Economics Principles

What is the law of demand in microeconomics?

• The law of demand states that as the price increases, the quantity demanded also increases

• In microeconomics, the law of demand indicates that price and quantity demanded are unrelated

• According to the law of demand, as the price decreases, the quantity demanded decreases as well

• The law of demand in microeconomics states that as the price of a good or service increases, the quantity demanded decreases, and vice versa.

Explain the concept of opportunity cost in microeconomics.

• Opportunity cost is the same as sunk cost.

• Opportunity cost is the cost of the chosen option.

• Opportunity cost is the total cost of all available alternatives.

• Opportunity cost is the value of the next best alternative forgone when a decision is made.

Define price elasticity of demand and its significance in microeconomics.

• Price elasticity of demand is the responsiveness of quantity demanded to a change in price. It helps businesses understand consumer reactions to price changes.

• Price elasticity of demand measures the supply of goods

• Price elasticity of demand only applies to luxury goods

• Price elasticity of demand is unrelated to consumer behavior

Discuss the role of supply and demand in determining market equilibrium.

• Supply and demand have no impact on market equilibrium

• Market equilibrium is always achieved without any fluctuations

• Supply and demand interact to determine the equilibrium price and quantity in a market. When the quantity supplied equals the quantity demanded, market equilibrium is achieved.

• Market equilibrium is solely determined by government regulations

How does a perfectly competitive market differ from a monopoly in microeconomics?

• Perfectly competitive markets have a single seller controlling prices.

• Monopolies have many buyers and sellers with no control over prices.

• Perfectly competitive markets have few buyers and sellers with a single entity controlling prices.

• Perfectly competitive markets have many buyers and sellers with no single entity controlling prices, while monopolies have a single seller with control over prices and output.