Business Economics Quiz

Business economics focuses on the application of economic principles to the business decision-making process, while pure economics deals with the theoretical aspects of economics and its principles.

Cardinal approach in consumption analysis is based on the measurement of utility in numerical terms, while ordinal approach focuses on the ranking of preferences without measuring utility numerically.

Market equilibrium is achieved when the quantity of goods supplied equals the quantity demanded. Factors that can lead to changes in equilibrium include shifts in supply and demand curves due to changes in determinants, government interventions, and external shocks.

<p>Consumer surplus is the difference between what consumers are willing to pay for a good and what they actually pay. Its limitations include the assumption of perfect information, the inability to measure consumer surplus directly, and the impact of price discrimination.</p> Signup and view all the answers

<p>Market failure occurs when the allocation of goods and services by a free market is not efficient. An example is the presence of externalities, where the cost or benefit of a transaction is not fully accounted for by the buyers and sellers involved.</p> Signup and view all the answers

<p>Business economics is concerned with the application of economic principles to solve business problems, while pure economics focuses on the theoretical aspects of economics and the development of economic theories.</p> Signup and view all the answers

<p>The law of demand states that, all else being equal, as the price of a good increases, the quantity demanded decreases, and vice versa. Variations in demand include income effect, substitution effect, and the effect of consumer preferences.</p> Signup and view all the answers

<p>The cardinal approach to consumer behavior focuses on the measurement of utility, and the law of Equi-marginal utility states that a rational consumer will allocate their income in such a way that the utility derived from the last unit of money spent on each good is equal.</p> Signup and view all the answers

<p>Consumer surplus is the difference between what consumers are willing to pay for a good and what they actually pay. It represents the benefit consumers receive from paying less than they are willing to for a product. Its analysis involves the calculation of the area under the demand curve and above the market price. Limitations include the assumption of a single price for all units purchased and the difficulty in measuring consumer's willingness to pay.</p> Signup and view all the answers

<p>Market equilibrium occurs when the quantity of a good demanded by consumers is equal to the quantity supplied by producers. Factors that lead to changes in equilibrium include changes in demand, changes in supply, and shifts in the demand or supply curve.</p> Signup and view all the answers