#1
In economics, what does the law of demand state?
As the price of a good increases, the quantity demanded decreases.
ExplanationPrice up, demand down.
#2
What is the concept of equilibrium price in economics?
The price at which demand equals supply.
ExplanationSupply meets demand.
#3
Which of the following is a characteristic of a perfectly competitive market?
Many sellers and few buyers.
ExplanationNumerous sellers, limited buyers.
#4
What does the price elasticity of demand measure?
The responsiveness of quantity demanded to a change in price.
ExplanationHow demand changes with price.
#5
Which of the following is not a determinant of demand?
Technology
ExplanationTechnology doesn't affect demand.
#6
What does elasticity of demand measure?
The responsiveness of quantity demanded to a change in price.
ExplanationChange in demand with price change.
#7
Which of the following is not a determinant of supply?
Consumer preferences
ExplanationConsumer preference is not a supply determinant.
#8
What is the formula to calculate total revenue?
Price × Quantity Demanded
ExplanationPrice times Quantity Demanded.
#9
What does the term 'market failure' refer to in economics?
When the market fails to allocate resources efficiently.
ExplanationInefficient resource allocation.
#10
What is the main idea behind the law of diminishing marginal utility?
As a consumer consumes more of a good, the additional satisfaction from each additional unit decreases.
ExplanationSatisfaction decreases with more consumption.
#11
In the long run, in a perfectly competitive market, what happens if firms are making economic profits?
New firms will enter the market, increasing supply and decreasing prices until economic profits disappear.
ExplanationProfitable market attracts competition.
#12
Which of the following is not a characteristic of monopolistic competition?
Perfect substitutes
ExplanationDifferentiated products, not perfect substitutes.
#13
What is a natural monopoly?
A monopoly that arises when one firm can produce at a lower cost than multiple firms.
ExplanationSingle firm has lower costs than many.
#14
What is the difference between accounting profit and economic profit?
Accounting profit includes explicit costs only, while economic profit includes both explicit and implicit costs.
ExplanationCosts included in profit calculation.
#15
What is a cartel?
A group of firms that collude to restrict output and raise prices.
ExplanationCollusive output restriction.