1. In economics, the term “opportunity cost” refers
to:
a) The financial cost of a particular choice
b) The value of the best alternative foregone
c) The total cost of producing a good or service
d) The profit earned from a business venture
Answer: b) The value of the best alternative
foregone
2. Which of the following is an example of a perfectly
competitive market?
a) The market for luxury cars
b) The market for natural gas
c) The market for smartphones
d) The market for agricultural products
Answer:
d) The market for agricultural products
3. The law of demand states that:
a) There is a positive relationship between price and
quantity demanded
b) There is a negative relationship between price and
quantity demanded
c) Price has no effect on quantity demanded
d) Quantity demanded is determined solely by income
Answer:
b) There is a negative relationship between price and
quantity demanded
4. The term “elasticity of demand” measures the:
a) Responsiveness of quantity demanded to changes in price
b) Responsiveness of quantity supplied to changes in price
c) Rate at which prices change in the market
d) Proportion of income spent on a particular good or service
Answer:
a) Responsiveness of quantity demanded to changes in
price
5. A price ceiling is a government-imposed maximum price set:
a) Above the equilibrium price, leading to a surplus
b) Above the equilibrium price, leading to a shortage
c) Below the equilibrium price, leading to a surplus
d) Below the equilibrium price, leading to a shortage
Answer:
c) Below the equilibrium price, leading to a surplus
6. When a market is in equilibrium:
a) There is excess demand in the market
b) There is excess supply in the market
c) Quantity demanded is equal to quantity supplied
d) Quantity demanded is greater than quantity supplied
Answer:
c) Quantity demanded is equal to quantity supplied
7. The term “marginal utility” refers to the:
a) Total satisfaction derived from consuming a good or service
b) Additional satisfaction derived from consuming an
additional unit of a good or service
c) Total cost of producing a good or service
d) Additional cost incurred in producing an additional unit
of a good or service
Answer:
b) Additional satisfaction derived from consuming an
additional unit of a good or service
8. The term
“oligopoly” refers to a market structure characterized by:
a) A large number of firms, differentiated products, and free
entry and exit
b) A single firm with exclusive control over the entire
market
c) A small number of firms, standardized products, and
significant barriers to entry
d) A government-owned and operated industry
Answer:
c) A small number of firms, standardized products, and
significant barriers to entry
9. The concept of “diminishing marginal returns”
suggests that:
a) As more units of a variable input are added, total output
increases at an increasing rate
b) As more units of a variable input are added, total output
increases at a decreasing rate
c) As more units of a variable input are added, total output
remains constant
d) As more units of a variable input are added, total output
decreases
Answer:
b) As more units of a variable input are added, total
output increases at a decreasing rate
10. In a perfectly competitive market, a firm is a price taker,
which means that it:
a) Sets the price of its products based on its production
costs
b) Has significant control over the market price
c) Must accept the market price determined by supply and
demand
d) Can influence the market price through advertising and
marketing
Answer:
c) Must accept the market price determined by supply and
demand
11. The concept of “elasticity of supply” measures the:
a) Responsiveness of quantity supplied to changes in price
b) Responsiveness of quantity demanded to changes in price
c) Rate at which prices change in the market
d) Proportion of income spent on a particular good or service
Answer:
a) Responsiveness of quantity supplied to changes in
price
12. The term “monopoly” refers to a market structure
characterized by:
a) A large number of firms, differentiated products, and free
entry and exit
b) A single firm with exclusive control over the entire
market
c) A small number of firms, standardized products, and
significant barriers to entry
d) A government-owned and operated industry
Answer:
b) A single firm with exclusive control over the entire
market
13. The term “price discrimination” refers to a
strategy where a firm charges different prices to different customers based on
their:
a) Personal preferences and tastes
b) Income levels and purchasing power
c) Geographic location or segment of the market
d) Price elasticity of demand
Answer:
c) Geographic location or segment of the market
14. The concept of “economic efficiency” refers to a
situation where:
a) Resources are allocated in a way that maximizes total
utility
b) Resources are allocated in a way that maximizes producer
surplus
c) Resources are allocated in a way that minimizes consumer
surplus
d) Resources are allocated in a way that maximizes total
welfare or social surplus
Answer:
d) Resources are allocated in a way that maximizes total
welfare or social surplus
15. The term “externality” in economics refers to:
a) Costs or benefits of economic activities that are borne by
third parties, not directly involved in the activity
b) Economic policies that are implemented by supranational
organizations
c) The movement of goods and services across national borders
