,1. Which of the following describes the concept of "price elasticity
of demand"?
- A) It measures the change in quantity supplied with a change in
price.
- B) It is the degree to which the quantity demanded of a good
changes as its price changes.
- C) It refers to the slope of the supply curve.
- D) It is determined by the elasticity of supply.
> Answer: B
> Rationale: Price elasticity of demand measures the
responsiveness of the quantity demanded to a change in price.
2. In monopolistic competition, firms differentiate their products
in order to:
- A) Capture a greater share of market power.
- B) Engage in price-fixing.
- C) Eliminate consumer choice.
- D) Ensure maximum efficiency.
> Answer: A
, > Rationale: Product differentiation allows firms in monopolistic
competition to capture a greater share of market power and earn
higher profits.
3. Which of the following is an example of a perfectly competitive
market?
- A) Automobile market
- B) Wheat market
- C) Smartphone market
- D) Airline industry
> Answer: B
> Rationale: The wheat market is often cited as an example of
perfect competition due to numerous producers and a
homogeneous product.
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