#1
What is the formula for calculating profit?
Revenue - Cost
Cost - Revenue
Revenue / Cost
Cost / Revenue
#2
In economic terms, what does 'opportunity cost' refer to?
The cost of producing one additional unit of a good
The cost of forgoing the next best alternative
The total cost of production
The cost of marketing a product
#3
Which of the following is an example of an implicit cost?
Rent paid for office space
Wages paid to employees
Interest paid on a business loan
Salary foregone by the business owner
#4
What is the difference between accounting profit and economic profit?
They are the same
Accounting profit includes explicit costs, while economic profit includes implicit and explicit costs
Economic profit includes only explicit costs, while accounting profit includes implicit and explicit costs
Accounting profit is calculated for the short run, while economic profit is calculated for the long run
#5
What is the relationship between marginal cost (MC) and average total cost (ATC) when MC is below ATC?
MC > ATC
MC < ATC
MC = ATC
No relationship between MC and ATC
#6
Which of the following is a characteristic of a monopoly market structure?
Many firms producing identical products
Ease of entry for new firms
One firm as the sole seller with no close substitutes
Price-taking behavior of individual firms
#7
What is the concept of 'marginal utility' in economics?
The additional satisfaction gained from consuming one more unit of a good
The total satisfaction derived from consuming a good
The average satisfaction obtained from consuming a good
The satisfaction gained from the first unit of a good
#8
How does a price ceiling impact the market for a good?
It leads to a surplus of the good
It creates a shortage of the good
It has no effect on the market equilibrium
It eliminates both producers and consumers surplus
#9
What is the role of a production possibility frontier (PPF) in economics?
To show the maximum output combinations of two goods an economy can produce
To indicate the profit-maximizing level of production
To determine the equilibrium price of a good
To regulate the production of goods and services
#10
According to the law of diminishing returns, what happens as more units of a variable input are added to a fixed input in the short run?
Total product increases continuously
Marginal product diminishes
Average product rises
Fixed costs decrease
#11
In the context of economic efficiency, what does Pareto efficiency imply?
It is impossible to make one individual better off without making another worse off
It is possible to make everyone better off simultaneously
It is optimal to maximize the production of all goods and services
It is optimal to minimize the production of goods and services
#12
What is the significance of the price elasticity of demand for a product?
It indicates how much quantity demanded changes in response to a change in price
It determines the production cost of the product
It measures the total revenue generated by the product
It reflects the market share of the product
#13
How does a perfectly competitive market achieve allocative efficiency?
By producing at the minimum point of average total cost
By producing at the level where price equals marginal cost
By maximizing total revenue
By minimizing explicit costs
#14
What is the primary objective of a firm in the long run from an economic perspective?
Maximizing accounting profit
Minimizing economic profit
Maximizing total revenue
Maximizing economic profit
#15
In terms of economic efficiency, what does the term 'deadweight loss' refer to?
The loss of consumer surplus due to a decrease in price
The loss of producer surplus due to an increase in quantity demanded
The overall reduction in consumer and producer surplus caused by market inefficiency
The gain in social welfare due to a decrease in production costs