d) The distribution of income and wealth in a society
Answer:
a) Costs or benefits of economic activities that are
borne by third parties, not directly involved in the activity
16. The term “perfectly elastic demand” refers to a
situation where:
a) Quantity demanded is extremely sensitive to changes in
price
b) Quantity demanded is not responsive to changes in price
c) Quantity demanded is perfectly inelastic regardless of
price changes
d) Quantity demanded is perfectly responsive to changes in
income
Answer:
a) Quantity demanded is extremely sensitive to changes in
price
17. A firm’s total revenue is equal to:
a) Price multiplied by quantity supplied
b) Price multiplied by quantity demanded
c) Average revenue multiplied by quantity supplied
d) Average revenue multiplied by quantity demanded
Answer:
b) Price multiplied by quantity demanded
18. The term “game theory” is the study of:
a) How individuals make decisions in social and strategic
situations
b) How firms set prices and output levels to maximize profit
c) How markets reach equilibrium through the interaction of
supply and demand
d) How government policies influence economic outcomes
Answer:
a) How individuals make decisions in social and strategic
situations
19. In economics, the term “utility” refers to:
a) The total satisfaction derived from consuming a good or
service
b) The price of a good or service
c) The cost of producing a good or service
d) The profit earned from selling a good or service
Answer:
a) The total satisfaction derived from consuming a good
or service
20. The term “perfect competition” refers to a market
structure characterized by:
a) A large number of firms, differentiated products, and
barriers to entry
b) A single firm with exclusive control over the entire
market
c) A small number of firms, standardized products, and free
entry and exit
d) A government-regulated industry
Answer:
c) A small number of firms, standardized products, and
free entry and exit
21. The concept of “marginal cost” refers to the:
a) Additional cost incurred in producing one more unit of a
good or service
b) Total cost of producing a certain quantity of a good or
service
c) Average cost per unit of a good or service
d) Fixed cost of production
Answer:
a) Additional cost incurred in producing one more unit of
a good or service
22. The term “price elasticity of demand” measures the:
a) Responsiveness of quantity demanded to changes in price
b) Responsiveness of quantity supplied to changes in price
c) Rate at which prices change in the market
d) Proportion of income spent on a particular good or service
Answer:
a) Responsiveness of quantity demanded to changes in
price
23. A production possibilities frontier (PPF) represents:
a) The maximum output levels an economy can produce with its
available resources
b) The distribution of income and wealth in a society
c) The demand and supply curves of a particular product
d) The economic growth rate of a country
Answer:
a) The maximum output levels an economy can produce with
its available resources
24. The term “oligopoly” refers to a market structure
characterized by:
a) A large number of firms, differentiated products, and
barriers to entry
b) A single firm with exclusive control over the entire
market
c) A small number of firms, standardized products, and
significant barriers to entry
d) A government-owned and operated industry
Answer:
c) A small number of firms, standardized products, and
significant barriers to entry
25. The concept of “consumer surplus” refers to:
a) The total amount of money consumers spend on goods and
services
b) The difference between the price consumers are willing to
pay and the price they actually pay
c) The total amount of money consumers earn from selling
goods and services
d) The difference between the price suppliers receive and the
price consumers pay
Answer:
b) The difference between the price consumers are willing
to pay and the price they actually pay
26. The term “monopsony” refers to a market structure
characterized by:
a) A single firm with exclusive control over the entire
market
b) A large number of firms, differentiated products, and free
entry and exit
c) A small number of firms, standardized products, and significant
barriers to entry
d) A market with a single buyer and many sellers
Answer:
d) A market with a single buyer and many sellers
27. The term “perfectly inelastic demand” refers to a
situation where:
a) Quantity demanded is extremely sensitive to changes in
price
b) Quantity demanded is not responsive to changes in price
c) Quantity demanded is perfectly elastic regardless of price
changes
d) Quantity demanded is perfectly responsive to changes in
income
Answer:
b)
28. The concept of “price elasticity of supply”
measures the:
a) Responsiveness of quantity demanded to changes in price
b) Responsiveness of quantity supplied to changes in price
c) Rate at which prices change in the market
d) Proportion of income spent on a particular good or service
Answer:
b) Responsiveness of quantity supplied to changes in
price
29. The term “monopolistic competition” refers to a
market structure characterized by:
a) A large number of firms, differentiated products, and
barriers to entry
b) A single firm with exclusive control over the entire
market
c) A small number of firms, standardized products, and free
entry and exit
d) A government-regulated industry
Answer:
a) A large number of firms, differentiated products, and
barriers to entry
