Principles of Economics and Production Quiz

Perfect competition involves a large number of buyers and sellers with homogeneous products.

Opportunity cost refers to the value of the best alternative forgone when a decision is made.

GDP represents the total monetary value of all goods and services produced within a country's borders.

The law of demand states that there is an inverse relationship between price and quantity demanded.

Fiscal policy involves government decisions on taxation and spending to influence economic conditions.

This law indicates that adding more of a variable input, while holding other inputs constant, will eventually result in smaller increases in output.

Monopolistic competition involves many firms selling differentiated products, allowing them some control over price.

Total revenue is the product of the price per unit and the quantity sold.

Oligopoly involves a few firms dominating the market, leading to interdependence among them in decision-making.

Average variable cost is the total variable cost divided by the quantity of output produced.

Profit is a result of production, not a factor of production itself.

This law posits that as consumption of a good increases, the additional satisfaction derived from each additional unit decreases.

Elasticity of demand quantifies how much the quantity demanded changes in response to a change in price.

Cross-price elasticity of demand measures how the quantity demanded of one good changes in response to a change in the price of another good.

Real GDP accounts for changes in price levels, while nominal GDP does not adjust for inflation.