#1
What is the law of demand in economics?
As price increases, quantity demanded decreases
ExplanationInverse relationship between price and quantity demanded.
#2
What is the law of supply in microeconomics?
As price decreases, quantity supplied increases
ExplanationDirect relationship between price and quantity supplied.
#3
What is the concept of market equilibrium?
A situation where quantity demanded equals quantity supplied.
ExplanationBalanced state where supply and demand are equal.
#4
What is the concept of elasticity of demand?
A measure of the responsiveness of quantity demanded to changes in price.
ExplanationIndicates how quantity demanded changes with price.
#5
What is the law of diminishing marginal utility?
As the quantity consumed of a good increases, the total utility increases at a decreasing rate.
ExplanationDecreasing additional satisfaction with each additional unit consumed.
#6
What does the supply curve represent in microeconomics?
The relationship between price and quantity supplied
ExplanationIllustrates how quantity supplied changes with price.
#7
What is the equilibrium price in a market?
The price at which quantity supplied equals quantity demanded
ExplanationPoint where supply and demand are balanced.
#8
What is the price elasticity of demand?
A measure of the responsiveness of quantity demanded to a change in price
ExplanationQuantifies how demand reacts to price changes.
#9
What is a perfectly competitive market?
A market with many buyers and sellers, identical products, and free entry and exit
ExplanationIdealized market structure with no market power.
#10
What is the difference between a normal good and an inferior good?
Normal goods have a positive income elasticity of demand, while inferior goods have a negative income elasticity of demand.
ExplanationIncome elasticity determines how demand changes with income.
#11
What is the concept of elasticity of supply?
A measure of the responsiveness of quantity supplied to changes in price.
ExplanationExamines how quantity supplied changes with price.
#12
What is the difference between a monopoly and perfect competition?
Monopolies have identical products, while perfect competition has differentiated products.
ExplanationContrast in market structures based on product differentiation.
#13
What is a price floor in the context of supply and demand?
A government-imposed minimum price for a good or service
ExplanationGovernment sets a floor to prevent prices from falling.
#14
Inelastic demand is characterized by:
Small changes in quantity demanded for a large change in price
ExplanationQuantity demanded is less responsive to price changes.
#15
What is the cross-price elasticity of demand?
A measure of the responsiveness of quantity demanded to a change in the price of another good
ExplanationExamines how demand for one good changes with the price of another.
#16
What is the concept of consumer surplus?
The difference between the maximum price a consumer is willing to pay and the actual price paid
ExplanationBenefit consumers receive when they pay less than their maximum willingness to pay.
#17
What is the deadweight loss in the context of taxation?
The total loss in welfare that occurs when a tax reduces the quantity traded in a market.
ExplanationEfficiency loss due to taxes distorting market equilibrium.
#18
What is the multiplier effect in economics?
The magnification of an initial change in spending into a larger final change in economic activity.
ExplanationAmplification of economic changes through multiple rounds of spending.
#19
What is the opportunity cost of a decision?
The highest-valued alternative that must be sacrificed to make the decision.
ExplanationThe value of the next best alternative foregone.