#1
In microeconomics, what does the term 'utility' refer to?
The total revenue generated by a firm
The satisfaction or pleasure a consumer derives from consuming goods and services
The cost of producing one additional unit of a good
The price elasticity of demand for a product
#2
What does the concept of elasticity of demand measure?
The responsiveness of quantity demanded to changes in price
The percentage change in quantity demanded divided by the percentage change in income
The percentage change in price divided by the percentage change in quantity demanded
The percentage change in quantity supplied divided by the percentage change in price
#3
What is the primary determinant of a consumer's demand for a good according to the law of demand?
Consumer preferences
Income
Price of the good
Price of complementary goods
#4
What is consumer surplus?
The difference between the total amount consumers are willing to pay for a good and the total amount they actually pay
The difference between the total amount producers are willing to sell a good for and the total amount they actually receive
The difference between the total amount consumers spend on a good and the total amount they receive in utility
The difference between the total amount producers receive from selling a good and the total amount they spend on production
#5
Which of the following is NOT a characteristic of a monopolistically competitive market?
Many buyers and sellers
Product differentiation
Ease of entry and exit
Price takers
#6
What is the concept of a production possibilities frontier (PPF) in microeconomics?
It shows the maximum combinations of goods and services that a society can produce given its resources and technology
It represents the point at which a consumer maximizes utility
It illustrates the relationship between price and quantity demanded for a single good
It depicts the trade-off between present consumption and future consumption
#7
What is the law of diminishing returns in production?
As the quantity of a variable input increases, the marginal product of that input decreases, holding all other inputs constant
As the quantity of a variable input increases, the average product of that input decreases, holding all other inputs constant
As the quantity of a variable input increases, the total product of that input increases at a decreasing rate
As the quantity of a variable input increases, the total product of that input increases at an increasing rate
#8
What is the law of diminishing marginal utility?
As the price of a good increases, the quantity demanded decreases
As more of a good is consumed, the additional satisfaction from consuming one more unit decreases
Consumers will buy more of a good when its price decreases
The total utility derived from consuming a good increases linearly
#9
Which of the following is NOT a characteristic of an indifference curve?
It is downward sloping
It shows all combinations of goods that yield the same level of satisfaction
It is convex to the origin
It cannot intersect with another indifference curve
#10
What is the budget constraint in consumer theory?
The limitation on the consumer's income restricting what they can afford to buy
The relationship between the price of a good and the quantity demanded
The total amount of money a consumer is willing to spend on goods and services
The opportunity cost of consuming one more unit of a good
#11
What is the income effect in consumer choice theory?
The change in quantity demanded of a good due to a change in its price
The change in quantity demanded of a good due to a change in consumer income
The tendency for consumers to substitute cheaper goods for more expensive ones
The change in consumer preferences for a good over time
#12
Which of the following is NOT an assumption of consumer rationality in microeconomics?
Consumers aim to maximize their utility
Consumers have perfect information about prices and product characteristics
Consumers make decisions based on consistent preferences
Consumers have unlimited income
#13
Which of the following is NOT a characteristic of a perfectly competitive market?
Many buyers and sellers
Homogeneous products
Barriers to entry and exit
Perfect information
#14
What is the substitution effect in response to a price change?
Consumers substitute one good for another when the relative price changes
Consumers decrease the quantity demanded of a good when its price decreases
Consumers switch to inferior goods when the price of normal goods increases
Consumers purchase more of a good as its price decreases
#15
What is the optimal consumption bundle for a consumer?
The combination of goods and services that maximizes total utility given the consumer's income and the prices of goods
The combination of goods and services that minimizes total utility given the consumer's income and the prices of goods
The combination of goods and services that maximizes the consumer's income
The combination of goods and services that minimizes the consumer's income
#16
What is the difference between ordinal utility and cardinal utility?
Ordinal utility measures utility on an absolute scale, while cardinal utility measures utility on a relative scale
Ordinal utility measures utility based on the ranking of preferences, while cardinal utility assigns numerical values to utility
Ordinal utility assumes consumers have perfect information, while cardinal utility does not
Ordinal utility is used in producer theory, while cardinal utility is used in consumer theory
#17
What is the concept of marginal rate of substitution (MRS) in consumer choice theory?
The rate at which a consumer is willing to substitute one good for another while maintaining the same level of utility
The rate at which a consumer's income increases with the purchase of one more unit of a good
The rate at which a consumer's total utility increases with the consumption of one more unit of a good
The rate at which a consumer's total utility decreases with the consumption of one more unit of a good
#18
What is the significance of consumer equilibrium in microeconomics?
It represents the point at which a consumer maximizes total revenue
It represents the point at which a consumer maximizes total utility given their budget constraint
It represents the point at which a consumer minimizes total utility given their budget constraint
It represents the point at which a consumer minimizes total expenditure
#19
What is the formula to calculate price elasticity of demand using the midpoint method?
Percentage change in quantity demanded / Percentage change in price
Percentage change in price / Percentage change in quantity demanded
[(Q2 - Q1) / ((Q2 + Q1)/2)] / [(P2 - P1) / ((P2 + P1)/2)]
[(P2 - P1) / ((P2 + P1)/2)] / [(Q2 - Q1) / ((Q2 + Q1)/2)]
#20
What is the concept of market equilibrium in microeconomics?
The point where quantity demanded equals quantity supplied
The point where price equals marginal cost
The point where total utility is maximized
The point where firms maximize profit
#21
What is the long run in microeconomics?
A time period in which all inputs can be varied
A time period in which only some inputs can be varied
A time period in which all inputs are fixed
A time period in which the production function exhibits constant returns to scale