#1
1. What is the primary focus of microeconomics?
Studying the economy as a whole
Analyzing individual economic units
Examining international trade relations
Assessing government fiscal policies
#2
9. What is the main objective of a profit-maximizing firm in microeconomics?
Maximizing market share
Minimizing production costs
Maximizing total revenue
Maximizing the difference between total revenue and total cost
#3
15. What is the concept of consumer surplus in microeconomics?
The profit earned by consumers
The difference between the price consumers are willing to pay and the price they actually pay
The additional satisfaction gained from consuming an additional unit of a good
The total revenue generated by consumers
#4
19. According to the law of supply, how does the quantity supplied respond to a change in price?
Moves in the same direction as the price change
Moves in the opposite direction as the price change
Remains constant regardless of the price change
Depends on the income level of consumers
#5
2. Which of the following is a fundamental assumption of the law of demand?
All goods are normal goods
Consumers have unlimited resources
The price of the good is the only factor affecting demand
Consumers always make rational choices
#6
3. What does the term 'opportunity cost' refer to in economics?
The explicit cost of production
The cost of forgoing the next best alternative
The total cost of inputs in production
The revenue generated from a product
#7
6. What is the law of diminishing marginal utility in microeconomics?
The more units of a good consumed, the greater the total satisfaction
As more units of a good are consumed, the additional satisfaction decreases
Consumers always prefer more of a good
The price of a good is directly proportional to its utility
#8
8. How does elasticity of demand impact pricing decisions for a firm?
Higher elasticity allows for higher prices
Lower elasticity necessitates lower prices
Elasticity does not influence pricing decisions
Elasticity only affects production quantity, not prices
#9
11. What is the difference between explicit and implicit costs in microeconomics?
Explicit costs are monetary, while implicit costs are opportunity costs
Explicit costs include both monetary and opportunity costs, while implicit costs are only monetary
Explicit costs are opportunity costs, while implicit costs are monetary
Both explicit and implicit costs refer to the same concept
#10
14. In microeconomic theory, what is the role of a regressive tax system?
Levies higher taxes on higher incomes
Levies higher taxes on lower incomes
Tax rates remain constant across all income levels
Tax rates increase with income
#11
4. In microeconomics, what is the significance of the production possibilities frontier (PPF)?
It represents the maximum output achievable with current technology
It indicates the least-cost method of production
It shows the various combinations of two goods a country can produce efficiently
It reflects the total output of an economy
#12
5. According to the Coase Theorem, what conditions are necessary for private bargaining to solve externalities efficiently?
Perfect competition
Property rights are clearly defined and transaction costs are low
Government intervention is required
Monopoly market structure
#13
7. In the context of microeconomics, what is the role of a monopolistic market structure?
Promotes perfect competition
Maximizes consumer surplus
Leads to a single seller dominating the market
Eliminates barriers to entry
#14
10. According to game theory, what is a Nash equilibrium?
A situation where all players cooperate for mutual benefit
A strategy that leads to the best outcome for each player, given the strategy of the others
A point where all players experience losses
A situation where players follow a predetermined set of rules
#15
12. How does a perfectly competitive market structure impact the pricing of goods and services?
Firms have significant control over prices
Prices are determined by market forces with individual firms having no influence
Prices are set by a central authority
Firms collaborate to set uniform prices
#16
13. What is the significance of the Laffer curve in microeconomics?
It illustrates the relationship between inflation and unemployment
It shows the trade-off between efficiency and equity
It demonstrates the relationship between tax rates and tax revenue
It represents the production possibilities frontier