Master Microeconomics: Introduction to Microeconomic Principles

Question 1

Which of the following represents the fundamental economic problem faced by societies?

Accepted Answer

Scarcity and unlimited wants

Answer

Pollution and environmental degradation

Answer

Inequality and social injustice

Answer

Rapid technological change

Question 2

For a normal good, as consumer income increases, demand typically:

Accepted Answer

Increases

Answer

Decreases

Answer

Remains constant

Answer

Becomes perfectly elastic

Question 3

The concept of elasticity measures the:

Accepted Answer

Responsiveness of quantity demanded to a change in price

Answer

Responsiveness of quantity supplied to a change in price

Answer

Responsiveness of price to a change in quantity demanded

Answer

Responsiveness of price to a change in quantity supplied

Question 4

The Keynesian multiplier effect refers to the:

Accepted Answer

Amplified impact of changes in autonomous spending on economic output

Answer

Tendency for inflation to lead to further inflation

Answer

Relationship between interest rates and economic growth

Answer

Impact of fiscal policy on unemployment

Question 5

Which of the fundamental concepts underpins microeconomics?

Accepted Answer

Scarcity

Answer

Global trade

Answer

Central banking

Answer

Macroeconomic forecasting

Question 6

Opportunity cost refers to the:

Accepted Answer

Value of the next best alternative forgone when a choice is made.

Answer

Amount of money spent on a product or service.

Answer

Loss of potential income when choosing one option over another.

Answer

Risk associated with making a decision.

Question 7

Which of the following statements about market demand accurately describes it?

Accepted Answer

It is the total quantity of a good or service that consumers are willing and able to purchase at all possible prices.

Answer

It is directly proportional to the price of the good or service.

Answer

It remains unaffected by consumer income.

Answer

It is identical to market supply.

Question 8

In a perfectly competitive market, firms:

Accepted Answer

Are price-takers.

Answer

Have a monopoly in the market.

Answer

Can set prices above marginal cost.

Answer

Produce at the point where marginal cost equals marginal revenue.

Question 9

Which of the following market structures is characterized by a single seller?

Accepted Answer

Monopoly

Answer

Oligopoly

Answer

Monopolistic competition

Answer

Perfect competition

Question 10

Which of the following is a fundamental economic concept that refers to the limited availability of resources relative to human wants?

Accepted Answer

Scarcity

Answer

Choice

Answer

Opportunity cost

Answer

Equilibrium

Question 11

Scarcity implies that:

Accepted Answer

Resources are limited relative to wants, forcing individuals and societies to make choices.

Answer

Resources are abundant and can easily satisfy all human desires.

Answer

Consumers always have access to everything they desire.

Answer

Producers can always meet consumer demand without any constraints.

Question 12

How does technological advancement typically affect the supply of a good or service?

Accepted Answer

Increases supply by lowering production costs.

Answer

Decreases supply by raising labor costs.

Answer

Has no impact on supply, as it only affects demand.

Question 13

The term for the cost of the next best alternative that is given up when making a choice is:

Accepted Answer

Opportunity cost

Answer

Marginal cost

Answer

Sunk cost

Answer

Fixed cost

Question 14

The primary goal of a profit-maximizing firm is to:

Accepted Answer

Maximize revenue and profit

Answer

Maximize output quantity

Answer

Minimize costs

Answer

Provide the highest quality products

Question 15

A market structure in which a single seller dominates and barriers to entry are high is:

Accepted Answer

Monopoly

Answer

Perfect competition

Answer

Oligopoly

Answer

Monopolistic competition

Question 16

Equilibrium price is the price at which:

Accepted Answer

Supply and demand are balanced

Answer

Consumer surplus is maximized

Answer

Producer surplus is minimized

Answer

Government intervention is required

Question 17

Microeconomics focuses on:

Accepted Answer

Individual markets

Answer

The overall economy

Answer

Long-term economic trends

Answer

Supply-side factors

Question 18

Identify the option that is NOT a factor of production.

Accepted Answer

Profit

Answer

Land

Answer

Labor

Answer

Capital

Question 19

Explain the law of diminishing marginal utility.

Accepted Answer

As consumption of a good increases, the additional satisfaction derived from each additional unit decreases

Answer

Total satisfaction from consuming a good continually increases as consumption increases

Answer

The marginal utility of a good remains constant regardless of the quantity consumed

Answer

Total satisfaction from consuming a good decreases as consumption increases

Question 20

In a monopoly, the firm possesses:

Accepted Answer

Exclusive control over the supply of a particular good or service

Answer

A large number of competitors

Answer

A price elasticity of demand equal to one

Answer

Unrestricted entry into the market

Question 21

Which of the following government interventions is intended to enhance market efficiency?

