#1
Which of the following best describes the law of demand in microeconomics?
As price decreases, quantity demanded increases.
ExplanationInverse relationship between price and quantity demanded.
#2
What does the term 'opportunity cost' refer to in microeconomics?
The value of the best alternative forgone
ExplanationCost of foregone alternatives when making a decision.
#3
What does the term 'marginal utility' represent in microeconomics?
The additional satisfaction gained from consuming one more unit of a good
ExplanationIncremental benefit from consuming an additional unit.
#4
What is the law of diminishing marginal returns in microeconomics?
As the quantity of inputs increases, total output increases at a decreasing rate.
ExplanationDecline in productivity with additional inputs.
#5
What is the difference between a normal good and an inferior good in microeconomics?
Normal goods have a positive income elasticity of demand, while inferior goods have a negative income elasticity of demand.
ExplanationResponse of demand to income changes for different types of goods.
#6
In microeconomics, what does the term 'elasticity' measure?
The responsiveness of quantity demanded to a change in price.
ExplanationSensitivity of quantity demanded to price changes.
#7
What is the primary goal of a monopoly in the market?
To maximize profit
ExplanationProfit maximization through market dominance.
#8
Which of the following is a characteristic of a monopolistic competition market structure?
Easy entry and exit
ExplanationLow barriers to entry and exit for firms.
#9
What is a 'price floor' in microeconomics?
A minimum price set by the government
ExplanationGovernment-imposed lower limit on prices.
#10
Which of the following is a characteristic of a perfectly elastic demand curve?
It is horizontal
ExplanationPrice change has no effect on quantity demanded.
#11
What is the primary goal of a firm in the short run?
To maximize profit
ExplanationMaximization of short-term earnings.
#12
Which of the following is NOT a characteristic of perfect competition in microeconomics?
Barriers to entry
ExplanationAbsence of entry restrictions.
#13
What is the 'invisible hand' concept introduced by Adam Smith in microeconomics?
The self-regulating nature of the market
ExplanationMarket's inherent ability to allocate resources efficiently.
#14
In microeconomics, what is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded divided by percentage change in price
ExplanationMeasure of responsiveness of quantity demanded to price change.
#15
What is the concept of 'consumer surplus' in microeconomics?
The difference between the price consumers are willing to pay and the price they actually pay
ExplanationExcess benefit consumers receive from paying less than their maximum willingness to pay.
#16
Which of the following is NOT a determinant of supply in microeconomics?
Consumer preferences
ExplanationFactors influencing supply excluding consumer choices.
#17
In microeconomics, what is the 'Pareto efficiency'?
When resources are allocated in a way that no one can be made better off without making someone else worse off
ExplanationOptimal allocation of resources where no one can gain without another losing.