#1
Which of the following best defines microeconomics?
The study of individual economic units and markets
ExplanationFocuses on analyzing individual economic units and markets.
#2
What does the law of demand state?
As the price of a good increases, the quantity demanded decreases
ExplanationInverse relationship between price and quantity demanded.
#3
What is the primary focus of microeconomics?
Individual economic units and markets
ExplanationAnalysis of individual units and market dynamics.
#4
What is the main determinant of elasticity of demand?
Availability of substitutes
ExplanationExtent to which substitutes affect demand.
#5
What does the term 'opportunity cost' refer to in economics?
The value of the next best alternative foregone
ExplanationCost of forgoing the next best alternative.
#6
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 price changes.
#7
Which of the following is NOT a determinant of supply?
Income of consumers
ExplanationIncome does not directly affect the supply of a good.
#8
Which of the following is a characteristic of a perfectly competitive market?
Many buyers and sellers
ExplanationNumerous buyers and sellers with equal influence.
#9
What happens to equilibrium price and quantity when demand increases and supply remains constant?
Price and quantity both increase
ExplanationBoth price and quantity move upward.
#10
Which market structure is characterized by a large number of firms selling similar but not identical products?
Monopolistic competition
ExplanationMany firms with differentiated products.
#11
In which market structure does a single firm dominate the entire market?
Monopoly
ExplanationSingle seller with exclusive market control.
#12
What is the main characteristic of a monopolistically competitive market?
There are many sellers, each offering similar but differentiated products
ExplanationMultiple sellers with varied products.
#13
Which of the following is NOT a characteristic of perfect competition?
Price setting power for individual firms
ExplanationFirms have no influence on market price.
#14
Which of the following is a characteristic of a monopoly market structure?
Single seller with significant market power
ExplanationExclusive market control by a single seller.
#15
What is the main objective of a firm operating in a monopolistically competitive market?
Maximize profit
ExplanationProfit maximization goal for firms in this structure.