Microeconomic Principles and Market Interventions Quiz

Perfectly competitive markets have numerous buyers and sellers, ensuring no single entity can influence prices.

Price ceilings are implemented to prevent prices from exceeding a specified maximum.

Monopolistic competition involves many buyers and sellers, offering differentiated products.

Antitrust laws aim to foster competition and prevent monopolies or anti-competitive practices.

Regressive taxes take a higher proportion of income from lower-income individuals, such as a sales tax.

Price elasticity of demand is measured by the percentage change in quantity demanded divided by the percentage change in price.

The price of related goods is not a determinant of supply; it is a factor influencing demand.

When both demand and supply increase, the equilibrium price and quantity in the market rise.

Tariffs are imposed by governments to protect domestic industries by making foreign goods more expensive and promoting local production.

Consumers experience diminishing marginal utility, where each additional unit of a good provides less additional satisfaction.

Externalities occur when the actions of one party affect others without compensation, such as pollution impacting nearby residents.

Command economies are characterized by central planning, where the government controls economic decisions and resource allocation.

Asymmetric information occurs when one party has more information than the other, leading to issues like moral hazard in insurance markets.

Traditional economies rely on barter systems and customs, with little reliance on modern monetary transactions.

Public goods, like national defense, are non-excludable and non-rivalrous, meaning individuals cannot be excluded from their benefits, and one person's consumption does not diminish its availability to others.