30. The law of diminishing marginal utility states that:
a) As more of a good is consumed, the total utility derived
from each additional unit increases
b) As more of a good is consumed, the total utility derived
from each additional unit decreases
c) As more of a good is consumed, the marginal utility
derived from each additional unit increases
d) As more of a good is consumed, the marginal utility
derived from each additional unit decreases
Answer:
d) As more of a good is consumed, the marginal utility
derived from each additional unit decreases
31. A price floor is a government-imposed minimum price set:
a) Above the equilibrium price, leading to a surplus
b) Above the equilibrium price, leading to a shortage
c) Below the equilibrium price, leading to a surplus
d) Below the equilibrium price, leading to a shortage
Answer:
b) Above the equilibrium price, leading to a shortage
32. The concept of “market equilibrium” occurs when:
a) Quantity demanded exceeds quantity supplied
b) Quantity supplied exceeds quantity demanded
c) Quantity demanded equals quantity supplied
d) Quantity demanded and quantity supplied are unrelated
Answer:
c) Quantity demanded equals quantity supplied
33. The term “price elasticity of demand” is calculated
as the:
a) Percentage change in quantity demanded divided by the
percentage change in price
b) Percentage change in price divided by the percentage
change in quantity demanded
c) Total change in quantity demanded divided by the total
change in price
d) Total change in price divided by the total change in
quantity demanded
Answer:
a) Percentage change in quantity demanded divided by the
percentage change in price
34. The term “externalities” in economics refers to:
a) Costs or benefits of economic activities that are borne by
third parties, not directly involved in the activity
b) Economic policies that are implemented by supranational
organizations
c) The movement of goods and services across national borders
d) The distribution of income and wealth in a society
Answer:
a) Costs or benefits of economic activities that are
borne by third parties, not directly involved in the activity
35. The term “short-run” in economics refers to a time
period in which:
a) All inputs are fixed and cannot be changed
b) Some inputs are fixed, while others are variable
c) All inputs are variable and can be adjusted
d) The economy is in a recessionary phase
Answer:
b) Some inputs are fixed, while others are variable
36. The concept of “total cost” includes:
a) Only the explicit costs incurred in production
b) Only the implicit costs incurred in production
c) Both explicit and implicit costs incurred in production
d) None of the above
Answer:
c) Both explicit and implicit costs incurred in
production
37. The term “production function” describes the
relationship between:
a) Total revenue and total cost
b) Total output and total cost
c) Total output and total revenue
d) Total cost and average cost
Answer:
b) Total output and total cost
38. The term “deadweight loss” refers to:
a) The loss of consumer surplus and producer surplus due to
market inefficiency
b) The loss of government revenue from taxation
c) The loss of profits experienced by firms in a monopolistic
market
d) The loss of economic output in a recessionary period
Answer:
a) The loss of consumer surplus and producer surplus due
to market inefficiency
39. The concept of “income elasticity of demand”
measures the:
a) Responsiveness of quantity demanded to changes in income
b) Responsiveness of quantity supplied to changes in income
c) Rate at which incomes change in the market
d) Proportion of income spent on a particular good or service
Answer:
a) Responsiveness of quantity demanded to changes in
income
40. The term “cross-price elasticity of demand”
measures the responsiveness of quantity demanded of one good to changes in the
price of:
a) A complementary good
b) A substitute good
c) An inferior good
d) A luxury good
Answer:
b) A substitute good
41. The concept of “total revenue” is calculated as:
a) Price multiplied by quantity supplied
b) Price multiplied by quantity demanded
c) Average revenue multiplied by quantity supplied
d) Average revenue multiplied by quantity demanded
Answer:
b) Price multiplied by quantity demanded
42. The term “market failure” refers to a situation
where:
a) The government fails to regulate markets effectively
b) There is an imbalance between demand and supply in a
market
c) Resources are not allocated efficiently in the market
d) Market prices fluctuate too rapidly
Answer:
c) Resources are not allocated efficiently in the market
43. The term “perfectly inelastic demand” refers to a
situation where:
a) Quantity demanded is extremely sensitive to changes in
price
b) Quantity demanded is not responsive to changes in price
c) Quantity demanded is perfectly elastic regardless of price
changes
d) Quantity demanded is perfectly responsive to changes in
income
Answer:
b) Quantity demanded is not responsive to changes in
price
44. The term “sunk cost” refers to:
a) A cost that has already been incurred and cannot be
recovered
b) A cost that varies with the level of production
c) A cost that is directly proportional to the quantity of
output
d) A cost that is incurred in the short run
Answer:
a) A cost that has already been incurred and cannot be
recovered
45. The concept of “marginal revenue” is defined as
the:
a) Total revenue earned from selling one unit of a good
