#1
What is the concept of 'opportunity cost' in microeconomics?
The cost of the next best alternative foregone when a decision is made
ExplanationCost of foregoing next best alternative.
#2
In microeconomics, what does the term 'elasticity' measure?
The responsiveness of quantity demanded to a change in price
ExplanationMeasures responsiveness of demand to price changes.
#3
Which of the following is a characteristic of a perfectly competitive market?
Many buyers and many sellers
ExplanationLarge number of buyers and sellers.
#4
What does the term 'utility' represent in microeconomics?
The satisfaction or pleasure derived from consuming goods and services
ExplanationSatisfaction from consuming goods/services.
#5
What does the term 'externality' refer to in microeconomic analysis?
A side effect or consequence of an economic activity that affects other parties
ExplanationImpact on third parties from economic activities.
#6
Which of the following is a characteristic of a monopoly market structure?
Price-setting power for individual firms
ExplanationFirms have power to set prices.
#7
In microeconomics, what does the term 'marginal revenue' represent?
The additional revenue from selling one more unit of a good
ExplanationExtra revenue from selling additional unit.
#8
In microeconomics, what is the role of the production possibility frontier (PPF)?
To show the maximum combination of goods and services that can be produced with available resources
ExplanationIllustrates production limits with given resources.
#9
What is the formula for calculating the marginal cost of production?
MC = ΔTC/ΔQ
ExplanationChange in total cost over change in quantity.
#10
In microeconomic analysis, what does the term 'Pareto efficiency' refer to?
Efficiency achieved when no one can be made better off without making someone worse off
ExplanationNo improvement without worsening someone else's situation.
#11
In microeconomics, what is the Law of Diminishing Marginal Returns?
As more units of a variable input are added to fixed inputs, the marginal product of the variable input eventually diminishes
ExplanationDecrease in marginal returns with additional inputs.
#12
What is the primary focus of game theory in microeconomics?
The analysis of strategic interactions among rational decision-makers
ExplanationStudy of strategic decision-making.
#13
What is the formula for calculating the price elasticity of demand?
PED = (Q2 - Q1) / (P2 - P1)
ExplanationPercentage change in quantity over percentage change in price.
#14
What is the significance of the 'Laffer curve' in microeconomics?
It depicts the relationship between tax rates and tax revenue
ExplanationRelationship between tax rates and revenue.
#15
What is the formula for calculating the average variable cost (AVC) of production?
AVC = VC / Q
ExplanationVariable cost per unit produced.