Question 1

In microeconomics, what does the law of demand state?

Accepted Answer

As the price of a good decreases, the quantity demanded of that good increases

Answer

As the price of a good decreases, the quantity demanded of that good decreases

Answer

As the price of a good increases, the quantity demanded of that good decreases

Answer

As the price of a good increases, the quantity demanded of that good increases

Question 2

What is the concept of elasticity of demand in microeconomics?

Accepted Answer

Elasticity of demand measures how responsive quantity demanded is to a change in price

Answer

Elasticity of demand measures the price level at which demand becomes elastic

Answer

Elasticity of demand measures the absolute quantity demanded of a good

Answer

Elasticity of demand measures the total revenue generated from a good

Question 3

What is the law of diminishing marginal returns in microeconomics?

Accepted Answer

As more units of a variable input are added to fixed inputs, the marginal product of the variable input will eventually decrease

Answer

As more units of a variable input are added to fixed inputs, the average product will continuously rise

Answer

As more units of a variable input are added to fixed inputs, the total product will increase indefinitely

Answer

As more units of a variable input are added to fixed inputs, the total costs will decrease

Question 4

What is the concept of perfect competition in microeconomics?

Accepted Answer

Perfect competition is a market structure with many small firms selling identical products, where no single firm has market power

Answer

Perfect competition is a market structure where prices are set by a central authority

Answer

Perfect competition is a market structure with a few large firms dominating the market

Answer

Perfect competition is a market structure where firms sell differentiated products

Question 5

What is the concept of price elasticity of supply in microeconomics?

Accepted Answer

Price elasticity of supply measures the responsiveness of quantity supplied to a change in price

Answer

Price elasticity of supply measures the absolute quantity supplied of a good

Answer

Price elasticity of supply measures the total cost of producing a good

Answer

Price elasticity of supply measures the price level at which supply becomes elastic

Question 6

What is the concept of a monopoly in microeconomics?

Accepted Answer

A monopoly is a market structure where a single firm dominates the entire market and has significant market power

Answer

A monopoly is a market structure with many small firms selling identical products

Answer

A monopoly is a market structure where prices are determined by supply and demand

Answer

A monopoly is a market structure characterized by perfect competition

Question 7

What is the difference between a normal good and an inferior good in microeconomics?

Accepted Answer

A normal good is a good for which demand increases as consumer income rises, while an inferior good is a good for which demand decreases as consumer income rises.

Answer

A normal good is a good for which demand increases as consumer income rises, while an inferior good is a good for which demand increases as consumer income rises.

Answer

A normal good is a good for which demand decreases as consumer income rises, while an inferior good is a good for which demand decreases as consumer income rises.

Answer

A normal good is a good for which demand decreases as consumer income rises, while an inferior good is a good for which demand increases as consumer income rises.

Question 8

What is the concept of market equilibrium in microeconomics?

Accepted Answer

Market equilibrium is the state where the quantity demanded by consumers equals the quantity supplied by producers, resulting in no surplus or shortage.

Answer

Market equilibrium is the state where the quantity demanded by consumers exceeds the quantity supplied by producers, leading to a surplus.

Answer

Market equilibrium is the state where the quantity supplied by producers exceeds the quantity demanded by consumers, resulting in a shortage.

Answer

Market equilibrium is the state where both the quantity demanded and quantity supplied are zero, leading to no transactions.

Question 9

What is the concept of consumer surplus in microeconomics?

Accepted Answer

Consumer surplus is the difference between what consumers are willing to pay for a good or service and what they actually pay.

Answer

Consumer surplus is the profit earned by consumers from purchasing a good or service.

Answer

Consumer surplus is the total revenue generated by selling a good or service.

Answer

Consumer surplus is the value of additional goods consumers are willing to buy beyond their budget.

Question 10

What is the difference between 'marginal cost' and 'average cost' in microeconomics?

Accepted Answer

Marginal cost is the additional cost incurred by producing one more unit, while average cost is the total cost divided by the quantity produced.

