#1
In microeconomics, what does the law of demand state?
As the price of a good increases, the quantity demanded decreases.
ExplanationHigher prices lead to lower demand.
#2
Which of the following is an example of a perfectly competitive market?
Local farmers' market
ExplanationNumerous sellers offering identical products.
#3
What is the primary goal of firms in microeconomics?
Maximize total profit
ExplanationFirms aim to maximize their net income.
#4
Which of the following is a characteristic of a monopoly?
A single firm selling a unique product
ExplanationOne seller controls the market for a distinct item.
#5
What does the term 'elasticity' refer to in microeconomics?
The responsiveness of quantity demanded to changes in price
ExplanationSensitivity of demand to price fluctuations.
#6
What is the formula for calculating price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
ExplanationElasticity measures responsiveness of demand to price changes.
#7
Which of the following is a characteristic of monopolistic competition?
One firm selling differentiated products
ExplanationMultiple firms offer similar but not identical products.
#8
What is the formula for calculating total revenue?
Price × Quantity demanded
ExplanationTotal income generated from sales.
#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.
ExplanationEconomic profit accounts for all costs, normal profit covers only explicit costs.
#10
Which of the following is an example of a public good?
Street lighting
ExplanationNon-excludable and non-rivalrous goods.
#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.
ExplanationExplicit costs involve monetary expenditure, implicit costs represent opportunity costs.
#12
Which of the following is a determinant of supply in microeconomics?
Number of sellers
ExplanationQuantity of goods provided by producers.
#13
Which of the following is a characteristic of oligopoly?
A few firms selling slightly differentiated products
ExplanationSmall number of firms offering similar but not identical goods.
#14
What is the difference between short-run and long-run in microeconomics?
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.
ExplanationShort-term has fixed inputs, long-term allows adjustment of all inputs.
#15
What is the difference between economic rent and normal profit?
Economic rent represents the surplus earned above opportunity cost, while normal profit is the return to entrepreneurship.
ExplanationRent is excess earnings beyond opportunity cost, profit is return for entrepreneurship.