Accepted Answer

Subsidies

Answer

Price ceilings

Answer

Taxes

Answer

Quotas

Question 22

Calculate the elasticity of demand for a good using the following formula:

Accepted Answer

% change in quantity demanded / % change in price

Answer

% change in price / % change in quantity demanded

Answer

Quantity demanded / Price

Answer

Price / Quantity demanded

Question 23

Opportunity cost is defined as:

Accepted Answer

The value of the best alternative that is given up when a choice is made.

Answer

The cost of a good or service in terms of money.

Answer

The cost of producing a good or service.

Answer

The loss incurred due to market imperfections.

Question 24

The primary determinant of market equilibrium price is:

Accepted Answer

Supply and demand

Answer

Consumer preferences

Answer

Government regulations

Answer

Producer costs

Question 25

Price elasticity of demand measures:

Accepted Answer

The responsiveness of quantity demanded to changes in price.

Answer

The responsiveness of quantity supplied to changes in price.

Answer

The responsiveness of market equilibrium to external factors.

Answer

The responsiveness of producer profits to changes in cost.

Question 26

The production possibilities frontier (PPF) illustrates the:

Accepted Answer

Trade-offs between producing different goods.

Answer

Optimal combinations of goods that can be produced.

Answer

Benefits of producing different goods.

Answer

Costs of producing different goods.

Question 27

The concept of 'rational self-interest' assumes that individuals:

Accepted Answer

Make decisions that primarily benefit themselves.

Answer

Make decisions that are always in line with societal norms.

Answer

Make decisions that prioritize the well-being of others.

Answer

Make decisions based on impulse and emotion.

Question 28

In economic decision-making, which ethical factor is crucial?

Accepted Answer

Promoting societal well-being

Answer

Maximizing profits

Answer

Advancing technology

Question 29

Which fundamental challenge does microeconomics address?

Accepted Answer

Addressing limited resources relative to unlimited wants

Answer

Managing excess money supply

Answer

Controlling unemployment rates

Answer

Reducing government borrowing

Question 30

The idea that making any choice entails sacrificing other options is known as:

Accepted Answer

Opportunity cost

Answer

Incremental cost

Answer

Historical cost

Answer

Variable cost

Question 31

In a perfectly competitive market, businesses:

Accepted Answer

Have no control over prices

Answer

Can dictate prices

Answer

Have significant market power

Answer

Are often oligopolies

Question 32

Which of the following illustrates a negative externality?

Accepted Answer

Air pollution

Answer

Public education

Answer

Subsidized public transportation

Answer

Government healthcare

Question 33

The cost of the most desirable alternative that is given up when a decision is made is known as:

Accepted Answer

Opportunity cost

Answer

Sunk cost

Answer

Fixed cost

Answer

Variable cost

Question 34

Which of the following is a consequence of the law of demand?

Accepted Answer

As price increases, quantity demanded decreases.

Answer

Consumers always prefer higher-priced goods.

Answer

Demand curves are always upward sloping.

Answer

Price has no effect on consumer behavior.

Question 35

The concept of market equilibrium refers to the point where:

Accepted Answer

Quantity supplied equals quantity demanded

Answer

Quantity supplied exceeds quantity demanded

Answer

Quantity demanded exceeds quantity supplied

Answer

Price is at its maximum

Question 36

Which of the following is not a source of economic inefficiency?

Accepted Answer

Competition

Answer

Monopolies

Answer

Externalities

Answer

Government intervention

Question 37

Which of the following demand curves is considered perfectly elastic?

Accepted Answer

Horizontal

Answer

Vertical

Answer

Upward sloping

Answer

Downward sloping

Question 38

Which field of economics focuses on the individual decision-making of consumers and producers?

Accepted Answer

Microeconomics

Answer

Macroeconomics

Answer

Econometrics

Answer

Finance

Question 39

Which of the following is a fundamental concept in microeconomics that refers to the limited availability of resources relative to wants?

Accepted Answer

Scarcity

Answer

Equilibrium

Answer

Inflation

Answer

Fiscal policy

Question 40

When an individual selects one option over another, what is the value of the foregone option called?

Accepted Answer

Opportunity cost

Answer

Implicit cost

Answer

Explicit cost

Answer

Sunk cost

Question 41

Which of the following is NOT a factor that influences the quantity of a good or service demanded by consumers?

Accepted Answer

Weather conditions

Answer

Price of the good

Answer

Income

Answer

Preferences

Question 42

The point at which the supply and demand curves intersect establishes:

Accepted Answer

Equilibrium price and quantity

Answer

Surplus

Answer

Shortage

Answer

Maximum profit for producers

Question 43

A fundamental assumption of the rational actor model in microeconomics is:

Accepted Answer

Individuals make decisions that they believe will maximize their well-being

Answer

All individuals have access to perfect information

Answer

Emotions have no influence on economic decisions

Answer

Individuals are completely altruistic

Question 44

If demand for a product increases while supply remains constant, what is the likely impact on the equilibrium price?

