About this Study Set
This study set covers Microeconomics through
20 practice questions.
A set of knowledge-based multiple-choice questions covering core microeconomic concepts relevant to high school curriculum. Every question includes the correct answer so you can learn as you go — pick any format above to get started.
Questions & Answers
Browse all 20 questions from the
Microeconomics Fundamentals study set below.
Each question shows the correct answer — select a study format above to practice interactively.
1
Which of the following best describes the concept of opportunity cost in microeconomics?
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A
The total cost of producing a good.
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B
The price of the next best alternative forgone when a choice is made.
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C
The cost incurred by a firm when it hires more labour.
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D
The sum of all explicit and implicit costs.
2
In a perfectly competitive market, what is the marginal revenue for a firm?
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A
Equal to the market price.
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B
Less than the market price.
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C
Greater than the market price.
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D
Variable and dependent on output.
3
What does the law of diminishing marginal utility suggest?
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A
As consumption of a good increases, total utility decreases.
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B
As consumption of a good increases, the additional satisfaction from each extra unit decreases.
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C
The marginal cost of production always falls.
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D
Consumers will always buy more at lower prices.
4
A firm faces a downward-sloping demand curve. This is characteristic of which market structure?
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A
Perfect competition.
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B
Monopoly.
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C
Oligopoly.
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D
Monopolistic competition.
5
What is the primary goal of a profit-maximizing firm in a market economy?
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A
To maximise market share.
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B
To minimise costs.
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C
To produce at the quantity where marginal revenue equals marginal cost.
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D
To achieve the highest possible total revenue.
6
Which of the following best defines a 'normal good' in economics?
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A
A good for which demand decreases as income rises.
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B
A good for which demand increases as income rises.
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C
A good for which demand is unaffected by price changes.
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D
A good that is essential for survival.
7
If the price of a substitute good increases, what is the likely effect on the demand for the original good?
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A
Demand will decrease.
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B
Demand will increase.
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C
Demand will remain unchanged.
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D
Demand will become elastic.
8
In the short run, a firm will continue to produce as long as its price is above which cost?
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A
Total cost.
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B
Average fixed cost.
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C
Average variable cost.
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D
Total fixed cost.
9
What does price elasticity of demand measure?
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A
The responsiveness of quantity supplied to a change in price.
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B
The responsiveness of quantity demanded to a change in price.
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C
The responsiveness of total revenue to a change in price.
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D
The responsiveness of income to a change in demand.
10
In a monopoly, the firm's demand curve is:
-
A
Downward sloping.
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B
Perfectly elastic.
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C
Upward sloping.
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D
Perfectly inelastic.
11
Which of the following is a characteristic of a public good?
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A
It is rivalrous and excludable.
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B
It is non-rivalrous and non-excludable.
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C
It is rivalrous and non-excludable.
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D
It is non-rivalrous and excludable.
12
When the government imposes a price ceiling below the equilibrium price, what is the likely outcome?
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A
A surplus of the good.
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B
A shortage of the good.
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C
An increase in producer surplus.
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D
Market equilibrium is maintained.
13
What is the definition of marginal cost?
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A
The total cost divided by the quantity produced.
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B
The increase in total cost resulting from producing one more unit of output.
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C
The cost of all fixed inputs.
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D
The average cost when output is zero.
14
In the long run, firms in monopolistic competition tend to earn:
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A
Supernormal profits.
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B
Normal profits.
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C
Economic losses.
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D
Negative economic profits.
15
What is the primary characteristic of a natural monopoly?
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A
High barriers to entry due to patents.
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B
Significant economies of scale such that one firm can supply the entire market at a lower cost than multiple firms.
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C
Intense competition from many small firms.
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D
Product differentiation through advertising.
16
A decrease in the cost of inputs will typically lead to:
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A
A decrease in supply, shifting the supply curve to the left.
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B
An increase in supply, shifting the supply curve to the right.
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C
A decrease in demand, shifting the demand curve to the left.
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D
An increase in demand, shifting the demand curve to the right.
17
In game theory, a 'dominant strategy' is one that:
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A
Is the best strategy regardless of what the other player does.
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B
Is the worst strategy regardless of what the other player does.
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C
Is only the best strategy if the other player chooses a specific action.
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D
Leads to the highest possible payoff for both players.
18
What is a cartel?
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A
A group of firms that compete fiercely on price.
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B
A single firm that dominates an entire market.
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C
A group of independent firms that agree to coordinate their actions to influence market output and prices.
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D
A market where there are many buyers and sellers of identical products.
19
If a good is a 'luxury good', its income elasticity of demand is typically:
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A
Less than 0.
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B
Between 0 and 1.
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C
Equal to 1.
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D
Greater than 1.
20
What does the concept of 'consumer surplus' represent?
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A
The difference between the price consumers are willing to pay and the price they actually pay.
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B
The total expenditure by consumers on a good.
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C
The profit earned by producers.
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D
The cost of producing the marginal unit.
