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Microeconomics Quiz

Description: This quiz covers the fundamental concepts and principles of microeconomics, including supply and demand, market equilibrium, consumer behavior, and firm behavior.
Number of Questions: 15
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Tags: microeconomics supply and demand market equilibrium consumer behavior firm behavior
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What is the basic economic problem?

  1. Scarcity of resources

  2. Unlimited wants

  3. Inefficient allocation of resources

  4. All of the above

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Correct Option: D
Explanation:

The basic economic problem is that we have unlimited wants but limited resources. This means that we have to make choices about how to allocate our resources in order to satisfy our wants as best as possible.

What is the law of demand?

  1. As price increases, quantity demanded decreases.

  2. As price decreases, quantity demanded increases.

  3. Quantity demanded is independent of price.

  4. None of the above

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Correct Option: A
Explanation:

The law of demand states that, all other factors being equal, as the price of a good or service increases, the quantity demanded of that good or service will decrease.

What is the law of supply?

  1. As price increases, quantity supplied increases.

  2. As price decreases, quantity supplied decreases.

  3. Quantity supplied is independent of price.

  4. None of the above

Show answer
Correct Option: A
Explanation:

The law of supply states that, all other factors being equal, as the price of a good or service increases, the quantity supplied of that good or service will increase.

What is market equilibrium?

  1. The point where supply and demand are equal.

  2. The point where price is at its highest.

  3. The point where quantity is at its lowest.

  4. None of the above

Show answer
Correct Option: A
Explanation:

Market equilibrium is the point where the quantity of a good or service that suppliers are willing and able to supply is equal to the quantity of that good or service that consumers are willing and able to buy.

What is consumer surplus?

  1. The difference between the price consumers are willing to pay and the price they actually pay.

  2. The difference between the price consumers pay and the price producers receive.

  3. The total amount of money consumers spend on a good or service.

  4. None of the above

Show answer
Correct Option: A
Explanation:

Consumer surplus is the difference between the price that consumers are willing to pay for a good or service and the price that they actually pay.

What is producer surplus?

  1. The difference between the price producers receive and the price they are willing to accept.

  2. The difference between the price consumers pay and the price producers receive.

  3. The total amount of money producers receive for a good or service.

  4. None of the above

Show answer
Correct Option: A
Explanation:

Producer surplus is the difference between the price that producers receive for a good or service and the price that they are willing to accept.

What is the marginal cost of production?

  1. The cost of producing one additional unit of output.

  2. The total cost of production divided by the quantity of output.

  3. The difference between the total cost of production and the variable cost of production.

  4. None of the above

Show answer
Correct Option: A
Explanation:

The marginal cost of production is the cost of producing one additional unit of output.

What is the marginal revenue of a firm?

  1. The revenue from selling one additional unit of output.

  2. The total revenue divided by the quantity of output.

  3. The difference between the total revenue and the variable cost of production.

  4. None of the above

Show answer
Correct Option: A
Explanation:

The marginal revenue of a firm is the revenue from selling one additional unit of output.

What is profit maximization?

  1. Producing the quantity of output that maximizes total revenue.

  2. Producing the quantity of output that minimizes total cost.

  3. Producing the quantity of output that maximizes the difference between total revenue and total cost.

  4. None of the above

Show answer
Correct Option: C
Explanation:

Profit maximization is producing the quantity of output that maximizes the difference between total revenue and total cost.

What is perfect competition?

  1. A market in which there are many buyers and sellers, each of whom has a small share of the market.

  2. A market in which there is only one buyer and one seller.

  3. A market in which there are a few large buyers and sellers, each of whom has a significant share of the market.

  4. None of the above

Show answer
Correct Option: A
Explanation:

Perfect competition is a market in which there are many buyers and sellers, each of whom has a small share of the market.

What is monopoly?

  1. A market in which there is only one buyer and one seller.

  2. A market in which there are a few large buyers and sellers, each of whom has a significant share of the market.

  3. A market in which there are many buyers and sellers, each of whom has a small share of the market.

  4. None of the above

Show answer
Correct Option: A
Explanation:

Monopoly is a market in which there is only one buyer and one seller.

What is oligopoly?

  1. A market in which there are a few large buyers and sellers, each of whom has a significant share of the market.

  2. A market in which there is only one buyer and one seller.

  3. A market in which there are many buyers and sellers, each of whom has a small share of the market.

  4. None of the above

Show answer
Correct Option: A
Explanation:

Oligopoly is a market in which there are a few large buyers and sellers, each of whom has a significant share of the market.

What is externality?

  1. A cost or benefit that is imposed on a third party as a result of an economic activity.

  2. A cost or benefit that is incurred by the producer or consumer of a good or service.

  3. A cost or benefit that is incurred by the government.

  4. None of the above

Show answer
Correct Option: A
Explanation:

An externality is a cost or benefit that is imposed on a third party as a result of an economic activity.

What is public good?

  1. A good or service that is non-rivalrous and non-excludable.

  2. A good or service that is rivalrous and non-excludable.

  3. A good or service that is non-rivalrous and excludable.

  4. A good or service that is rivalrous and excludable.

Show answer
Correct Option: A
Explanation:

A public good is a good or service that is non-rivalrous and non-excludable.

What is a merit good?

  1. A good or service that is provided by the government because it is believed to be beneficial to society.

  2. A good or service that is provided by the private sector because it is profitable.

  3. A good or service that is provided by both the government and the private sector.

  4. None of the above

Show answer
Correct Option: A
Explanation:

A merit good is a good or service that is provided by the government because it is believed to be beneficial to society.

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