RECITATION_MATRIX_MIDTERM

Question 1

What is the relationship between average product and marginal product?

Answer 1

Average product rises when marginal product is above it

Question 2

How do you calculate average product (AP)?

Answer 2

AP = Total Product / Input

Question 3

What is the significance of the law of diminishing marginal returns?

Answer 3

It helps firms determine optimal input levels

Question 4

What determines consumer tastes and preferences?

Answer 4

Age, income, education, culture

Question 5

How does an increase in variable inputs affect output in the short run?

Answer 5

It increases total output until diminishing returns set in

Question 6

What is the relationship between consumer surplus and market price?

Answer 6

Consumer surplus decreases as market price increases

Question 7

What is an economic good?

Answer 7

A good that is both useful and scarce

Question 8

Describe the concept of opportunity cost.

Answer 8

The cost of the next best alternative foregone

Question 9

What happens to total cost if fixed costs are constant and variable costs increase?

Answer 9

Total cost increases

Question 10

What does an increase in demand typically do to prices?

Answer 10

It raises prices

Question 11

What are fixed inputs?

Answer 11

Inputs that cannot be changed in the short run

Question 12

How does a firm determine the optimal combination of factors of production?

Answer 12

By analyzing isoquants and isocosts

Question 13

What are the primary needs identified by Maslow?

Answer 13

Physiological, safety, social, esteem, self-actualization

Question 14

What role do consumers play in a market economy?

Answer 14

They determine what is produced through their demands

Question 15

What is the formula for marginal product?

Answer 15

MP = Change in Total Product / Change in Input

Question 16

What is the total product when 6 units of input yield 30 units of output?

Answer 16

30 units

Question 17

What factors affect the productivity of a firm?

Answer 17

Technology, labor efficiency, input quality

Question 18

How do luxury goods differ from essential goods?

Answer 18

Luxury goods are not necessary for survival

Question 19

What are the implications of the Law of Diminishing Returns for production?

Answer 19

It suggests increasing input will yield lower per unit output after a point

Question 20

In which phase of production do marginal returns start to diminish?

Answer 20

After the optimal input level is reached

Question 21

What type of goods are considered consumer goods?

Answer 21

Goods that provide satisfaction directly

Question 22

How does the government restrict consumer sovereignty?

Answer 22

By regulating harmful products

Question 23

How is total revenue calculated?

Answer 23

Total Revenue = Price x Quantity

Question 24

What is the importance of studying consumer behavior in economics?

Answer 24

To understand market demand and pricing strategies

Question 25

What factors contribute to a firm's total cost?

Answer 25

Fixed and variable costs

Question 26

What does the marginal rate of substitution indicate?

Answer 26

The rate at which one factor can be substituted for another

Question 27

How does the elasticity of demand affect pricing strategies?

Answer 27

Higher elasticity means consumers are more responsive to price changes

Question 28

What is the significance of the production function?

Answer 28

It shows the relationship between input and output

Question 29

How does competition impact prices in the market?

Answer 29

Competition generally leads to lower prices

Question 30

What is the economic definition of a shortage?

Answer 30

When demand exceeds supply

Question 31

What are the main characteristics of an oligopoly?

Answer 31

Few sellers, interdependent pricing, barriers to entry

Question 32

What is price elasticity of demand?

Answer 32

The responsiveness of quantity demanded to a price change

Question 33

What factors can lead to an increase in supply?

Answer 33

Technology improvements, lower production costs

Question 34

How does a price ceiling affect the market?

Answer 34

It can create shortages by keeping prices below equilibrium

Question 35

What is a subsidy and how does it affect production?

Answer 35

A payment to producers to encourage production, which increases supply

Question 36

How do consumers respond to changes in their income?

Answer 36

They may adjust their spending on normal and inferior goods

Question 37

What is the concept of consumer surplus?

Answer 37

The difference between what consumers are willing to pay and what they actually pay

Question 38

How can advertising influence demand?

Answer 38

It can increase demand by changing consumer preferences

Question 39

What are economies of scale?

Answer 39

Cost advantages gained by producing on a larger scale

Question 40

What is the purpose of a demand curve?

Answer 40

To show the relationship between price and quantity demanded

Question 41

What is the impact of increased competition on prices?

Answer 41

Prices tend to decrease

Question 42

What is a price floor, and how does it affect the market?

Answer 42

A minimum price set by the government that can create surpluses

Question 43

What is a public good?

Answer 43

A good that is non-rivalrous and non-excludable

Question 44

How do externalities affect market efficiency?

Answer 44

They can lead to market failures and inefficient allocation of resources

Question 45

What is the concept of marginal utility?

Answer 45

The additional satisfaction gained from consuming one more unit

Question 46

How does consumer confidence affect economic activity?

Answer 46

Higher confidence typically leads to increased spending

Question 47

What is the purpose of antitrust laws?

Answer 47

To promote competition and prevent monopolies

Question 48

How can price discrimination increase a firm's profits?

Answer 48

By charging different prices to different consumers based on willingness to pay

Question 49

What is the relationship between interest rates and investment?

Answer 49

Higher interest rates typically reduce investment

Question 50

How do imports affect domestic prices?

Answer 50

They can lower prices by increasing supply