#1
Which of the following is a characteristic of a perfectly competitive market?
Homogeneous products
ExplanationProducts are identical across firms.
#2
What is the main function of a price ceiling?
To prevent the price of a good from falling below a certain level
ExplanationImposes a maximum price.
#3
Which of the following is an example of a positive externality?
A beekeeper's honey production benefiting nearby fruit farmers
ExplanationWhen an activity benefits a third party.
#4
What is the formula to calculate price elasticity of demand?
Percentage change in quantity demanded divided by percentage change in price
ExplanationMeasure of responsiveness of demand to price change.
#5
Which of the following is a characteristic of monopolistic competition?
Product differentiation
ExplanationProducts are similar but not identical.
#6
What is the law of demand?
As the price of a good increases, the quantity demanded decreases, ceteris paribus.
ExplanationInverse relationship between price and quantity demanded.
#7
What does the term 'elasticity of demand' measure?
The responsiveness of quantity demanded to a change in price
ExplanationHow much quantity demanded changes with a change in price.
#8
In microeconomics, what does the 'law of diminishing marginal returns' state?
As input increases, marginal output decreases
ExplanationEach additional unit of input yields less additional output.
#9
Which market structure is characterized by a few large firms dominating the industry?
Oligopoly
ExplanationA market dominated by a small number of firms.
#10
What does a production possibilities frontier (PPF) represent?
The maximum combinations of goods and services that can be produced given current resources and technology
ExplanationThe boundary between attainable and unattainable production levels.
#11
Which of the following is NOT a determinant of demand?
Technology used in production
ExplanationDeterminants include price, income, tastes, etc.
#12
What is a 'price floor'?
A minimum price set by the government for a good or service
ExplanationPrevents price from falling below a certain level.
#13
What is the primary determinant of a firm's short-run supply curve?
Marginal cost
ExplanationThe additional cost of producing one more unit.
#14
What is the 'deadweight loss' in economics?
The loss of economic efficiency that occurs when the equilibrium quantity of a good or service is not maximized
ExplanationLoss of allocative efficiency.
#15
Which of the following is a characteristic of a natural monopoly?
High average total cost relative to the market demand
ExplanationCosts decrease with increased production.
#16
What is the 'invisible hand' concept in economics?
The concept that individuals' self-interested behavior can lead to positive social outcomes
ExplanationMarket self-regulation.
#17
What is the 'Tragedy of the Commons'?
A situation where resources are overused and depleted due to individual self-interest
ExplanationOverexploitation of shared resources.