Principles of Microeconomics in Competitive Markets Quiz

Test your knowledge on microeconomics with questions on demand, supply, market structures, elasticity, and more.

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In economics, what does the term 'ceteris paribus' mean?

All else being equal

Demand exceeding supply

Government intervention

Market equilibrium

What is the formula for calculating total revenue?

Total revenue = Price × Quantity

Total revenue = Price ÷ Quantity

Total revenue = Price - Quantity

Total revenue = Quantity - Price

What does the law of demand state?

As the price of a good increases, the quantity demanded decreases

As the price of a good increases, the quantity demanded increases

As the price of a good decreases, the quantity demanded decreases

As the price of a good decreases, the quantity demanded increases

Which of the following is a characteristic of a perfectly competitive market?

Many buyers and sellers

Barriers to entry

Control over prices by individual firms

Product differentiation

What does the demand curve represent in microeconomics?

The quantity of goods demanded at different prices

The quantity of goods supplied at different prices

The relationship between price and income

The elasticity of demand

What is the profit-maximizing rule for firms in a perfectly competitive market?

Produce where marginal cost equals marginal revenue

Produce where marginal cost exceeds marginal revenue

Produce where total cost equals total revenue

Produce where total cost exceeds total revenue

What is the law of diminishing marginal utility?

As the quantity of a good consumed increases, the marginal utility decreases

As the quantity of a good consumed increases, the total utility decreases

As the price of a good increases, the demand decreases

As the price of a good decreases, the demand increases

What is a monopolistic competition market structure characterized by?

A large number of firms selling identical products

A single firm dominating the market

A few firms dominating the market with differentiated products

No barriers to entry or exit

What is the long-run equilibrium condition for firms in perfect competition?

Price equals average total cost

Price equals marginal cost

Price equals average variable cost

Price equals marginal revenue

#10

What is the difference between explicit and implicit costs?

Explicit costs are monetary costs, while implicit costs are non-monetary costs

Explicit costs are long-term costs, while implicit costs are short-term costs

Explicit costs are opportunity costs, while implicit costs are fixed costs

Explicit costs are variable costs, while implicit costs are fixed costs

#11

What is an externality in economics?

A situation where demand exceeds supply

A side effect of a transaction affecting a third party

A legal restriction on trade

The difference between social and private costs

#12

What is a characteristic of a perfectly elastic demand curve?

It is horizontal

It is vertical

It is upward-sloping

It is downward-sloping

#13

What is the price elasticity of demand for a perfectly elastic demand curve?

Zero

Less than one

Greater than one

Infinity

#14

What does a perfectly inelastic demand curve look like?

Horizontal

Vertical

Upward-sloping

Downward-sloping