#1
Which of the following best describes the law of demand?
As the price of a good decreases, the quantity demanded increases.
ExplanationInverse relationship between price and quantity demanded.
#2
What does the term 'equilibrium price' refer to?
The price at which quantity demanded equals quantity supplied
ExplanationBalance point between demand and supply.
#3
What is 'utility' in economics?
The total satisfaction derived from consuming a good or service.
ExplanationMeasure of satisfaction or happiness.
#4
Which of the following is NOT a determinant of supply?
Price of substitutes
ExplanationFactors affecting supply, excluding substitutes.
#5
What is 'opportunity cost'?
The highest-valued alternative that must be sacrificed to engage in an activity
ExplanationCost of the next best alternative foregone.
#6
What is the law of supply?
As the price of a good increases, the quantity supplied increases.
ExplanationPositive relationship between price and quantity supplied.
#7
In economics, what is 'elasticity of demand'?
The percentage change in quantity demanded relative to the percentage change in price
ExplanationSensitivity of quantity demanded to price changes.
#8
What is a 'market failure'?
When the market does not allocate resources efficiently
ExplanationInefficient allocation of resources by the market.
#9
What is the law of diminishing marginal utility?
As a consumer consumes more units of a good, the total utility increases at a decreasing rate.
ExplanationDecreasing additional satisfaction from consuming more.
#10
What is the difference between 'perfect competition' and 'monopolistic competition'?
Perfect competition has identical products, while monopolistic competition has differentiated products.
ExplanationHomogeneous vs. differentiated products in markets.
#11
What is a 'price ceiling'?
A legal maximum price for a good or service
ExplanationGovernment-imposed maximum price.
#12
What is the difference between 'demand' and 'quantity demanded'?
Demand refers to the desire for a good or service, while quantity demanded refers to the amount of that good or service that consumers are willing and able to purchase at a given price.
ExplanationDesire versus actual purchase quantity.
#13
What concept describes a situation where a good or service is non-rivalrous and non-excludable?
Public good
ExplanationGoods benefiting everyone without exclusion.
#14
Which market structure is characterized by a single seller with significant control over price?
Monopoly
ExplanationSingle seller dominance in the market.
#15
What is 'producer surplus'?
The difference between the lowest price a producer is willing to accept and the price they actually receive
ExplanationExcess revenue above the minimum acceptable price.
#16
What is 'monopsony'?
A market structure with many sellers but only one buyer
ExplanationSingle buyer dominance in the market.
#17
What does the term 'consumer surplus' represent?
The difference between the highest price a consumer is willing to pay and the price they actually pay
ExplanationDifference between what consumers willing to pay and actual payment.