Accepted Answer

Increase

Answer

Decrease

Answer

Remain constant

Answer

Impossible to determine

Question 45

Which government intervention aims to address negative externalities, such as environmental pollution?

Accepted Answer

Taxes

Answer

Price floors

Answer

Subsidies

Answer

Quotas

Question 46

In microeconomics, a market is defined as:

Accepted Answer

Any voluntary exchange between buyers and sellers of goods or services

Answer

A physical location where goods are traded

Answer

A government-regulated institution

Answer

The entirety of economic activity within a country

Question 47

Opportunity cost is defined as the:

Accepted Answer

Cost of choosing one alternative over another

Answer

Total cost of a production process

Answer

Minimal increase in cost associated with producing one additional unit

Answer

Fixed cost of a production process

Question 48

Select the factors that influence market demand.

Accepted Answer

All of the choices

Answer

Price of the product

Answer

Consumer income

Answer

Available technology

Question 49

The upward slope of the aggregate supply curve indicates that:

Accepted Answer

Firms are willing to increase production as prices rise

Answer

Production costs rise with increasing prices

Answer

Demand for products increases with rising prices

Answer

Wages increase in response to higher prices

Question 50

Elasticity measures:

Accepted Answer

The degree to which one variable reacts to changes in another

Answer

The angle of a demand curve

Answer

The total change in quantity demanded

Answer

The additional revenue earned from selling one more unit

Question 51

A leftward shift of the supply curve suggests:

Accepted Answer

A decrease in supply

Answer

An increase in supply

Answer

An increase in demand

Answer

A decrease in demand

Question 52

Which of the following is a key feature of a monopoly?

Accepted Answer

All of the choices

Answer

Single seller in a market

Answer

Barriers to entry for potential competitors

Answer

Ability to influence market prices

Question 53

Scarcity refers to the situation where:

Accepted Answer

Limited resources meet limitless human wants.

Answer

Unlimited resources satisfy boundless human wants.

Answer

Sufficient resources fulfill all human desires.

Answer

Economic decisions are made without trade-offs.

Question 54

The graphical representation of consumer preferences is called:

Accepted Answer

Indifference Curve

Answer

Budget Line

Answer

Utility Function

Answer

Production Possibility Frontier

Question 55

The law of diminishing marginal utility suggests that as consumption of a good increases:

Accepted Answer

Marginal utility decreases gradually.

Answer

Total utility continues to rise indefinitely.

Answer

Total utility eventually falls.

Answer

Marginal utility remains constant.

Question 56

The equilibrium price in a market is the price where:

Accepted Answer

Quantity supplied matches quantity demanded.

Answer

Producers are most willing to sell.

Answer

Consumers are most willing to buy.

Answer

Producers maximize their profits.

Question 57

A tax on the production of a good will:

Accepted Answer

Reduce quantity supplied.

Answer

Increase quantity demanded.

Answer

Shift the supply curve rightward.

Answer

Lower the equilibrium price.

Question 58

In the long run, a firm will:

Accepted Answer

Cease operations if average total cost exceeds average revenue.

Answer

Always operate profitably.

Answer

Earn profits only in the short run.

Answer

Continue production even if incurring losses.

Question 59

Identify the factor that does NOT influence demand.

Accepted Answer

Government policies

Answer

Preferences of consumers

Answer

Price of the good

Answer

Consumer income

Question 60

What is the name for the relationship between the quantity supplied of a good and its price?

Accepted Answer

Supply curve

Answer

Demand curve

Answer

Equilibrium price

Answer

Opportunity cost

Question 61

If the marginal cost of producing an additional unit of a good is less than its marginal revenue, a firm should:

Accepted Answer

Increase production

Answer

Decrease production

Answer

Maintain current production level

Answer

Exit the market

Question 62

Which market structure is characterized by the highest level of competition?

Accepted Answer

Perfect competition

Answer

Monopoly

Answer

Oligopoly

Answer

Monopolistic competition

Question 63

The elasticity of demand measures the sensitivity of:

Accepted Answer

Quantity demanded to a change in price

Answer

Price to a change in quantity demanded

Answer

Supply to a change in price

Answer

Demand to a change in income

Question 64

When considering opportunity cost, the real cost of a choice encompasses:

Accepted Answer

Explicit and implicit costs

Answer

Explicit costs only

Answer

Implicit costs only

Answer

Neither explicit nor implicit costs