Introduction To Microeconomics

Question 1

What is microeconomics?

Answer 1

Microeconomics is the branch of economics that studies individual agents, such as households and firms, and their interactions in markets.

Question 2

True or False: Microeconomics focuses on the economy as a whole.

Answer 2

False

Question 3

Fill in the blank: Microeconomics analyzes the behavior of individual __________.

Answer 3

economic agents

Question 4

What is the primary concern of microeconomics?

Answer 4

Understanding how individuals and firms make decisions regarding the allocation of resources.

Question 5

Multiple Choice: Which of the following is a key concept in microeconomics? A) Inflation B) Supply and Demand C) National Income

Answer 5

B) Supply and Demand

Question 6

What is the law of demand?

Answer 6

The law of demand states that, all else being equal, an increase in the price of a good will decrease the quantity demanded.

Question 7

True or False: The demand curve typically slopes downward from left to right.

Answer 7

True

Question 8

What does the term ‘elasticity’ refer to in microeconomics?

Answer 8

Elasticity refers to the responsiveness of quantity demanded or supplied to changes in price or other factors.

Question 9

Multiple Choice: What does a price elasticity of demand greater than 1 indicate? A) Inelastic demand B) Elastic demand C) Perfectly inelastic demand

Answer 9

B) Elastic demand

Question 10

What is the law of supply?

Answer 10

The law of supply states that, all else being equal, an increase in the price of a good will increase the quantity supplied.

Question 11

Fill in the blank: The point where the supply and demand curves intersect is called the __________.

Answer 11

equilibrium

Question 12

True or False: At equilibrium, there is neither a surplus nor a shortage of goods.

Answer 12

True

Question 13

What is consumer surplus?

Answer 13

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

Question 14

What is producer surplus?

Answer 14

Producer surplus is the difference between what producers are willing to accept for a good and the market price.

Question 15

Multiple Choice: Which factor does NOT shift the demand curve? A) Consumer preferences B) Price of the good C) Income of consumers

Answer 15

B) Price of the good

Question 16

What is a market failure?

Answer 16

Market failure occurs when the allocation of goods and services is not efficient, leading to a loss of economic welfare.

Question 17

True or False: Public goods are an example of market failure.

Answer 17

True

Question 18

What is the role of government in a microeconomic context?

Answer 18

The government can intervene to correct market failures, provide public goods, and regulate monopolies.

Question 19

Fill in the blank: The concept of opportunity cost refers to the __________ of the next best alternative forgone.

Answer 19

value

Question 20

What is a monopoly?

Answer 20

A monopoly is a market structure where a single seller controls the entire market for a product or service.

Question 21

Multiple Choice: Which of the following is NOT a characteristic of perfect competition? A) Many buyers and sellers B) Homogeneous products C) Price maker

Answer 21

C) Price maker

Question 22

What is the difference between fixed costs and variable costs?

Answer 22

Fixed costs do not change with the level of output, while variable costs do change with the level of output.

Question 23

True or False: In the long run, firms can adjust all inputs, including fixed costs.

Answer 23

True

Question 24

What is a budget constraint?

Answer 24

A budget constraint represents the combinations of goods and services that a consumer can purchase given their income and the prices of those goods.

Question 25

Fill in the blank: The __________ curve shows the different combinations of two goods that provide the same level of utility to a consumer.

Answer 25

indifference

Question 26

What is marginal utility?

Answer 26

Marginal utility is the additional satisfaction or utility gained from consuming one more unit of a good or service.