Microeconomics Chapter 1-4 Practice Questions & Answers 2025/2026

Microeconomics Chapter 1-4 Practice Questions & Answers 2025/2026 Price ceiling - ANSWER-A legally determined maximum price that sellers may charge price floor - ANSWER-a legally determined minimum price that sellers may receive consumer surplus - ANSWER-the difference between the highest price a consumer is willing to pay and the price the consumer actually pays marginal benefit - ANSWER-the additional benefit to a consumer from consuming one more unit of a good or service. marginal cost - ANSWER-the additional cost to a firm of producing one more unit of a good or service producer surplus - ANSWER-the difference between the lowest price a firm would be willing to accept and the price it actually receives economic surplus - ANSWER-the sum of consumer surplus and producer surplus deadweight loss - ANSWER-the reduction in economic surplus resulting from a market not being in competitive equilibrium. economic efficiency - ANSWER-a market outcome in which the marginal benefit to consumers of the last unit produced is equal to its marginal cost of production and in which the sum of consumer surplus and producer surplus is at a maximum. tax incidence - ANSWER-the actual division of the burden of a tax between buyers and sellers in a market black market - ANSWER-a market in which buying and selling takes place at prices violate government price regulations. Perfectly competitive market - ANSWER-A market that meets the conditions of (1) many buyers and sellers, (2) all firms selling identical products, and (3) no barriers to new firms entering the market. Demand schedule - ANSWER-A table showing the relationship between the price of a product and the quantity of the product demanded Quantity demanded - ANSWER-the amount of a good or service that a consumer is willing and able to purchase at a given price ...