#1
Which of the following is a characteristic of a perfectly competitive market?
High barriers to entry
Homogeneous products
Price-setting power for individual firms
Limited number of buyers and sellers
#2
What is the law of demand?
As price decreases, quantity demanded decreases
As price decreases, quantity demanded increases
As price increases, quantity demanded decreases
As price increases, quantity demanded increases
#3
What is the opportunity cost?
The monetary cost of an item or service
The cost of producing one additional unit of a good
The value of the best alternative forgone when a decision is made
The total cost of production
#4
Which of the following is a characteristic of monopolistic competition?
Many buyers and many sellers
Homogeneous products
High barriers to entry
Product differentiation
#5
What is the law of diminishing marginal returns?
As output increases, the marginal cost decreases
As input increases, the marginal output decreases
As input increases, the marginal cost decreases
As input increases, the marginal output increases
#6
Which of the following is an example of a regressive tax?
Income tax
Sales tax
Property tax
Corporate tax
#7
What is the formula for price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
Percentage change in price / Percentage change in quantity demanded
Total change in quantity demanded / Total change in price
Total change in price / Total change in quantity demanded
#8
What is the main determinant of the price elasticity of demand for a good?
The availability of substitutes
The percentage of income spent on the good
The number of firms producing the good
The level of government regulation
#9
What is the formula for total revenue?
Price x Quantity demanded
Price / Quantity demanded
Price + Quantity demanded
Price - Quantity demanded
#10
In a perfectly competitive market, what is the relationship between price and marginal revenue?
Price is equal to marginal revenue
Price is greater than marginal revenue
Price is less than marginal revenue
Price and marginal revenue are unrelated
#11
What does the price elasticity of supply measure?
The responsiveness of quantity demanded to a change in price
The responsiveness of quantity supplied to a change in price
The responsiveness of price to a change in quantity supplied
The responsiveness of price to a change in quantity demanded
#12
What is the main determinant of the price elasticity of supply?
The availability of substitutes
The time horizon
The income level of consumers
The number of firms in the market
#13
Which of the following is an example of a positive externality?
Pollution from a factory
A flu outbreak in a community
A beekeeper's bees pollinating nearby crops
A car accident causing property damage
#14
Which of the following is a characteristic of a natural monopoly?
High barriers to entry
Multiple firms producing identical products
Decreasing average total cost over a wide range of output
Perfect information among buyers and sellers
#15
Which of the following is an example of a public good?
Private healthcare services
A toll road
National defense
A luxury car
#16
What is an example of a negative externality?
Public parks
Education
Pollution from a factory
Road maintenance
#17
What is a positive externality?
A situation where the social cost of production exceeds the private cost
A situation where the social benefit of consumption exceeds the private benefit
A situation where the market fails to allocate resources efficiently
A situation where the production or consumption of a good benefits a third party