#1
Which of the following best describes the law of demand?
As price increases, quantity demanded decreases
ExplanationInverse relationship between price and quantity demanded
#2
What is the term used to describe a market structure with many buyers and sellers, homogenous products, and ease of entry and exit?
Perfect competition
ExplanationMany buyers and sellers with identical products and easy entry
#3
What does the term 'utility' refer to in microeconomics?
The satisfaction derived from consuming goods and services
ExplanationSatisfaction from consuming goods or services
#4
Which of the following is a characteristic of a perfectly elastic demand curve?
It is horizontal
ExplanationQuantity demanded remains constant at all prices
#5
What is the main assumption of the law of supply?
Producers aim to maximize profits
ExplanationProducers seek to increase profits
#6
What is the primary goal of a firm in a perfectly competitive market?
To maximize profit
ExplanationProfit maximization
#7
Which of the following statements best describes price elasticity of demand?
It measures how much quantity demanded responds to a change in price
ExplanationResponsiveness of quantity demanded to price change
#8
What does a price ceiling imposed by the government on a particular good usually result in?
A shortage of the good
ExplanationShortage due to maximum price restriction
#9
What is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
ExplanationPercentage change in quantity demanded relative to price change
#10
In economics, what is the term used to describe the situation where a firm is producing at the lowest possible cost per unit?
Cost minimization
ExplanationProducing at minimum cost per unit
#11
Which of the following is a characteristic of a monopolistic competition market structure?
Product differentiation
ExplanationDiverse products with branding and marketing
#12
What does the term 'marginal utility' refer to in microeconomics?
The additional satisfaction from consuming one more unit of a good
ExplanationExtra satisfaction from consuming additional unit
#13
In a perfectly competitive market, what condition ensures that firms earn zero economic profit in the long run?
No barriers to entry or exit
ExplanationFree entry and exit eliminating long-run profit
#14
Which of the following factors would cause the supply curve to shift to the right?
A decrease in production costs
ExplanationLower production costs increase supply
#15
In the long run, what happens to the number of firms in a perfectly competitive market if firms are earning economic profits?
New firms enter the market, increasing the number of firms
ExplanationEntry of new firms due to profit opportunities
#16
In a monopolistic market structure, what distinguishes each firm's product?
Brand
ExplanationProduct differentiation through branding
#17
What is a characteristic of a natural monopoly?
High barriers to entry
ExplanationSignificant obstacles for new entrants