In microeconomics, 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.
#2
Which of the following is an example of a perfectly competitive market?
Local farmers' market
The market for smartphones
The market for diamonds
The market for patented drugs
#3
What is the primary goal of firms in microeconomics?
Maximize total revenue
Maximize total profit
Maximize total market share
Minimize total costs
#4
Which of the following is a characteristic of a monopoly?
Many firms selling identical products
Perfectly elastic demand curve
A single firm selling a unique product
Easy entry and exit of firms
#5
What does the term 'elasticity' refer to in microeconomics?
The responsiveness of quantity demanded to changes in income
The responsiveness of quantity demanded to changes in price
The responsiveness of quantity supplied to changes in price
The responsiveness of quantity supplied to changes in income
#6
What is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
Percentage change in price / Percentage change in quantity demanded
Change in quantity demanded / Change in price
Change in price / Change in quantity demanded
#7
Which of the following is a characteristic of monopolistic competition?
Many firms selling identical products
One firm selling a unique product
A few firms selling slightly differentiated products
One firm selling differentiated products
#8
What is the formula for calculating total revenue?
Price × Quantity demanded
Price × Quantity supplied
Price elasticity of demand × Quantity demanded
Price × Income elasticity of demand
#9
What is the difference between normal profit and economic profit?
Normal profit considers only explicit costs, while economic profit considers both explicit and implicit costs.
Normal profit considers only implicit costs, while economic profit considers both explicit and implicit costs.
Normal profit is the same as accounting profit, while economic profit is calculated differently.
Normal profit and economic profit are synonymous.
#10
Which of the following is an example of a public good?
A sandwich
A movie ticket
Street lighting
A car
#11
What is the difference between explicit and implicit costs?
Explicit costs are incurred when money is spent, while implicit costs are the opportunity costs of using resources owned by the firm.
Explicit costs include opportunity costs, while implicit costs do not.
Implicit costs are incurred when money is spent, while explicit costs are the opportunity costs of using resources owned by the firm.
Explicit costs and implicit costs are synonymous.
#12
Which of the following is a determinant of supply in microeconomics?
Price of substitutes
Consumer preferences
Number of sellers
Income of buyers
#13
Which of the following is a characteristic of oligopoly?
Many firms selling identical products
A single firm selling a unique product
A few firms selling slightly differentiated products
Easy entry and exit of firms
#14
What is the difference between short-run and long-run in microeconomics?
Short-run refers to a period where all factors of production can be varied, while long-run refers to a period where at least one factor of production is fixed.
Short-run refers to a period where at least one factor of production is fixed, while long-run refers to a period where all factors of production can be varied.
Short-run refers to a period where there is no fixed input, while long-run refers to a period where all inputs are fixed.
Short-run and long-run have the same meaning in microeconomics.
#15
What is the difference between economic rent and normal profit?
Economic rent is the same as accounting profit, while normal profit represents the return to entrepreneurship.
Economic rent represents the return to entrepreneurship, while normal profit is the surplus earned above opportunity cost.
Economic rent represents the surplus earned above opportunity cost, while normal profit is the return to entrepreneurship.