INTRODUCTION TO MICROECONOMICS

What does economics primarily study?

• The behavior of individuals and society in allocating limited resources

• The production of goods and services without considering resources

• The distribution of unlimited resources to satisfy limited wants

• The creation of resources from unlimited factors of production

Which of the following is a characteristic of microeconomics?

• Studies the aggregate behavior of the entire economy

• Focuses on the national income and international trade

• Examines individual economic units like households and firms

• Deals with inflation, deflation, and unemployment

Which of the following is NOT a factor of production?

• Labour

• Land

• Capital

• Profit

What is opportunity cost?

• The total cost of all choices

• The benefit gained from the chosen option

• The second best alternative that is forgone

• The cost of producing one more unit of a good

Which of the following best describes a public good?

• Goods that can be purchased privately by consumers

• Goods provided by the government for free to all members of society

• Goods that are sold in a competitive market for profit

• Goods produced with the help of private capital

What is a key characteristic of a capitalist economy?

• Public ownership of all resources

• Centralized economic planning by the government

• Price mechanism and minimal government intervention

• Equal distribution of income and wealth

What is the law of demand?

• The higher the price, the higher the quantity demanded

• The lower the price, the lower the quantity demanded

• The higher the price, the lower the quantity demanded

• The price of a good is constant regardless of demand

Which of the following is a determinant of demand?

• Technology advancement

• Cost of production

• Consumer income

• Price of related goods

Which type of goods are used to produce other goods and services?

• Consumer goods

• Capital goods

• Free goods

• Public goods

What happens in a market equilibrium?

• Quantity demanded is greater than quantity supplied

• Quantity supplied is greater than quantity demanded

• Quantity demanded equals quantity supplied

• There is a surplus of goods in the market