Unit-1 The Competitive Market

Question 0

What is a monopoly?

Answer 0

One firm selling in a market.

Question 1

What is a competitive market?

Answer 1

A situation where there are many buyers (demand) and sellers (supply).

Question 2

What is a monopoly power?

Answer 2

When a firm has more than 25% of the market.

Question 3

What is demand?

Answer 3

The quantity buyers are willing and able to buy at a given price in a given period of time.

Question 4

What is effective demand?

Answer 4

The consumer must be willing and able to buy the products.

Question 5

What is the contraction of demand?

Answer 5

The fall in quantity demanded due to a rise in price.

Question 6

What is the extension of demand?

Answer 6

The increase in quantity demanded due to a fall in price.

Question 7

What is the shift in demand?

Answer 7

Demand increase due to factors other than prices-PASIFIC.

Question 8

What does PASIFIC stand for?

Answer 8

P-opulation 
A-dvertising 
S-ubstitute goods
I-ncome 
F-ashion 
I-nterest rates
C- omplementary goods

Question 9

What are inferior goods?

Answer 9

Goods for which the demand falls when income rises.

Question 10

What is elastic demand?

Answer 10

The quantity demanded changes at a greater rate than price (PED greater than 1)

Question 11

What is inelastic demand?

Answer 11

The quantity demanded changes at a lesser rate than price (PED less than 1)

Question 12

What is unit elastic demand?

Answer 12

The quantity demanded changes at the same rate as the price (PED=1)

Question 13

What is total revenue?

Answer 13

The amount of money a firm receives when selling its products.

Question 14

How do you calculate total revenue?

Answer 14

Price x quantity sold

Question 15

What is supply?

Answer 15

The quantity a producer is willing and able to produce at a given price level in a given period.

Question 16

What is the extension in supply?

Answer 16

The increase in quantity supplied due to a rising price.

Question 17

What is the contraction in supply?

Answer 17

The decrease in quantity supplied due to a falling price.

Question 18

What is the shift in supply?

Answer 18

Supply increases due to factors other than price- PINTSWC

Question 19

What is productivity?

Answer 19

Output per worker per period of time.

Question 20

What are subsidies?

Answer 20

A payment given to a firm, usually by the government.

Question 21

What is price elasticity of supply?

Answer 21

The responsiveness of quantity supplied to a change in price.

Question 22

What is inelastic supply?

Answer 22

He quantity supplied changes at a lesser rate than price (PES less than 1)

Question 23

What is elastic supply?

Answer 23

The quantity supplied changes at a greater rate than price (PES greater than 1)

Question 24

What is the equilibrium?

Answer 24

The point where demand and supply meet-the market clearing price.

Question 25

What is specific tax?

Answer 25

A tax placed in a good or a service which is a specific amount of money per unit bought.

Question 26

What is ad valorem tax?

Answer 26

A tax placed on a good or a service which is a percentage of a price.

Question 27

What is the minimum price?

Answer 27

A price set above the equilibrium and the price is not allowed to go below it.

Question 28

What is the maximum price?

Answer 28

A price set below the equilibrium and the price is not allowed to go above it.

Question 29

What are the determinants of supply?

Answer 29

``` Productivity Interest rates Number of firms entering the market Technology Subsidies Weather Cost of production ```