change in price / Change in quantity demanded
#12
What is the concept of utility in economics?
The total satisfaction received from consuming a good or service
The total cost of producing a good or service
The total revenue generated from selling a good or service
The total profit earned from selling a good or service
#13
What is the Laffer curve used to analyze?
Tax revenue and tax rates
Market equilibrium
Consumer surplus
Income inequality
#14
What does a perfectly elastic demand curve look like?
Vertical line
Horizontal line
Upward-sloping line
Downward-sloping line
#15
What does the deadweight loss represent in a market?
The loss in consumer surplus
The loss in producer surplus
The total loss in economic welfare
The loss in government revenue
#16
What does a subsidy do to the market equilibrium?
Increases price and quantity
Decreases price and quantity
Increases price, decreases quantity
Decreases price, increases quantity
#17
What is the difference between a movement along the demand curve and a shift of the demand curve?
A movement is caused by changes in price, while a shift is caused by changes in factors other than price
A movement is caused by changes in income, while a shift is caused by changes in price
A movement is caused by changes in quantity demanded, while a shift is caused by changes in quantity supplied
A movement is caused by changes in quantity supplied, while a shift is caused by changes in quantity demanded