#1
What is the law of demand?
As price decreases, quantity demanded increases.
ExplanationInverse relationship between price and quantity demanded.
#2
In the context of supply and demand, what does a surplus indicate?
Excess supply
ExplanationQuantity supplied exceeds quantity demanded.
#3
What is the 'short run' in microeconomics?
A period of time during which at least one input is fixed.
ExplanationPartial input flexibility.
#4
What is the 'long run' in microeconomics?
A period of time during which all inputs can be varied.
ExplanationFull input flexibility.
#5
What does the term 'elasticity of demand' measure?
The percentage change in quantity demanded for a percentage change in price.
ExplanationResponsiveness of quantity demanded to price changes.
#6
What is a 'monopoly' in economics?
A market with a single seller and many buyers.
ExplanationSingle firm controls the entire market.
#7
What is the opportunity cost?
The value of the best alternative foregone when a choice is made.
ExplanationCost of the next best alternative.
#8
What is price discrimination?
When firms charge different prices to different consumers based on their willingness to pay.
ExplanationVarying prices based on consumer segments.
#9
What is a perfectly competitive market?
A market with identical products and many buyers and sellers, where no one has market power.
ExplanationMarket with no individual influence on price.
#10
What does the production possibilities frontier (PPF) illustrate?
The relationship between two goods that can be produced simultaneously.
ExplanationTrade-off between two goods' production.
#11
What is the difference between marginal cost and average variable cost?
Average variable cost is the total variable cost divided by the quantity produced, while marginal cost is the change in total cost divided by the change in quantity produced.
ExplanationIncremental cost vs. cost per unit.
#12
What is the difference between accounting profit and economic profit?
Accounting profit includes explicit costs, while economic profit includes explicit and implicit costs.
ExplanationAccounting vs. total cost consideration.
#13
What is 'perfect price discrimination'?
When firms charge a price that exactly matches each consumer's willingness to pay.
ExplanationCharging based on individual willingness to pay.
#14
What is the difference between absolute advantage and comparative advantage?
Absolute advantage refers to the ability to produce a good using fewer resources, while comparative advantage refers to the ability to produce a good at a lower opportunity cost.
ExplanationResource efficiency vs. opportunity cost.