Quiz 11

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Louisiana State University *

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Economics

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Apr 3, 2024

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Quiz 1: Microeconomics 1. Define opportunity cost. a) The explicit monetary cost of an activity b) The value of the next best alternative forgone c) The total cost of producing one additional unit of output d) The revenue earned from selling additional units of output 2. What is the difference between explicit costs and implicit costs? a) Explicit costs are incurred in the past, while implicit costs are incurred in the future b) Explicit costs involve monetary payments, while implicit costs do not c) Explicit costs are tangible, while implicit costs are intangible d) Explicit costs are fixed, while implicit costs are variable 3. Describe a situation where a perfectly competitive market structure exists. a) A market with only one seller and many buyers b) A market with many sellers and one buyer c) A market with many buyers and many sellers, all selling identical products d) A market with a few sellers and many buyers, with differentiated products 4. What is the law of diminishing marginal utility? a) As consumption of a good increases, the additional satisfaction derived from each additional unit decreases b) As consumption of a good decreases, the total utility derived from each unit increases c) As consumption of a good increases, the total utility derived from each unit remains constant d) As consumption of a good decreases, the additional satisfaction derived from each additional unit increases 5. Explain the concept of price elasticity of demand. a) The percentage change in quantity demanded divided by the percentage change in price b) The absolute change in quantity demanded divided by the absolute change in price c) The percentage change in price divided by the percentage change in quantity demanded d) The absolute change in price divided by the absolute change in quantity demanded 6. How does a price ceiling affect the market for a good? a) It sets a maximum price above which the good cannot be sold, leading to a shortage b) It sets a minimum price below which the good cannot be sold, leading to a surplus c) It has no effect on the market for the good d) It creates a perfectly competitive market for the good 7. What factors can shift the demand curve? a) Changes in technology and production costs b) Changes in consumer preferences and income c) Changes in government regulations and taxes d) Changes in the prices of related goods 8. Describe a situation where a monopolistic market structure exists. a) A market with only one seller and many buyers b) A market with many sellers and one buyer c) A market with many buyers and many sellers, all selling identical products d) A market with a few sellers and many buyers, with differentiated products 9. What is the difference between accounting profit and economic profit? a) Accounting profit includes explicit costs only, while economic profit includes both explicit and implicit costs b) Accounting profit includes

implicit costs only, while economic profit includes both explicit and implicit costs c) Accounting profit equals total revenue minus total explicit costs, while economic profit equals total revenue minus total costs d) Accounting profit equals total revenue minus total costs, while economic profit equals total revenue minus explicit costs 10. How does a subsidy affect the supply curve? a) It shifts the supply curve to the left b) It shifts the supply curve to the right c) It has no effect on the supply curve d) It creates a perfectly inelastic supply curve

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