#1
Which of the following is a characteristic of a perfectly competitive market?
Many buyers and many sellers
ExplanationPerfect competition involves numerous buyers and sellers.
#2
What happens to consumer surplus when the price of a good decreases?
It increases
ExplanationConsumer surplus expands as prices decrease.
#3
Which of the following is a characteristic of a monopolistically competitive market?
Product differentiation
ExplanationMonopolistic competition entails product diversity among sellers.
#4
What is the primary goal of antitrust laws?
To protect consumers from unfair business practices
ExplanationAntitrust laws aim to safeguard consumers from unjust business tactics.
#5
What is economic efficiency?
The allocation of resources that minimizes deadweight loss
ExplanationEconomic efficiency involves resource allocation to minimize deadweight loss.
#6
Which of the following is NOT a factor that can lead to market failure?
Perfect information
ExplanationPerfect information doesn't contribute to market failure.
#7
What is the formula for calculating price elasticity of demand?
Percentage change in price / Percentage change in quantity demanded
ExplanationPrice elasticity of demand is calculated as the percentage change in price divided by the percentage change in quantity demanded.
#8
In a perfectly competitive market, what happens if a firm increases its price above the equilibrium price?
It sells nothing
ExplanationFirms sell nothing when prices exceed the equilibrium in perfect competition.