#1
1. What is the law of demand in microeconomics?
As price decreases, quantity demanded increases.
ExplanationInverse relationship between price and quantity demanded.
#2
6. What does the production possibility frontier (PPF) illustrate in microeconomics?
The trade-off between two goods that a society can produce efficiently.
ExplanationShows maximum production of two goods given resources.
#3
11. What is the 'invisible hand' concept in microeconomics?
The self-regulating nature of free markets guided by individual self-interest.
ExplanationMarket forces guiding resource allocation.
#4
16. What is the 'Tragedy of the Commons' in microeconomics?
The overuse and depletion of shared resources due to self-interest.
ExplanationOverexploitation of common resources.
#5
21. What is the 'income effect' in microeconomics?
The change in quantity demanded due to a change in real income.
ExplanationImpact of income change on quantity demanded.
#6
2. What does the term 'elasticity' refer to in microeconomics?
The responsiveness of quantity demanded to a change in price.
ExplanationMeasure of sensitivity of demand to price changes.
#7
3. According to the law of diminishing marginal utility, what happens as a consumer consumes more units of a good?
Total utility decreases.
ExplanationDecrease in satisfaction from consuming additional units.
#8
7. What is the main assumption of the law of supply in microeconomics?
Producers always aim to maximize profits.
ExplanationProducers seek to increase profits by supplying more.
#9
8. In microeconomics, what is the role of a price floor?
To prevent the price of a good from falling below a certain level.
ExplanationSets minimum price for a good to maintain value.
#10
12. What does the term 'price discrimination' mean in microeconomics?
Charging different prices for the same good or service to different customers.
ExplanationVarying prices based on consumer characteristics.
#11
4. What is a 'normal good' in microeconomics?
A good for which demand increases as income increases.
ExplanationGoods for which demand rises with income growth.
#12
5. In microeconomics, what is the formula for price elasticity of demand?
Percentage change in price / Percentage change in quantity demanded
ExplanationMeasure of responsiveness of demand to price changes.
#13
9. What is the concept of 'deadweight loss' in microeconomics?
Loss of consumer surplus due to market inefficiency.
ExplanationWelfare loss from market inefficiencies.
#14
10. In microeconomics, what does the term 'opportunity cost' represent?
The value of the best alternative foregone when a choice is made.
ExplanationCost of next best alternative when making a decision.
#15
14. What is the significance of the 'Laffer curve' in microeconomics?
It shows the impact of taxation on government revenue and economic activity.
ExplanationRelationship between tax rates, revenue, and economic activity.