Introduction To Microeconomics Flashcards
What is microeconomics?
Microeconomics is the branch of economics that studies individual agents, such as households and firms, and their interactions in markets.
True or False: Microeconomics focuses on the economy as a whole.
False
Fill in the blank: Microeconomics analyzes the behavior of individual __________.
economic agents
What is the primary concern of microeconomics?
Understanding how individuals and firms make decisions regarding the allocation of resources.
Multiple Choice: Which of the following is a key concept in microeconomics? A) Inflation B) Supply and Demand C) National Income
B) Supply and Demand
What is the law of demand?
The law of demand states that, all else being equal, an increase in the price of a good will decrease the quantity demanded.
True or False: The demand curve typically slopes downward from left to right.
True
What does the term ‘elasticity’ refer to in microeconomics?
Elasticity refers to the responsiveness of quantity demanded or supplied to changes in price or other factors.
Multiple Choice: What does a price elasticity of demand greater than 1 indicate? A) Inelastic demand B) Elastic demand C) Perfectly inelastic demand
B) Elastic demand
What is the law of supply?
The law of supply states that, all else being equal, an increase in the price of a good will increase the quantity supplied.
Fill in the blank: The point where the supply and demand curves intersect is called the __________.
equilibrium
True or False: At equilibrium, there is neither a surplus nor a shortage of goods.
True
What is consumer surplus?
Consumer surplus is the difference between what consumers are willing to pay for a good and what they actually pay.
What is producer surplus?
Producer surplus is the difference between what producers are willing to accept for a good and the market price.
Multiple Choice: Which factor does NOT shift the demand curve? A) Consumer preferences B) Price of the good C) Income of consumers
B) Price of the good
What is a market failure?
Market failure occurs when the allocation of goods and services is not efficient, leading to a loss of economic welfare.
True or False: Public goods are an example of market failure.
True
What is the role of government in a microeconomic context?
The government can intervene to correct market failures, provide public goods, and regulate monopolies.
Fill in the blank: The concept of opportunity cost refers to the __________ of the next best alternative forgone.
value
What is a monopoly?
A monopoly is a market structure where a single seller controls the entire market for a product or service.
Multiple Choice: Which of the following is NOT a characteristic of perfect competition? A) Many buyers and sellers B) Homogeneous products C) Price maker
C) Price maker
What is the difference between fixed costs and variable costs?
Fixed costs do not change with the level of output, while variable costs do change with the level of output.
True or False: In the long run, firms can adjust all inputs, including fixed costs.
True
What is a budget constraint?
A budget constraint represents the combinations of goods and services that a consumer can purchase given their income and the prices of those goods.
Fill in the blank: The __________ curve shows the different combinations of two goods that provide the same level of utility to a consumer.
indifference
What is marginal utility?
Marginal utility is the additional satisfaction or utility gained from consuming one more unit of a good or service.
