#1
In microeconomics, what does the term 'market equilibrium' refer to?
A situation where quantity demanded equals quantity supplied
ExplanationBalance between demand and supply.
#2
What is the concept of 'opportunity cost' in economics?
The value of the next best alternative foregone
ExplanationCost of the best alternative sacrificed.
#3
What does the term 'elastic demand' mean?
A large change in quantity demanded for a small change in price
ExplanationResponsive demand to price changes.
#4
Which of the following is a determinant of demand?
The price of related goods
ExplanationInfluence of substitute or complementary goods on demand.
#5
Which of the following is NOT a characteristic of a perfectly competitive market?
Barriers to entry
ExplanationAbsence of obstacles for firms to enter or exit the market.
#6
What is the primary goal of price floors implemented by governments?
To prevent prices from falling below a certain level
ExplanationSetting a minimum price to protect producers.
#7
What effect does a subsidy have on the market for a good?
Increases quantity supplied and decreases price
ExplanationBoosts supply and lowers prices.
#8
What is the effect of a binding price ceiling on a market?
Creates excess demand and leads to shortages
ExplanationResults in supply shortage due to price restrictions.
#9
What is the concept of 'elasticity' in economics?
A measure of how much quantity demanded responds to a change in price
ExplanationSensitivity of demand to price changes.
#10
Which of the following is an example of a positive externality?
Education benefiting society as a whole
ExplanationBeneficial impact on third parties not involved in a transaction.
#11
What does the term 'monopoly' refer to in economics?
A market with only one seller and many buyers
ExplanationSingle firm dominating the market.
#12
What is the concept behind 'deadweight loss' in economics?
The loss of total surplus due to market inefficiency
ExplanationLoss in overall welfare due to market distortion.
#13
What is the 'Laffer curve' in economics?
A curve illustrating the relationship between tax rates and government revenue
ExplanationDepicts the optimal tax rate for maximizing revenue.
#14
What is the 'Tragedy of the Commons' in economics?
A situation where individual pursuit of self-interest leads to a depletion of shared resources
ExplanationOveruse or depletion of resources due to lack of property rights.
#15
What is the formula for calculating consumer surplus?
Consumer surplus = Marginal benefit - Price.
ExplanationDifference between what consumers are willing to pay and what they actually pay.
#16
What is the Coase theorem in economics?
A theorem that suggests private parties can reach efficient solutions to externalities through bargaining, regardless of the initial allocation of property rights.
ExplanationPrivate negotiations can resolve externalities without government intervention.