b) Additional revenue earned from selling one more unit of a
good
c) Average revenue earned per unit of a good
d) Total revenue earned minus the total cost incurred
Answer:
b) Additional revenue earned from selling one more unit
of a good
46. The term “natural monopoly” refers to a situation
where:
a) A single firm controls the entire market due to government
regulation
b) Multiple firms compete in a market without any barriers to
entry
c) A single firm can produce at a lower cost than multiple
firms in the industry
d) Multiple firms collude to set prices and restrict
competition in the market
Answer:
c) A single firm can produce at a lower cost than
multiple firms in the industry
47. The term “opportunity cost” refers to:
a) The monetary cost of producing a good or service
b) The highest-valued alternative that must be forgone to
choose an option
c) The cost of raw materials used in production
d) The cost of labor employed in production
Answer:
b) The highest-valued alternative that must be forgone to
choose an option
48. The term “price ceiling” is a government-imposed
maximum price set:
a) Below the equilibrium price, leading to a surplus
b) Below the equilibrium price, leading to a shortage
c) Above the equilibrium price, leading to a surplus
d) Above the equilibrium price, leading to a shortage
Answer:
b) Below the equilibrium price, leading to a shortage
49. The concept of “elasticity of supply” measures the:
a) Responsiveness of quantity demanded to changes in price
b) Responsiveness of quantity supplied to changes in price
c) Rate at which prices change in the market
d) Proportion of income spent on a particular good or service
Answer:
b) Responsiveness of quantity supplied to changes in
price
50. The term “diminishing returns” occurs when:
a) Total output increases proportionately with the increase
in input usage
b) Total output decreases as more units of a variable input
are added to a fixed input
c) Total output remains constant regardless of input usage
d) Total output exceeds the maximum capacity of the production
function
Answer:
b) Total output decreases as more units of a variable
input are added to a fixed input
51. The concept of “marginal utility” measures the:
a) Total satisfaction derived from consuming a good or
service
b) Additional satisfaction derived from consuming one more
unit of a good or service
c) Total cost of producing a certain quantity of a good or
service
d) Additional cost incurred in producing one more unit of a
good or service
Answer:
b) Additional satisfaction derived from consuming one
more unit of a good or service
52. The term “monopoly” refers to a market structure
characterized by:
a) A large number of firms, differentiated products, and
barriers to entry
b) A single firm with exclusive control over the entire
market
c) A small number of firms, standardized products, and free
entry and exit
d) A government-regulated industry
Answer:
b) A single firm with exclusive control over the entire
market
53. The concept of “marginal cost” is calculated as
the:
a) Change in total cost divided by the change in quantity
produced
b) Change in total revenue divided by the change in quantity
produced
c) Total cost divided by the total quantity produced
d) Total revenue divided by the total quantity produced
Answer:
a) Change in total cost divided by the change in quantity
produced
54. The term “elastic demand” refers to a situation
where:
a) Quantity demanded is extremely sensitive to changes in
price
b) Quantity demanded is not responsive to changes in price
c) Quantity demanded is perfectly elastic regardless of price
changes
d) Quantity demanded is perfectly responsive to changes in
income
Answer:
a) Quantity demanded is extremely sensitive to changes in
price
55. The term “monopolistic competition” is a market
structure characterized by:
a) A large number of firms, differentiated products, and
barriers to entry
b) A single firm with exclusive control over the entire
market
c) A small number of firms, standardized products, and
significant barriers to entry
d) A government-owned and operated industry
Answer:
a)
56. The term “perfect competition” refers to a market
structure characterized by:
a) A large number of firms, differentiated products, and
barriers to entry
b) A single firm with exclusive control over the entire
market
c) A small number of firms, standardized products, and free
entry and exit
d) A government-regulated industry
Answer:
c) A small number of firms, standardized products, and
free entry and exit
57. The concept of “marginal product” measures the:
a) Total output produced by a firm
b) Additional output produced by one more unit of input
c) Average output produced per unit of input
d) Total cost incurred in producing a certain quantity of
output
Answer:
b) Additional output produced by one more unit of input
58. The term “oligopoly” refers to a market structure
characterized by:
a) A large number of firms, differentiated products, and
barriers to entry
b) A single firm with exclusive control over the entire
market
c) A small number of firms, standardized products, and free
entry and exit
d) A small number of firms that dominate the market
Answer: d) A small number of firms that dominate the market
59. The concept of “perfectly elastic demand” refers to
a situation where:
a) Quantity demanded is extremely sensitive to changes in
price
b) Quantity demanded is not responsive to changes in price
c) Quantity demanded is perfectly responsive to changes in
