Microeconomics

What is the branch of economics that deals with the choices made by individuals and businesses within the economy?

• Macroeconomics

• Microeconomics

• Managerial economics

• Development economics

What would be the opportunity cost of buying a car instead of going on a holiday?

• The benefit of the car

• The price of the car

• The cost of the holiday

• The value of the holiday

What happens when variable factors of production are added to fixed factors according to the law of diminishing returns?

• Overall output decreases

• Overall output remains constant

• Overall output becomes unpredictable

• Overall output increases

What do we call the magical force that determines prices in markets?

• Visible hand

• Price control

• Market regulation

• Invisible hand

In economic systems, what do markets not depend on in order for producers and consumers to come together?

• Physical locations

• Human interaction

• Perfect knowledge

• Remote communication

Who laid the groundwork for the formal analysis of supply and demand, and thus the determination of prices in markets?

• John Maynard Keynes

• Alfred Marshall

• Karl Marx

• Adam Smith

What determines the level of demand for a good or service?

• Income alone

• Just tastes and preferences

• Various factors including price, income, tastes, and preferences

• Only price

What happens to the quantity demanded when the price of a good increases, assuming other determinants are constant?

• Quantity demanded stays the same

• Quantity demanded goes down

• Quantity demanded goes up

• Quantity demanded becomes unpredictable

What do we call the responsiveness of quantity demanded or supplied to a change in price?

• Cross elasticity

• Income elasticity

• Price elasticity

• Unitary elasticity

Where can you find the sweet spot where supply and demand meet in a market?

• Right next to the equilibrium price

• At the equilibrium price

• Just below the equilibrium price

• Above the equilibrium price