#1
What is the law of demand in microeconomics?
As price increases, quantity demanded decreases
ExplanationInverse relationship between price and quantity demanded.
#2
What is the concept of 'opportunity cost' in microeconomics?
The cost of choosing one option over another
ExplanationThe value of the next best alternative foregone when a decision is made.
#3
What is the 'law of diminishing marginal returns' in microeconomics?
As production increases, the additional output from each additional unit decreases
ExplanationDecreasing marginal returns with each additional input unit.
#4
What is the 'law of diminishing marginal utility' in microeconomics?
As consumption increases, total utility increases at a decreasing rate
ExplanationDecreasing additional satisfaction from each unit consumed.
#5
What is the 'income effect' in microeconomics?
The impact of changes in income on the quantity demanded of a good
ExplanationChange in quantity demanded due to changes in consumer income.
#6
What is the formula for calculating elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
ExplanationMeasure of responsiveness of quantity demanded to price changes.
#7
What is a production possibility frontier (PPF) used to represent?
The trade-offs between two goods that an economy can produce efficiently
ExplanationIllustrates the opportunity cost of allocating resources between two goods.
#8
What does the 'Laffer curve' illustrate in microeconomics?
The impact of taxes on government revenue
ExplanationCurvilinear relationship between tax rates and government revenue.
#9
In microeconomic terms, what is 'price discrimination'?
Charging different prices for the same good or service based on various factors
ExplanationVarying prices based on consumer characteristics or preferences.
#10
In microeconomics, what does the term 'elasticity of supply' measure?
The responsiveness of quantity supplied to changes in price
ExplanationSensitivity of quantity supplied to price changes.
#11
What is the primary focus of behavioral economics in microeconomics?
The impact of psychological factors on economic decision-making
ExplanationExamining how psychological factors influence economic choices.
#12
In microeconomics, what does the term 'oligopoly' refer to?
A market structure dominated by a few large firms
ExplanationMarket dominated by a small number of large firms.
#13
In microeconomics, what does the term 'market equilibrium' refer to?
The point where quantity supplied equals quantity demanded
ExplanationBalanced state where supply matches demand.
#14
What is the Cobb-Douglas production function commonly used to represent?
Labor productivity in production
ExplanationMathematical model for labor and capital input in production.
#15
What is the 'Tragedy of the Commons' in microeconomics?
The depletion of shared resources due to individual self-interest
ExplanationOverexploitation of common resources due to individual gain.
#16
What is the 'Coase Theorem' in microeconomics primarily concerned with?
The resolution of externalities through bargaining
ExplanationPrivate bargaining to internalize external costs or benefits.
#17
In microeconomics, what does the term 'deadweight loss' refer to?
The overall loss in social welfare caused by market inefficiency
ExplanationLoss in efficiency or welfare due to market distortion.
#18
What is the concept of 'perfect competition' in microeconomics?
A market structure with many sellers, homogeneous products, and free entry and exit
ExplanationIdealized market structure with idealized conditions for competition.
#19
In microeconomics, what does the term 'consumer surplus' represent?
The difference between the maximum price a consumer is willing to pay and the market price
ExplanationExcess of what consumers are willing to pay over the actual price.