Answer

Marginal cost is the total cost divided by the quantity produced, while average cost is the additional cost incurred by producing one more unit.

Answer

Marginal cost is the total revenue divided by the quantity produced, while average cost is the additional cost incurred by producing one more unit.

Answer

Marginal cost is the additional revenue earned by producing one more unit, while average cost is the total cost divided by the quantity produced.

Question 11

What is 'perfect competition' in microeconomics?

Accepted Answer

A market structure with many buyers and sellers, identical products, perfect information, and no barriers to entry or exit.

Answer

A market structure where products are differentiated and sold at different prices.

Answer

A market structure with only one seller dominating the industry.

Answer

A market structure with limited competition and high barriers to entry.

Question 12

What is the concept of 'utility' in microeconomics?

Accepted Answer

Utility refers to the satisfaction or happiness that an individual derives from consuming a good or service.

Answer

Utility is the level of profit generated by a business in a particular period.

Answer

Utility is the total revenue earned by a firm from selling its products.

Answer

Utility is the cost incurred by consumers when purchasing goods.

Question 13

When demand is elastic and supply is inelastic, what will happen to the price and quantity of a good following a decrease in supply?

Accepted Answer

The price will increase significantly, and the quantity will decrease slightly

Answer

There will be no change in price or quantity

Answer

The price will decrease slightly, and the quantity will increase significantly

Answer

Both the price and quantity will increase significantly

Question 14

What is the concept that describes the point where the quantity demanded equals the quantity supplied in a market?

Accepted Answer

Equilibrium

Answer

Monopoly

Answer

Inflation

Answer

Scarcity

Question 15

What principle states that there is an inverse relationship between the price of a good and the quantity demanded, holding all other factors constant?

Accepted Answer

The Law of Demand

Answer

The Law of Supply

Answer

The Law of Equilibrium

Answer

The Law of Scarcity

Question 16

What is the impact on price and quantity in a market with perfectly elastic supply when demand increases?

Accepted Answer

The price will remain constant, but the equilibrium quantity will increase

Answer

The price will increase, and the quantity will decrease

Answer

There will be no change in price or quantity

Answer

Both the price and quantity will increase

Question 17

What is the difference between average cost and marginal cost?

Accepted Answer

Average cost is the total cost divided by the quantity produced, while marginal cost is the additional cost incurred by producing one more unit.

Answer

Marginal cost is the total cost divided by the quantity produced

Answer

Average cost remains constant throughout production, while marginal cost varies

Answer

Average cost is always higher than marginal cost

Question 18

What is the definition of average total cost?

Accepted Answer

Average Total Cost (ATC) is the total cost divided by the quantity of output produced.

Answer

Average Total Cost is the cost incurred in a specific time period

Answer

Average Total Cost is the cost incurred in producing the first unit of output

Answer

Average Total Cost is the sum of fixed costs and variable costs

Question 19

According to the concept of scarcity in economics, which of the following statements is true?

Accepted Answer

Scarcity refers to the limited availability of resources in relation to unlimited wants.

Answer

Scarcity implies that resources are abundant and unlimited.

Answer

Scarcity means that wants are limited and resources are unlimited.

Answer

Scarcity does not have any impact on resource allocation.

Question 20

What does the demand curve show in economics?

Accepted Answer

The relationship between the price of a good and the quantity demanded by consumers

Answer

The relationship between interest rates and investment

Answer

The relationship between supply and demand

Answer

The relationship between income and consumption

Question 21

What does a downward-sloping demand curve indicate?

Accepted Answer

As the price decreases, the quantity demanded increases

Answer

As the price increases, the quantity demanded increases

Answer

There is no relationship between price and quantity demanded

Answer

As the price decreases, the quantity demanded decreases

Question 22

What factors can cause a shift in the demand curve?

Accepted Answer

Changes in consumer income, preferences, population, and expectations

Answer

Changes in government regulations and taxes

Answer

Changes in producer costs, technology, and competition

Answer

Changes in interest rates and investments

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