#1
What is the basic economic principle that states that as the price of a good or service increases, the quantity demanded for that good or service decreases?
Price elasticity of demand
ExplanationPrice elasticity of demand measures the responsiveness of quantity demanded to changes in price.
#2
What is the term used to describe the responsiveness of quantity demanded to a change in price?
Elasticity
ExplanationElasticity measures the sensitivity of quantity demanded to changes in price.
#3
What economic term refers to the total quantity of a good or service that consumers are willing and able to purchase at a given price level?
Demand
ExplanationDemand represents the quantity of a good or service consumers are willing to buy at a specific price.
#4
In a competitive market, what happens to the equilibrium price and quantity when there is an increase in demand?
Equilibrium price increases, quantity increases
ExplanationIn a competitive market, an increase in demand leads to both an increase in equilibrium price and quantity.
#5
What is a price ceiling in the context of market regulations?
A maximum price set by the government
ExplanationA price ceiling is a government-imposed maximum price that can be charged for a good or service.
#6
What is the primary goal of antitrust laws in the context of market regulation?
To promote competition and prevent monopolies
ExplanationAntitrust laws aim to foster competition and restrain the formation of monopolies.
#7
What is the economic term for the situation where the government intervenes to protect a domestic industry by imposing tariffs or quotas on imported goods?
Protectionism
ExplanationProtectionism involves government actions to shield domestic industries from foreign competition.
#8
Which of the following is a potential consequence of a price floor in a market?
Surplus of goods
ExplanationA price floor can lead to a surplus of goods as it sets a minimum price above equilibrium.
#9
Which of the following is an example of a non-price barrier to entry in a market?
Minimum wage laws
ExplanationMinimum wage laws are regulations that affect entry into a market without directly impacting prices.
#10
What economic concept refers to the situation where one firm dominates the entire market and sets the price and quantity of goods or services?
Monopoly
ExplanationA monopoly occurs when a single firm controls the market, dictating prices and quantities.
#11
In a market with perfect competition, what is the relationship between price and marginal cost in the long run?
Price equals marginal cost
ExplanationIn perfect competition, price equals marginal cost due to free entry and exit of firms.
#12
What is the role of a central bank in influencing market forces?
Controlling inflation and interest rates
ExplanationCentral banks influence market forces by managing inflation and interest rates.
#13
In the context of market forces, what is the term for a situation where a single buyer or seller has significant influence over the market price?
Monopoly
ExplanationA monopoly exists when one entity has substantial control over market prices.