The Unbeatable Quiz On Microeconomics
You’ve faced quizzes on microeconomics before, but the following quiz on the subject that analyses the decisions made by a firm or individual on how to allocate scarce resources is going to be your biggest challenge yet. Take the quiz, answer the tough questions and find out once and for all if you have what it takes to make it in the world of microeconomics. Let’s see how well you do!
- 1.
The central question in economics is
- A.
Allocation
- B.
Choice
- C.
Scarcity
- D.
All Of The Above
Correct Answer
C. ScarcityExplanation
The central question in economics is scarcity. Scarcity refers to the limited availability of resources in relation to unlimited wants and needs. It is the fundamental problem that drives economic decision-making, as individuals, businesses, and governments must make choices about how to allocate scarce resources to satisfy their needs and wants. Understanding and addressing scarcity is essential in economics to ensure efficient resource allocation and maximize societal welfare.Rate this question:
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- 2.
A situation where one buyer buys all the available output from an industry is known as
- A.
Bilateral Monopoly
- B.
Unilateral Monopoly
- C.
Monopsony
- D.
None of the above
Correct Answer
C. MonopsonyExplanation
Monopsony refers to a market situation where there is only one buyer for a particular product or service. In this scenario, the buyer has significant market power and can dictate the terms of trade, including the price. The given answer, "Monopsony," accurately describes the situation where one buyer purchases all the available output from an industry. In such cases, the buyer has the ability to control the market and influence prices, potentially leading to market inefficiencies.Rate this question:
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- 3.
If marginal benefit is greater than marginal cost, a rational choice involves:
- A.
No more of the activity
- B.
More of the activity
- C.
Less of the activity
- D.
More or less of the activity, depending on other factors.
Correct Answer
B. More of the activityExplanation
If the marginal benefit is greater than the marginal cost, it means that the additional benefit gained from engaging in more of the activity outweighs the additional cost incurred. Therefore, it is rational to choose to engage in more of the activity in order to maximize overall benefit.Rate this question:
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- 4.
A graph showing all the combinations of goods and services that can be produced if all of society's resources are used efficiently is a:
- A.
Lorentz Curve
- B.
Production Possibility Curve
- C.
Capital Consumption Frontier
- D.
None of the above
Correct Answer
B. Production Possibility CurveExplanation
A production possibility curve represents the maximum amount of goods and services that can be produced with the given resources and technology. It shows the trade-off between producing different combinations of goods and services. The curve illustrates the concept of opportunity cost, as producing more of one good requires sacrificing the production of another. Therefore, a graph showing all the combinations of goods and services that can be produced if all of society's resources are used efficiently is a production possibility curve.Rate this question:
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- 5.
Which of the following is true of a perfectly contestable market?
- A.
Cost of entry is low
- B.
There is no cost of entry
- C.
Entry into the market is free
- D.
None of the above
Correct Answer
B. There is no cost of entryExplanation
A perfectly contestable market is characterized by the absence of barriers to entry and exit, meaning that new firms can enter and exit the market freely without incurring any costs. This implies that there is no cost of entry into the market. In such a market, existing firms face the threat of potential competition, which ensures that they operate efficiently and at competitive prices. As a result, consumers benefit from lower prices and a wider variety of choices.Rate this question:
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- 6.
At what price does a monopolist maximise profit?
- A.
A monopolist never maximises profit
- B.
When MC=MR
- C.
A monopolist maximises profit all the time
- D.
None of the above.
Correct Answer
D. None of the above.Explanation
The correct answer is "none of the above." A monopolist does not always maximize profit. While it is true that a monopolist maximizes profit when marginal cost (MC) is equal to marginal revenue (MR), this is not always the case. Profit maximization for a monopolist depends on various factors such as market demand, cost structure, and pricing strategies. Therefore, it cannot be generalized that a monopolist always maximizes profit.Rate this question:
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