Micro economics

Sarah wants to buy a smartwatch and is willing to pay R 300 for it. However, during a sale, she gets it for R 250. What is her consumer surplus?

• R 50

• R 250

• R 350

• R 550

The government sets a maximum rent price for apartments to make housing affordable. This is an example of:

• Price Floor

• Price Ceiling

• Tax Subsidy

• Market Equilibrium

If the government sets a minimum wage above the market equilibrium wage, what is the likely outcome?

• Higher employment

• Labor shortage

• Unemployment or surplus labor

• No effect on labor market

If the price of a product increases by 20% and the quantity demanded decreases by 40%, the demand for this product is:

• Inelastic

• Unitary Elastic

• Elastic

• Perfectly Inelastic

Which of the following goods is most likely to have inelastic demand?

• Luxury handbags

• Fresh vegetables

• Life-saving medicine

• Soft drinks

If a consumer’s income increases and their demand for instant noodles decreases, this means that instant noodles are:

• A normal good with positive income elasticity

• An inferior good with negative income elasticity

• A luxury good with high income elasticity

• A necessity with unitary income elasticity

Which of the following goods is most likely to have an income elasticity of demand greater than 1?

• Rice

• Public transport tickets

• Designer handbags

• Electricity

Which of the following is a key characteristic of a monopoly?

• Many sellers and many buyers

• Free entry and exit in the market

• A single seller with no close substitutes

• Perfect information and price-taking behavior

Which of the following is a common government response to prevent monopolies from exploiting consumers?

• Encouraging price discrimination

• Enforcing antitrust laws

• Eliminating subsidies for small businesses

• Allowing unrestricted mergers

In industries like electricity and water supply, where it is inefficient to have multiple firms, the government typically:

• Bans the monopoly completely

• Imposes price controls and regulations

• Encourages market entry of multiple firms

• Leaves the monopoly unregulated