#1
What is the law of demand in microeconomics?
As price increases, quantity demanded decreases
ExplanationInverse relationship between price and quantity demanded.
#2
What is the primary goal of a firm in microeconomics?
Maximizing profit
ExplanationMain objective of revenue exceeding costs.
#3
What is the role of government in correcting negative externalities in microeconomics?
All of the above
ExplanationGovernment intervention to internalize external costs.
#4
In microeconomics, what is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
ExplanationMeasure of responsiveness of quantity demanded to changes in price.
#5
What is the primary assumption of the rational choice model in microeconomics?
Consumers always maximize their utility
ExplanationAssumption that individuals make choices to maximize their well-being.
#6
What does the term 'elasticity' measure in microeconomics?
Responsiveness to a change in quantity demanded or supplied
ExplanationDegree of responsiveness of quantity demanded or supplied to changes in price or income.
#7
In microeconomic theory, what is the profit-maximizing output level for a perfectly competitive firm?
Where marginal revenue equals marginal cost
ExplanationOutput level where additional revenue equals additional cost.
#8
Which market structure is characterized by few sellers, each with a significant market share?
Oligopoly
ExplanationMarket dominated by a few large firms.
#9
In microeconomics, what is the relationship between marginal cost (MC) and average total cost (ATC) at the minimum point of ATC?
MC = ATC
ExplanationMarginal cost equals average total cost at the minimum point of ATC.
#10
According to the law of diminishing marginal returns, what happens as additional units of a variable input are added to a fixed input in production?
Total output increases at a decreasing rate
ExplanationOutput increases at a diminishing rate as more units of variable input are added.
#11
What is the key characteristic of a monopoly market structure?
One seller and many buyers
ExplanationSingle seller dominating the market.
#12
What is the concept of 'opportunity cost' in microeconomics?
The value of the next best alternative forgone
ExplanationValue of the best alternative not chosen.
#13
What is the 'Laffer Curve' in microeconomics often used to illustrate?
Tax revenue and tax rates
ExplanationRelationship between tax rates and tax revenue.
#14
In the short run, what happens to a firm's fixed costs as output increases?
Fixed costs remain constant
ExplanationFixed costs do not change with output levels in the short run.
#15
What is the primary factor that distinguishes monopolistic competition from perfect competition?
Product differentiation
ExplanationDifferentiated products in monopolistic competition.