#1
What is the law of demand?
As price decreases, demand increases
ExplanationInverse relationship between price and demand.
#2
Which of the following is a characteristic of a perfectly competitive market?
Many buyers and many sellers
ExplanationMarket with numerous buyers and sellers.
#3
What does the production possibility frontier (PPF) represent?
The maximum amount of goods and services an economy can produce with its existing resources and technology
ExplanationBoundary of achievable production.
#4
Which of the following is a characteristic of a monopolistic competition market structure?
Many buyers and many sellers
ExplanationCombination of monopoly and perfect competition.
#5
What is the law of diminishing marginal utility?
As the quantity consumed of a good increases, the total utility increases at a decreasing rate
ExplanationDecline in additional satisfaction from consuming more.
#6
Which of the following is a characteristic of an oligopoly market structure?
Few sellers with significant market power
ExplanationMarket dominated by a few powerful firms.
#7
What is the formula to calculate price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
ExplanationMeasure of responsiveness of demand to price change.
#8
What is the difference between accounting profit and economic profit?
Accounting profit considers explicit costs, while economic profit considers both explicit and implicit costs
ExplanationAccounting vs. total costs in profit calculation.
#9
What is the formula to calculate marginal cost?
Change in total cost / Change in quantity
ExplanationIncremental cost of producing additional unit.
#10
What is the difference between explicit costs and implicit costs?
Explicit costs are monetary costs, while implicit costs are opportunity costs associated with the use of resources
ExplanationTangible vs. intangible costs.
#11
What is the formula to calculate average revenue (AR)?
Total revenue / Quantity sold
ExplanationRevenue generated per unit sold.
#12
What is the difference between economic efficiency and technical efficiency?
Economic efficiency refers to producing at the lowest possible cost, while technical efficiency refers to producing the maximum output with given inputs
ExplanationCost minimization vs. output maximization.
#13
What is the Coase theorem?
It suggests that when property rights are well-defined and transaction costs are low, bargaining will lead to an efficient allocation of resources regardless of the initial allocation
ExplanationEfficient resource allocation through bargaining.
#14
According to game theory, what is a Nash equilibrium?
A situation where each player makes the best decision for themselves, given the decisions of the other players
ExplanationStable outcome where no player has incentive to change.
#15
What is a Giffen good?
A good for which the income elasticity of demand is negative
ExplanationRare case where demand increases with price.
#16
What is price discrimination?
Setting different prices for different customers based on their willingness to pay
ExplanationCharging different prices for same product.
#17
What is the difference between perfect price discrimination and other forms of price discrimination?
Perfect price discrimination involves charging each customer their maximum willingness to pay, while other forms of price discrimination involve charging different prices based on certain characteristics
ExplanationTailoring prices to individual willingness to pay.