income
d) Quantity demanded is perfectly inelastic regardless of
price changes
Answer:
b) Quantity demanded is not responsive to changes in
price
60. The term “marginal revenue product” is calculated
as the:
a) Change in total revenue divided by the change in quantity
produced
b) Change in total cost divided by the change in quantity
produced
c) Change in total revenue divided by the change in input
usage
d) Change in total cost divided by the change in input usage
Answer:
c) Change in total revenue divided by the change in input
usage
61. The concept of “consumer surplus” measures the:
a) Total satisfaction derived from consuming a good or
service
b) Additional satisfaction derived from consuming one more
unit of a good or service
c) Difference between the price consumers are willing to pay
and the price they actually pay
d) Difference between total revenue and total cost
Answer:
c) Difference between the price consumers are willing to
pay and the price they actually pay
62. The term “oligopsony” refers to a market structure
characterized by:
a) A large number of buyers and a single seller
b) A small number of buyers and a large number of sellers
c) A single buyer with exclusive control over the entire
market
d) A small number of buyers that dominate the market
Answer: d) A small number of buyers that
dominate the market
63. The concept of “price discrimination” refers to:
a) The practice of charging different prices to different
customers for the same product
b) The practice of setting prices below production costs to
drive competitors out of the market
c) The practice of colluding with other firms to set prices
and restrict competition
d) The practice of government intervention in setting market
prices
Answer:
a) The practice of charging different prices to different
customers for the same product
64. The concept of “externality” refers to:
a) The cost incurred by firms to produce goods and services
b) The benefit received by consumers from consuming goods and
services
c) The impact of economic activities on third parties not
involved in the transaction
d) The profit earned by firms in competitive markets
Answer:
c) The impact of economic activities on third parties not
involved in the transaction
65. The term “perfectly competitive market” is
characterized by:
a) A large number of firms, differentiated products, and
barriers to entry
b) A single firm with exclusive control over the entire
market
c) A small number of firms, standardized products, and
significant barriers to entry
d) A large number of firms, standardized products, and free
entry and exit
Answer:
d) A large number of firms, standardized products, and
free entry and exit
66. The concept of “income effect” refers to the:
a) Change in quantity demanded of a good due to a change in
income
b) Change in quantity supplied of a good due to a change in
income
c) Change in price of a good due to a change in income
d) Change in consumer preferences due to a change in income
Answer:
a) Change in quantity demanded of a good due to a change
in income
67. The term “perfectly elastic supply” refers to a
situation where:
a) Quantity supplied is extremely sensitive to changes in
price
b) Quantity supplied is not responsive to changes in price
c) Quantity supplied is perfectly responsive to changes in
income
d) Quantity supplied is perfectly inelastic regardless of
price changes
Answer:
a) Quantity supplied is extremely sensitive to changes in
price
68. The concept of “marginal rate of substitution”
measures the:
a) Rate at which a consumer is willing to trade one good for
another
b) Rate at which a firm substitutes one input for another to
minimize costs
c) Rate at which prices change in the market
d) Rate at which consumer preferences change over time
Answer:
a) Rate at which a consumer is willing to trade one good
for another
69. The term “production possibility frontier”
represents:
a) The maximum output that can be produced using all
available resources and technology
b) The minimum amount of input required to produce a given
level of output
c) The relationship between price and quantity demanded in a
market
d) The cost of production for different levels of output
Answer:
a) The maximum output that can be produced using all
available resources and technology
70. The concept of “monopsony” refers to a market
structure characterized by:
a) A large number of buyers and a single seller
b) A small number of buyers and a large number of sellers
c) A single buyer with exclusive control over the entire
market
d) A small number of buyers that dominate the market
Answer:
c) A single buyer with exclusive control over the entire
market
71. The term “elasticity of demand” measures the:
a) Responsiveness of quantity demanded to changes in price
b) Responsiveness of quantity supplied to changes in price
c) Rate at which prices change in the market
d) Rate at which consumer preferences change over time
Answer:
a) Responsiveness of quantity demanded to changes in
price
72. The term “monopolistic competition” is a market
structure characterized by:
a) A large number of firms, differentiated products, and
barriers to entry
b) A single firm with exclusive control over the entire
market
c) A small number of firms, standardized products, and
significant barriers to entry
d) A government-owned and operated industry
Answer:
a) A large number of firms, differentiated products, and
barriers to entry
