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What is microeconomics?

• The study of the behavior of decision takers within the economy

• The study of the economy as a whole

• The study of international trade

• The study of government policies

What is the opportunity cost of a decision?

• The total cost of all alternatives

• The value of the next best alternative that is forgone

• The benefit of the decision

• The cost of the decision

What does the law of diminishing returns state?

• Adding more resources will always result in increased output

• Adding more resources will result in proportionally less output

• Adding more resources will have no effect on output

• Adding more resources will decrease output

What is the 'invisible hand' in the context of the price mechanism?

• The government's control over prices

• The force that guides the actions of producers and consumers

• The impact of technological advancements

• The influence of international markets

What is the primary function of markets in producing goods and services?

• To create competition among producers

• To regulate prices of goods and services

• To facilitate exchange of goods and services

• To control the distribution of goods and services

Who drew heavily on the writings of Jevons and Mill in the analysis of supply and demand?

• Adam Smith

• Alfred Marshall

• Milton Friedman

• John Maynard Keynes

What determines the level of demand for a good or service?

• Several factors including price, income, and preferences

• The availability of substitutes for the good or service

• Only the income of consumers

• Only the price of the good or service

What does the price elasticity of demand measure?

• The responsiveness of quantity demanded to a change in government policies

• The responsiveness of quantity demanded to a change in price

• The responsiveness of quantity demanded to a change in income

• The responsiveness of quantity demanded to a change in technology

What is the equilibrium point in a market?

• The point where quantity supplied exceeds quantity demanded

• The point where quantity demanded exceeds quantity supplied

• The point where price is set below the equilibrium price

• The point where quantity supplied equals quantity demanded

In a capitalist system, what are 'public goods and services'?

• Goods and services that can only be provided adequately by government intervention

• Goods and services that are not essential for society

• Goods and services that are only available in international markets

• Goods and services provided by private companies