Economic Principles

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Questions and Answers

Which of the following scenarios best illustrates the concept of opportunity cost?

A student chooses to attend a concert and foregoes studying for an exam. (correct)
A firm decides to hire more workers due to increased demand.
A consumer purchases a product during a sale.
A country imposes tariffs on imported goods.

In a perfectly competitive market, firms are price makers.

False (B)

Explain how an increase in the price of a complementary good affects the demand curve for the related good.

An increase in the price of a complementary good typically results in a leftward shift of the demand curve for the related good, indicating decreased demand.

A market structure characterized by a single seller is known as a ______.

monopoly Signup and view all the answers

Match each term with its definition:

Price Elasticity of Demand = Responsiveness of quantity demanded to a change in price Consumer Surplus = Difference between what consumers are willing to pay and what they actually pay Producer Surplus = Difference between the market price and the minimum price at which producers are willing to sell Deadweight Loss = Loss of economic efficiency when the equilibrium outcome is not achieved Signup and view all the answers

Which of the following is an example of a positive externality?

A neighbor's well-maintained garden that increases property values (B) Signup and view all the answers

A binding price ceiling will result in a surplus.

False (B) Signup and view all the answers

Briefly explain the concept of diminishing marginal returns.

Diminishing marginal returns refers to a point when adding an additional factor of production results in smaller increases in output. Signup and view all the answers

The Gini coefficient is a measure of ______.

income inequality Signup and view all the answers

What is the likely effect of a per-unit tax imposed on suppliers?

Decrease in supply (B) Signup and view all the answers

Flashcards

Microeconomics

The branch of economics that studies the behavior of individuals and small impacting entities, such as families and firms, in making decisions regarding the allocation of limited resources.

Scarcity

A situation in which unlimited wants exceed the limited resources available to fulfill those wants.