73. The concept of “deadweight loss” refers to:
a) The loss of consumer surplus due to an increase in price
b) The loss of producer surplus due to a decrease in price
c) The loss of total surplus due to a market inefficiency
d) The loss of tax revenue due to tax evasion
Answer:
c) The loss of total surplus due to a market inefficiency
74. The term “inelastic demand” refers to a situation where:
a) Quantity demanded is extremely sensitive to changes in
price
b) Quantity demanded is not responsive to changes in price
c) Quantity demanded is perfectly elastic regardless of price
changes
d) Quantity demanded is perfectly responsive to changes in
income
Answer:
b) Quantity demanded is not responsive to changes in
price
75. The concept of “market equilibrium” occurs when:
a) Quantity demanded is equal to quantity supplied
b) Quantity demanded exceeds quantity supplied
c) Quantity supplied exceeds quantity demanded
d) Prices are at their highest level
Answer:
a) Quantity demanded is equal to quantity supplied
76. The term “price elasticity of demand” measures the:
a) Responsiveness of quantity demanded to changes in price
b) Responsiveness of quantity supplied to changes in price
c) Rate at which prices change in the market
d) Rate at which consumer preferences change over time
Answer:
a) Responsiveness of quantity demanded to changes in
price
77. The concept of “short-run production” refers to a
period of time when:
a) All inputs can be varied to adjust production levels
b) At least one input is fixed and cannot be varied
c) All inputs are fixed, and no adjustments can be made
d) Inputs can be adjusted, but the production technology
cannot be changed
Answer:
b) At least one input is fixed and cannot be varied
78. The term “normal goods” refers to goods that have:
a) Elastic demand, as consumers are highly responsive to
price changes
b) Inelastic demand, as consumers are not very responsive to
price changes
c) Demand that is directly related to consumers’ income
levels
d) Demand that is not affected by changes in consumers’
income levels
Answer:
c) Demand that is directly related to consumers’ income
levels
79. The concept of “perfectly inelastic demand” refers
to a situation where:
a) Quantity demanded is extremely sensitive to changes in
price
b) Quantity demanded is not responsive to changes in price
c) Quantity demanded is perfectly responsive to changes in
income
d) Quantity demanded is perfectly elastic regardless of price
changes
Answer:
b) Quantity demanded is not responsive to changes in
price
80. The term “oligopsony” refers to a market structure
characterized by:
a) A large number of buyers and a single seller
b) A small number of buyers and a large number of sellers
c) A single buyer with exclusive control over the entire
market
d) A small number of buyers that dominate the market
Answer:
b) A small number of buyers and a large number of sellers
81. The term “market failure” refers to a situation
where:
a) The market is unable to allocate resources efficiently
b) The market is dominated by a single firm
c) The market is characterized by perfect competition
d) The market is regulated by the government
Answer:
a) The market is unable to allocate resources efficiently
82. The concept of “price elasticity of supply”
measures the:
a) Responsiveness of quantity demanded to changes in price
b) Responsiveness of quantity supplied to changes in price
c) Rate at which prices change in the market
d) Rate at which suppliers adjust their production levels
Answer:
b) Responsiveness of quantity supplied to changes in
price
83. The term “subsidy” refers to:
a) A tax imposed on goods and services
b) A payment from the government to support production or
consumption
c) A restriction on the import or export of goods
d) A price control set by the government
Answer:
b) A payment from the government to support production or
consumption
84. The concept of “market power” refers to the ability
of a firm to:
a) Produce goods and services at the lowest cost
b) Set prices independently of market conditions
c) Enter and exit the market freely
d) Maximize consumer satisfaction
Answer:
b) Set prices independently of market conditions
85. The term “income elasticity of demand” measures
the:
a) Responsiveness of quantity demanded to changes in price
b) Responsiveness of quantity demanded to changes in income
c) Rate at which prices change in the market
d) Rate at which consumer preferences change over time
Answer:
b) Responsiveness of quantity demanded to changes in
income
86. The concept of “price floor” is a
government-imposed minimum price set:
a) Below the equilibrium price, leading to a surplus
b) Below the equilibrium price, leading to a shortage
c) Above the equilibrium price, leading to a surplus
d) Above the equilibrium price, leading to a shortage
Answer:
c) Above the equilibrium price, leading to a surplus
87. The term “inelastic supply” refers to a situation
where:
a) Quantity supplied is extremely sensitive to changes in
price
b) Quantity supplied is not responsive to changes in price
c) Quantity supplied is perfectly elastic regardless of price
changes
d) Quantity supplied is perfectly responsive to changes in
income
Answer:
b) Quantity supplied is not responsive to changes in
price
88. The concept of “consumer surplus” represents:
a) The amount of money consumers spend on goods and services
b) The additional satisfaction derived from consuming one
more unit of a good
