#1
Which of the following is a characteristic of a perfectly competitive market?
Many buyers and many sellers
ExplanationNumerous participants ensure no single entity can influence market price.
#2
In economics, what is the law of demand?
As price decreases, demand increases
ExplanationLower prices stimulate higher demand for a product or service.
#3
What is the primary function of prices in a market economy?
To allocate resources efficiently
ExplanationPrices guide resources to where they're most valued.
#4
What is the term used to describe a situation where a single buyer controls the market?
Monopsony
ExplanationA sole buyer exerts significant influence over market transactions.
#5
What is the term used to describe a market where the price is determined by supply and demand with little or no government intervention?
Free market
ExplanationPrices are dictated by supply and demand forces without external interference.
#6
Which of the following is a determinant of demand?
Price of related goods
ExplanationThe price of substitutes or complements influences demand.
#7
What does the term 'elasticity of demand' measure?
The responsiveness of quantity demanded to a change in price
ExplanationIt gauges how demand adjusts to changes in price levels.
#8
What is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded divided by percentage change in price
ExplanationQuantifies the sensitivity of demand to price fluctuations.
#9
In economics, what is a 'market failure'?
When resources are not allocated efficiently by the market
ExplanationMarket outcomes deviate from the ideal efficiency, leading to inefficiencies.
#10
What is the term used to describe the situation where the quantity supplied equals the quantity demanded?
Market equilibrium
ExplanationBalanced supply and demand result in stable market conditions.
#11
In a monopolistic competition market, firms compete primarily based on:
Product differentiation
ExplanationUnique features or branding distinguish products in this market.
#12
What is a characteristic of a monopolistic market structure?
There is product differentiation
ExplanationCompanies can distinguish their offerings to gain market share.
#13
In the context of market forces, what does the term 'invisible hand' refer to?
The self-regulating nature of markets guided by individual self-interest
ExplanationMarkets naturally adjust through individual actions without central planning.
#14
What concept describes the additional benefit gained from consuming one more unit of a good?
Marginal utility
ExplanationThe extra satisfaction or usefulness derived from an additional unit of a product.
#15
What concept refers to a situation where one party in a transaction has more information than the other, leading to imbalanced outcomes?
Asymmetric information
ExplanationInformation asymmetry can lead to market inefficiencies or unfair outcomes.