Question 1

Which of the following best describes an economic incentive?

Accepted Answer

A financial reward or penalty that motivates individuals to take certain actions.

Question 2

What is the maximum point on a graph?

Accepted Answer

The point where the graph changes direction from rising to falling.

Question 3

What does an outward shift in the Production Possibility Frontier (PPF) indicate?

Accepted Answer

An increase in the production capacity of an economy.

Question 4

What is market equilibrium?

Accepted Answer

The point where the quantity demanded equals the quantity supplied.

Question 5

What does a shift to the right in the demand curve typically indicate?

Accepted Answer

An increase in demand due to favorable conditions.

Question 6

What is a shortage in economic terms?

Accepted Answer

A situation where quantity demanded exceeds quantity supplied at a given price.

Question 7

What happens to the supply curve when there is a change in the price of a product?

Accepted Answer

There is movement along the existing supply curve.

Question 8

What does the term 'quantity supplied' refer to in microeconomics?

Accepted Answer

The amount of a good that sellers are willing to produce and sell at a given price.

Question 9

What does the price elasticity of supply measure?

Accepted Answer

The responsiveness of quantity supplied to a change in price.

Question 10

What is the primary difference between slope and elasticity on a demand curve?

Accepted Answer

Slope measures unit changes, while elasticity measures percentage changes.

Question 11

Using the midpoint method, calculate the price elasticity of demand if the price of a product increases from $10 to $12 and the quantity demanded decreases from 500 units to 400 units.

Accepted Answer

1.25

Question 12

What is a price ceiling?

Accepted Answer

A maximum price set by the government that can be charged for a product.

Question 13

What is producer surplus?

Accepted Answer

The difference between the market price and the minimum price suppliers are willing to sell their goods.

Question 14

What is consumer surplus?

Accepted Answer

The difference between what consumers are willing to pay and what they actually pay.

Question 15

What is consumer optimum consumption?

Accepted Answer

The point where a consumer maximizes utility given their budget constraint.

Question 16

What is a budget constraint?

Accepted Answer

A limit on the amount of goods a consumer can purchase based on their income and the prices of goods.

Question 17

Which of the following best describes marginal cost?

Accepted Answer

The cost of producing one more unit of a good.

Question 18

What is the primary purpose of a production function in microeconomics?

Accepted Answer

To determine the relationship between the quantity of inputs and the resulting quantity of outputs.

Question 19

What is the primary characteristic of fixed costs in the short run?

Accepted Answer

They remain constant regardless of the level of output.

Question 20

What is an isoquant line?

Accepted Answer

A curve that represents all combinations of inputs that produce the same level of output.

Microeconomics Core Concepts: Study Guide with Definitions, Examples, and Applications

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