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