c) The difference between the maximum price consumers are
willing to pay and the price they actually pay
d) The difference between total revenue and total cost for a
firm
Answer:
c) The difference between the maximum price consumers are
willing to pay and the price they actually pay
89. The term “production function” refers to the
relationship between:
a) Price and quantity demanded in a market
b) Input usage and total cost of production
c) Output and the quantities of inputs used in production
d) Consumer preferences and utility maximization
Answer:
c) Output and the quantities of inputs used in production
90. The concept of “regressive tax” refers to a tax
that:
a) Imposes a higher tax rate on higher-income individuals
b) Imposes a higher tax rate on lower-income individuals
c) Imposes the same tax rate on all income levels
d) Does not affect individual income levels
Answer:
b)
91. The term “opportunity cost” refers to:
a) The monetary cost of a decision
b) The highest-valued alternative given up when making a
choice
c) The total cost of production for a firm
d) The cost of resources used in production
Answer:
b) The highest-valued alternative given up when making a
choice
92. The concept of “market equilibrium” occurs when:
a) Quantity demanded is equal to quantity supplied
b) Quantity demanded exceeds quantity supplied
c) Quantity supplied exceeds quantity demanded
d) Prices are at their highest level
Answer:
a) Quantity demanded is equal to quantity supplied
93. The term “marginal utility” refers to the:
a) Total satisfaction derived from consuming a good or
service
b) Additional satisfaction derived from consuming one more
unit of a good or service
c) Average satisfaction derived from consuming a certain
quantity of a good or service
d) Total cost incurred in producing a certain quantity of a
good or service
Answer:
b) Additional satisfaction derived from consuming one
more unit of a good or service
94. The concept of “elastic demand” refers to a
situation where:
a) Quantity demanded is extremely sensitive to changes in
price
b) Quantity demanded is not responsive to changes in price
c) Quantity demanded is perfectly responsive to changes in
income
d) Quantity demanded is perfectly inelastic regardless of
price changes
Answer:
a) Quantity demanded is extremely sensitive to changes in
price
95. The term “monopoly” refers to a market structure
characterized by:
a) A large number of firms, differentiated products, and
barriers to entry
b) A single firm with exclusive control over the entire
market
c) A small number of firms, standardized products, and free
entry and exit
d) A small number of firms that dominate the market
Answer:
b) A single firm with exclusive control over the entire
market
96. The concept of “price elasticity of demand”
measures the:
a) Responsiveness of quantity demanded to changes in price
b) Responsiveness of quantity supplied to changes in price
c) Rate at which prices change in the market
d) Rate at which consumer preferences change over time
Answer:
a) Responsiveness of quantity demanded to changes in
price
97. The term “perfectly elastic demand” refers to a
situation where:
a) Quantity demanded is extremely sensitive to changes in
price
b) Quantity demanded is not responsive to changes in price
c) Quantity demanded is perfectly responsive to changes in
income
d) Quantity demanded is perfectly inelastic regardless of
price changes
Answer:
a) Quantity demanded is extremely sensitive to changes in
price
98. The concept of “monopolistic competition” is a
market structure characterized by:
a) A large number of firms, differentiated products, and
barriers to entry
b) A single firm with exclusive control over the entire
market
c) A small number of firms, standardized products, and
significant barriers to entry
d) A government-owned and operated industry
Answer:
a) A large number of firms, differentiated products, and
barriers to entry
99. The term “comparative advantage” refers to:
a) The ability of a country to produce a good at the lowest
opportunity cost
b) The ability of a country to produce a good using the
fewest resources
c) The ability of a country to produce a good at the highest
price
d) The ability of a country to produce a good with the
highest quality
Answer:
a) The ability of a country to produce a good at the
lowest opportunity cost
100. The term “oligopoly” refers to a market structure
characterized by:
a) A large number of firms, differentiated products, and
barriers to entry
b) A single firm with exclusive control over the entire
market
c) A small number of firms that dominate the market
d) A small number of firms, standardized products, and free
entry and exit
Answer:
c) A small number of firms that dominate the market
The concept of “price discrimination” refers to a
strategy where a firm:
a) Charges different prices to different customers based on
their willingness to pay
b) Charges the same price to all customers regardless of
their preferences
c) Lowers prices to drive competitors out of the market
d) Increases prices to maximize profits
Answer:
a) Charges different prices to different customers based
on their willingness to pay
The term “total revenue” refers to:
a) The total amount of money consumers spend on goods and
services
b) The total cost incurred in producing goods and services
c) The total profit earned by a firm
d) The total amount of money a firm receives from selling
goods and services
Answer:
d) The total amount of money a firm receives from selling
