#1
1. What is the law of demand in microeconomics?
As price increases, quantity demanded increases.
As price decreases, quantity demanded increases.
As price increases, quantity demanded decreases.
As price decreases, quantity demanded decreases.
#2
6. What does the production possibility frontier (PPF) illustrate in microeconomics?
Consumer preferences
The trade-off between two goods that a society can produce efficiently.
The demand and supply equilibrium
Market competition
#3
11. What is the 'invisible hand' concept in microeconomics?
The role of government in regulating markets.
The self-regulating nature of free markets guided by individual self-interest.
The influence of advertising on consumer behavior.
The impact of externalities on market outcomes.
#4
16. What is the 'Tragedy of the Commons' in microeconomics?
The overuse and depletion of shared resources due to self-interest.
The inefficiency of market economies.
The impact of externalities on market outcomes.
The occurrence of market failures.
#5
21. What is the 'income effect' in microeconomics?
The impact of advertising on consumer preferences.
The change in quantity demanded due to a change in real income.
The shift in market demand caused by changes in consumer income.
The effect of changes in interest rates on consumer spending.
#6
2. What does the term 'elasticity' refer to in microeconomics?
The responsiveness of quantity demanded to a change in price.
The total revenue of a firm.
The equilibrium price in a market.
The quantity supplied in a competitive market.
#7
3. According to the law of diminishing marginal utility, what happens as a consumer consumes more units of a good?
Total utility increases.
Marginal utility increases.
Total utility decreases.
Marginal utility remains constant.
#8
7. What is the main assumption of the law of supply in microeconomics?
Producers always aim to maximize profits.
Producers have unlimited resources.
Producers and consumers have perfect information.
Producers and consumers act rationally.
#9
8. In microeconomics, what is the role of a price floor?
To set a maximum price for a good or service.
To prevent the price of a good from falling below a certain level.
To promote market competition.
To reduce government intervention.
#10
12. What does the term 'price discrimination' mean in microeconomics?
Charging different prices for the same good or service to different customers.
Illegal pricing practices by monopolies.
The impact of inflation on prices.
Setting a fixed price for a product in the market.
#11
4. What is a 'normal good' in microeconomics?
A good with an elastic demand.
A good with an inelastic demand.
A good for which demand increases as income increases.
A good for which demand decreases as income decreases.
#12
5. In microeconomics, what is the formula for price elasticity of demand?
Percentage change in quantity demanded / Percentage change in price
Percentage change in price / Percentage change in quantity demanded
Total revenue / Quantity demanded
Marginal utility / Price
#13
9. What is the concept of 'deadweight loss' in microeconomics?
Loss of profit for producers.
Loss of consumer surplus due to market inefficiency.
Government subsidies to producers.
Perfect competition in the market.
#14
10. In microeconomics, what does the term 'opportunity cost' represent?
The cost of production for a firm.
The cost of a good or service in the market.
The value of the best alternative foregone when a choice is made.
The total cost of inputs in the production process.
#15
14. What is the significance of the 'Laffer curve' in microeconomics?
It illustrates the relationship between inflation and unemployment.
It shows the impact of taxation on government revenue and economic activity.
It explains the concept of diminishing marginal utility.
It measures the elasticity of demand for a luxury good.