#1
In economics, what does the term 'ceteris paribus' mean?
All else being equal
ExplanationHolding all other factors constant.
#2
What is the formula for calculating total revenue?
Total revenue = Price × Quantity
ExplanationIncome received from selling a given quantity of a good.
#3
What does the law of demand state?
As the price of a good increases, the quantity demanded decreases
ExplanationInverse relationship between price and quantity demanded.
#4
Which of the following is a characteristic of a perfectly competitive market?
Many buyers and sellers
ExplanationLarge number of buyers and sellers with homogeneous products.
#5
What does the demand curve represent in microeconomics?
The quantity of goods demanded at different prices
ExplanationGraphical representation of the relationship between price and quantity demanded.
#6
What is the profit-maximizing rule for firms in a perfectly competitive market?
Produce where marginal cost equals marginal revenue
ExplanationMaximizing profits by equating marginal cost with marginal revenue.
#7
What is the law of diminishing marginal utility?
As the quantity of a good consumed increases, the marginal utility decreases
ExplanationDecrease in additional satisfaction as consumption of a good increases.
#8
What is a monopolistic competition market structure characterized by?
A few firms dominating the market with differentiated products
ExplanationMarket with several firms selling differentiated products.
#9
What is the long-run equilibrium condition for firms in perfect competition?
Price equals average total cost
ExplanationCondition where price equals the minimum average total cost.
#10
What is the difference between explicit and implicit costs?
Explicit costs are monetary costs, while implicit costs are non-monetary costs
ExplanationExplicit costs are directly incurred expenses while implicit costs are opportunity costs.
#11
What is an externality in economics?
A side effect of a transaction affecting a third party
ExplanationUnintended consequence affecting parties not directly involved in a transaction.
#12
What is a characteristic of a perfectly elastic demand curve?
It is vertical
ExplanationDemand is infinitely responsive to any price change.
#13
What is the price elasticity of demand for a perfectly elastic demand curve?
Infinity
ExplanationDemand is infinitely responsive to price changes.
#14
What does a perfectly inelastic demand curve look like?
Vertical
ExplanationDemand does not change with price.