goods and services
The concept of “perfect competition” is a market
structure characterized by:
a) A large number of firms, differentiated products, and
barriers to entry
b) A single firm with exclusive control over the entire
market
c) A small number of firms, standardized products, and
significant barriers to entry
d) A large number of firms, standardized products, and free
entry and exit
Answer:
d) A large number of firms, standardized products, and
free entry and exit
The term “marginal revenue” refers to the:
a) Additional revenue generated from selling one more unit of
a good
b) Total revenue earned by a firm at a given level of output
c) Average revenue earned per unit of output
d) Total revenue minus total cost for a firm
Answer:
a) Additional revenue generated from selling one more
unit of a good
The concept of “long-run average cost” refers to
the:
a) Average cost of production for a firm in the short run
b) Minimum cost of production for a firm
c) Average cost of production for a firm over a range of
output levels in the long run
d) Total cost of production for a firm over a range of output
levels in the long run
Answer:
c) Average cost of production for a firm over a range of
output levels in the long run
The term “income effect” refers to the:
a) Change in quantity demanded of a good due to a change in
income
b) Change in quantity supplied of a good due to a change in
income
c) Change in price of a good due to a change in income
d) Change in consumer preferences due to a change in income
Answer:
a) Change in quantity demanded of a good due to a change
in income
The concept of “perfectly elastic demand” refers to
a situation where:
a) Quantity demanded is extremely sensitive to changes in
price
b) Quantity demanded is not responsive to changes in price
c) Quantity demanded is perfectly responsive to changes in
income
d) Quantity demanded is perfectly inelastic regardless of
price changes
Answer:
b) Quantity demanded is not responsive to changes in
price
The term “externality” refers to a situation where:
a) The market fails to allocate resources efficiently
b) The government regulates market transactions
c) There is a spillover effect on third parties from a market
transaction
d) The market is characterized by perfect competition
Answer:
c) There is a spillover effect on third parties from a
market transaction
The concept of “marginal cost” refers to the:
a) Additional cost incurred from producing one more unit of a
good
b) Total cost incurred in producing a certain quantity of a
good
c) Average cost of production for a firm at a given level of
output
d) Total cost minus total revenue for a firm
Answer:
a) Additional cost incurred from producing one more unit
of a good
The term “game theory” refers to the study of:
a) How individuals and firms make decisions based on their
self-interest
b) The behavior of consumers and producers in the market
c) The strategic interactions between decision-makers in
situations of interdependence
d) The economic policies implemented by the government
Answer:
c) The strategic interactions between decision-makers in
situations of interdependence
The concept of “elastic supply” refers to a
situation where:
a) Quantity supplied is extremely sensitive to changes in
price
b) Quantity supplied is not responsive to changes in price
c) Quantity supplied is perfectly responsive to changes in
income
d) Quantity supplied is perfectly inelastic regardless of
price changes
Answer:
a) Quantity supplied is extremely sensitive to changes in
price
The term “price ceiling” is a government-imposed
maximum price set:
a) Below the equilibrium price, leading to a surplus
b) Below the equilibrium price, leading to a shortage
c) Above the equilibrium price, leading to a surplus
d) Above the equilibrium price, leading to a shortage
Answer:
b) Below the equilibrium price, leading to a shortage
The concept of “perfectly competitive market” is a
market structure characterized by:
a) A large number of firms, differentiated products, and
barriers to entry
b) A single firm with exclusive control over the entire
market
c) A small number of firms, standardized products, and
significant barriers to entry
d) A large number of firms, standardized products, and free
entry and exit
Answer:
d) A large number of firms, standardized products, and
free entry and exit
The term “consumer surplus” represents:
a) The amount of money consumers spend on goods and services
b) The additional satisfaction derived from consuming one
more unit of a good
c) The difference between the maximum price consumers are
willing to pay and the price they actually pay
d) The difference between total revenue and total cost for a
firm
Answer:
c) The difference between the maximum price consumers are
willing to pay and the price they actually pay
The concept of “public goods” refers to goods that
are:
a) Excludable but non-rivalrous in consumption
b) Excludable and rivalrous in consumption
c) Non-excludable but rivalrous in consumption
d) Non-excludable and non-rivalrous in consumption
Answer:
d) Non-excludable and non-rivalrous in consumption
The term “perfectly inelastic supply” refers to a
situation where:
a) Quantity supplied is extremely sensitive to changes in
price
b) Quantity supplied is not responsive to changes in price
c) Quantity supplied is perfectly responsive to changes in
income
d) Quantity supplied is
perfectly elastic regardless of price changes
Answer:
b)
