Microeconomics Key Terms
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18 questions
Business & Economics > Microeconomics
by steven marone
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Fill in the Blank (18)
Question 1
When the quantity supplied exceeds the quantity demanded at a given price, a market surplus occurs.
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surplus
A surplus happens when there is more of a good available than consumers want to buy at the current price.
Question 2
The point where the supply and demand curves intersect is known as the market equilibrium.
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equilibrium
Equilibrium is the state where quantity demanded equals quantity supplied, with no tendency for price to change.
Question 3
An increase in consumer income typically leads to an increase in the demand for normal goods.
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normal
Normal goods are those for which demand increases as consumer income increases.
Question 4
A government-imposed maximum price that can be charged for a good or service is called a price ceiling.
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ceiling
A price ceiling is a legal maximum price, often set below the equilibrium price, which can lead to shortages.
Question 5
Price elasticity of demand measures the responsiveness of quantity demanded to a change in price.
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elasticity
Elasticity quantifies how much one variable responds to a change in another.
Question 6
Goods with many close substitutes tend to have a more elastic demand.
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substitutes
The availability of alternatives allows consumers to easily switch if the price of a good increases, making demand more elastic.
Question 7
Necessities typically have an inelastic demand because people need them regardless of price changes.
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inelastic
Inelastic demand means that quantity demanded does not change much in response to a price change, common for essential goods.
Question 8
Utility is the satisfaction or pleasure a consumer derives from consuming a good or service.
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Utility
Utility is a measure of the satisfaction consumers gain from consumption.
Question 9
The additional satisfaction gained from consuming one more unit of a good is called marginal utility.
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marginal
Marginal utility refers to the incremental satisfaction from consuming an additional unit.
Question 10
A consumer's budget constraint illustrates the limits on the consumption bundles that a consumer can afford.
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constraint
The budget constraint shows the various combinations of goods a consumer can buy given their income and prices.
Question 11
Indifference curves represent all combinations of goods that provide a consumer with the same level of satisfaction.
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Indifference
Indifference curves show combinations of goods between which a consumer is indifferent, meaning they yield equal utility.
Question 12
In perfect competition, there are many buyers and sellers, and all firms sell identical products.
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perfect
Perfect competition is characterized by numerous small firms, homogeneous products, and free entry and exit.
Question 13
A monopoly exists when a single firm is the sole producer of a product with no close substitutes.
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monopoly
A monopoly is a market structure where one firm dominates the entire market.
Question 14
An oligopoly is a market structure characterized by a few large firms that dominate the market.
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oligopoly
Oligopoly features a small number of interdependent firms, often leading to strategic interactions.
Question 15
Monopolistic competition is characterized by many firms selling differentiated products.
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Monopolistic
Monopolistic competition combines elements of monopoly (product differentiation) and perfect competition (many firms).
Question 16
Costs that do not vary with the quantity of output produced are known as fixed costs.
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fixed
Fixed costs are expenses that do not change with the level of production in the short run.
Question 17
Costs that change with the quantity of output produced are known as variable costs.
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variable
Variable costs are expenses that increase or decrease with the level of production.
Question 18
The additional cost incurred from producing one more unit of output is called marginal cost.
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marginal
Marginal cost is the change in total cost resulting from producing an additional unit of a good.
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