#1
2. What is a production function in microeconomics?
A function that represents the relationship between input and output in the production process.
ExplanationRelationship between input and output.
#2
6. What is the meaning of the term 'opportunity cost' in microeconomics?
The value of the best alternative forgone when a decision is made.
ExplanationValue of foregone alternatives.
#3
15. What is the concept of 'marginal utility' in consumer theory?
The additional satisfaction gained from consuming one more unit of a good.
ExplanationAdded satisfaction per additional unit.
#4
18. What is the primary goal of a firm in microeconomics?
To maximize profit.
ExplanationProfit optimization.
#5
1. What is the Law of Diminishing Marginal Returns in microeconomics?
As the quantity of a variable input increases, the marginal product of the input eventually decreases.
ExplanationDecrease in additional output with each additional input.
#6
4. What is the difference between economic profit and accounting profit?
Economic profit includes explicit and implicit costs, while accounting profit considers only explicit costs.
ExplanationAccounting profit vs. total costs.
#7
5. In a monopolistic competition market structure, firms differentiate their products to:
Create brand loyalty and reduce substitutability.
ExplanationCreating product differentiation.
#8
7. In the long run, a firm in a perfectly competitive market will earn:
Normal profit.
ExplanationEarns enough to cover all costs, including opportunity costs.
#9
10. What is the significance of the elasticity of demand for a product?
It indicates the responsiveness of quantity demanded to changes in price.
ExplanationSensitivity of demand to price changes.
#10
3. In the short run, a firm in a perfectly competitive market will shut down production if:
Total revenue is less than total variable cost.
ExplanationTotal revenue insufficient to cover variable costs.
#11
8. What is the relationship between marginal cost (MC) and average total cost (ATC) in microeconomics?
MC intersects ATC at the minimum point of ATC.
ExplanationPoint of minimum average cost.
#12
9. In a monopolistic market, how does a firm maximize profit in the short run?
By producing where marginal revenue equals marginal cost.
ExplanationProfit maximization point.
#13
11. What is the Nash Equilibrium in game theory?
A stable outcome where no player has an incentive to deviate unilaterally.
ExplanationStable strategy for all players.
#14
12. How does a monopolist determine the level of output to maximize profit?
By producing where marginal cost equals marginal revenue.
ExplanationProfit-maximizing output level.