#1
Which of the following is not a characteristic of perfectly competitive markets?
Firms are price makers
ExplanationPerfectly competitive markets involve firms being price takers, not price makers.
#2
Which of the following is not a determinant of supply?
Consumer preferences
ExplanationConsumer preferences influence demand, not supply.
#3
Which of the following is not a characteristic of monopolistic competition?
Firms are price takers
ExplanationIn monopolistic competition, firms have some control over prices due to product differentiation.
#4
What is the formula for the price elasticity of demand (PED)?
PED = (change in price) / (change in quantity demanded)
ExplanationPED measures the responsiveness of quantity demanded to changes in price.
#5
What is the definition of a market in microeconomics?
A group of buyers and sellers of a particular good or service
ExplanationMarket refers to the interaction between buyers and sellers of goods or services.
#6
What is the price elasticity of demand (PED) for a perfectly inelastic demand?
Zero
ExplanationPerfectly inelastic demand means quantity demanded does not change with price, hence PED is zero.
#7
What is the equation for the marginal cost (MC) curve in a perfectly competitive market?
MC = MR
ExplanationIn perfect competition, since the firm is a price taker, MC equals MR.
#8
What is the price elasticity of demand (PED) for a perfectly elastic demand?
Infinity
ExplanationPerfectly elastic demand means quantity demanded changes infinitely with a small change in price.
#9
What is the equation for the average fixed cost (AFC) curve in a perfectly competitive market?
AFC = FC/Q
ExplanationAFC is fixed cost divided by quantity produced.
#10
What is the price elasticity of supply (PES) for a perfectly elastic supply?
Infinity
ExplanationPerfectly elastic supply means quantity supplied changes infinitely with a small change in price.
#11
Which of the following is a characteristic of a monopoly?
One seller
ExplanationMonopoly is characterized by a single seller dominating the market.
#12
What happens to a monopoly's profits in the long run?
They increase
ExplanationMonopoly profits tend to increase due to barriers to entry.
#13
Which of the following is not a characteristic of an oligopoly?
Firms are price takers
ExplanationOligopolies involve firms having some control over prices, hence they are not pure price takers.
#14
What happens to the number of firms in an oligopoly when there is a merger?
It decreases
ExplanationMergers in an oligopoly lead to fewer firms as they consolidate.
#15
Which of the following is a characteristic of a natural monopoly?
One seller
ExplanationNatural monopolies involve a single seller due to high fixed costs and low marginal costs.