Microeconomics Quiz

What is the primary focus of microeconomics?

• The study of national economies

• The study of individual markets and consumer behavior

• The study of inflation and unemployment

• The study of international trade

Which of the following is an example of a public good?

• Private tutoring

• A toll road

• National defense

• A smartphone

What does the law of diminishing marginal returns imply about production?

• Additional units of input increase output at an increasing rate

• Additional units of input increase output at a decreasing rate

• Additional units of input have no effect on output

• Output decreases as inputs are added

In the short run, a firm will continue to produce as long as:

• Price > Average Total Cost (ATC)

• Price > Marginal Cost (MC)

• Price > Average Variable Cost (AVC)

• Price > Fixed Cost

Which economic indicator is commonly used to measure inflation?

• GDP

• Consumer Price Index (CPI)

• Unemployment Rate

• Interest Rate

Which of the following would be considered an expansionary fiscal policy?

• Increasing taxes

• Increasing government spending

• Raising the discount rate

• Reducing the money supply

The concept of opportunity cost implies that:

• Every choice has a cost of forgoing the next best alternative

• Goods with higher prices have higher opportunity costs

• Only monetary costs should be considered in decisions

• There are no trade-offs in decision-making

According to the law of demand, when the price of a good rises, the quantity demanded:

• Increases

• Decreases

• Remains the same

• Depends on the type of good

Define “comparative advantage” and explain why it is beneficial in international trade.

Explain the main difference between fiscal policy and monetary policy.