1. In economics, the term "opportunity cost" refers to:
a) The financial cost of a particular choice
b) The value of the best alternative foregone
c) The total cost of producing a good or service
d) The profit earned from a business venture
Answer: b) The value of the best alternative
foregone
2. Which of the following is an example of a perfectly
competitive market?
a) The market for luxury cars
b) The market for natural gas
c) The market for smartphones
d) The market for agricultural products
Answer:
d) The market for agricultural products
3. The law of demand states that:
a) There is a positive relationship between price and
quantity demanded
b) There is a negative relationship between price and
quantity demanded
c) Price has no effect on quantity demanded
d) Quantity demanded is determined solely by income
Answer:
b) There is a negative relationship between price and
quantity demanded
4. The term "elasticity of demand" measures the:
a) Responsiveness of quantity demanded to changes in price
b) Responsiveness of quantity supplied to changes in price
c) Rate at which prices change in the market
d) Proportion of income spent on a particular good or service
Answer:
a) Responsiveness of quantity demanded to changes in
price
5. A price ceiling is a government-imposed maximum price set:
a) Above the equilibrium price, leading to a surplus
b) Above the equilibrium price, leading to a shortage
c) Below the equilibrium price, leading to a surplus
d) Below the equilibrium price, leading to a shortage
Answer:
c) Below the equilibrium price, leading to a surplus
6. When a market is in equilibrium:
a) There is excess demand in the market
b) There is excess supply in the market
c) Quantity demanded is equal to quantity supplied
d) Quantity demanded is greater than quantity supplied
Answer:
c) Quantity demanded is equal to quantity supplied