Microeconomics Knowledge Test! Practice Quiz! Trivia

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Mohammad Akram
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Microeconomics Knowledge Test! Practice Quiz! Trivia - Quiz

If you are an economics student, then you must know that economics is all about supply, demand, and maximizing income, be it in a business or a country. Have you been having a hard time revising for your microeconomics course work? This quiz is designed to check your economics knowledge. The answers and detailed explanations are given at the end of each question.


Questions and Answers
  • 1. 

    What Microeconomics is about?

    • A.

      Study of Business Environment.

    • B.

      Study of financial position of the economy.

    • C.

      Study of the Economy at Micro Level.

    • D.

      None of the above.

    Correct Answer
    C. Study of the Economy at Micro Level.
    Explanation
    Microeconomics is concerned with the study of the individual consumer/producer or single economic unit.

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  • 2. 

    Law of Demand states that:

    • A.

      With the increase in price, quantity increases.

    • B.

      With the increase in price, quantity decreases other things remaining the same.

    • C.

      Quantity does not change with any increase in price.

    • D.

      All of the above.

    Correct Answer
    B. With the increase in price, quantity decreases other things remaining the same.
    Explanation
    Law of demand states that other things remaining the same every increase in price causes the quantity to be decreased and vice versa.

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  • 3. 

    The Slope of the Indifference Curve indicates:

    • A.

      Marginal Rate of Substitution of x for y.

    • B.

      Prices of x and y.

    • C.

      Slope of the budget line.

    • D.

      Change in prices.

    Correct Answer
    A. Marginal Rate of Substitution of x for y.
    Explanation
    The slope of the Indifference Curve shows MRSxy.

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  • 4. 

    Production Functions Shows:

    • A.

      Prices of input and output.

    • B.

      Relationship between output and input.

    • C.

      Various combinations of inputs.

    • D.

      All of the above.

    Correct Answer
    B. Relationship between output and input.
    Explanation
    A production function shows a level of output associated with inputs. Choice B is correct.

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  • 5. 

    The shape of the Total Fixed Cost(TFC) Curve is:

    • A.

      Verticle

    • B.

      Horizontal

    • C.

      45 degree line.

    • D.

      None of the above.

    Correct Answer
    B. Horizontal
    Explanation
    Since the fixed cost is given its shape is a horizontal line.

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  • 6. 

    While in Perfect Competition:

    • A.

      Firms are price taker.

    • B.

      Buyers are independent.

    • C.

      Input prices are given.

    • D.

      All of the above.

    Correct Answer
    D. All of the above.
    Explanation
    In perfect competition, firms are price takers, buyers make independent choices, and input prices are given. This market structure represents a scenario where there is no market power, and both buyers and sellers operate in a competitive, decentralized manner.

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  • 7. 

    Model of Monopolistic Competition (i.e Imperfect competition) is characterized by:

    • A.

      Homogeneous goods.

    • B.

      Differentiated goods.

    • C.

      Substitute Goods.

    • D.

      All of the above.

    Correct Answer
    B. Differentiated goods.
    Explanation
    In monopolistic goods are differentiated and the firm faces a downward sloping demand curve i.e with every increase(decrease) in price there is a decrease(increase) in quantity.

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  • 8. 

    A monopoly is a form of market where there is:

    • A.

      Large number of buyer.

    • B.

      Small number of buyer

    • C.

      A single firm controlling the market.

    • D.

      Any of the above.

    Correct Answer
    C. A single firm controlling the market.
    Explanation
    Monopoly is a form of market where a single producer controls the market and has power to change the price and output.

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  • 9. 

    In Duopoly, there is/are:

    • A.

      Many firms.

    • B.

      Two firms controlling the Market.

    • C.

      Large corporations.

    • D.

      None of the above.

    Correct Answer
    B. Two firms controlling the Market.
    Explanation
    Duopoly is a form of oligopoly where two large firms control the market.

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  • 10. 

    Price discrimination is a situation when a producer:

    • A.

      Charges different prices in different markets.

    • B.

      Charges same price.

    • C.

      Charges many prices.

    • D.

      All of the above.

    Correct Answer
    A. Charges different prices in different markets.
    Explanation
    Price discrimination refers to the practice of a producer charging different prices for the same product or service in different markets. This strategy allows the producer to maximize their profits by taking advantage of variations in demand and willingness to pay across different customer segments or geographical locations. By tailoring prices to specific market conditions, the producer can capture more value from customers who are willing to pay higher prices while still attracting customers who are more price-sensitive. This approach requires the producer to have market power and the ability to segment customers effectively.

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Our quizzes are rigorously reviewed, monitored and continuously updated by our expert board to maintain accuracy, relevance, and timeliness.

  • Current Version
  • Nov 06, 2023
    Quiz Edited by
    ProProfs Editorial Team
  • Aug 26, 2008
    Quiz Created by
    Mohammad Akram
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