#1
In microeconomics, what does market equilibrium refer to?
A situation where quantity supplied equals quantity demanded
ExplanationBalance of supply and demand.
#2
Which of the following is NOT a determinant of demand?
Cost of production
ExplanationProduction factor, not demand.
#3
What does consumer surplus represent?
The difference between the price consumers are willing to pay and the price they actually pay
ExplanationBenefit gained by consumers.
#4
What is producer surplus?
The difference between the price producers are willing to accept and the price they actually receive
ExplanationBenefit gained by producers.
#5
What is the main assumption underlying the concept of market equilibrium?
Supply and demand are in balance
ExplanationEquilibrium concept basis.
#6
Which of the following statements is true regarding a price ceiling?
It leads to a shortage of the good
ExplanationShortage due to price constraint.
#7
What is the effect of an increase in both demand and supply on equilibrium price and quantity?
Equilibrium price and quantity both increase
ExplanationDual increase due to demand and supply rise.
#8
What happens to consumer surplus if the price of a good decreases?
It increases
ExplanationConsumer benefit rises.
#9
What does deadweight loss signify in the context of market equilibrium?
The loss of total surplus due to market inefficiency
ExplanationInefficiency consequence.
#10
What is the significance of Pareto efficiency in welfare analysis?
It ensures that no individual can be made better off without making someone else worse off
ExplanationEfficiency criterion.
#11
How does a subsidy affect market equilibrium?
It has no effect on equilibrium price but increases equilibrium quantity
ExplanationQuantity effect without price change.
#12
What does a price floor set above the equilibrium price cause in the market?
Excess supply
ExplanationSurplus due to price constraint.