January 2026 | Microeconomics Comprehensive Exam &
Assignment Study Guide | In-Depth Course Notes, Supply
& Demand Analysis, Elasticity, Market Structures,
Consumer Theory, Production & Costs, Graphs, Worked
Examples, Practice Questions & University-Level Exam
Prep
Question 1:
What is the primary concern of microeconomics?
• A) Aggregate economic indicators
• B) Individual consumer behavior and firm decisions
• C) Global trade patterns
• D) Government fiscal policy
Correct Option: B) Individual consumer behavior and firm decisions
Rationale: Microeconomics focuses on the actions of individuals and industries, such
as the dynamics of supply and demand within specific markets.
Question 2:
Which of the following represents a movement along the demand curve?
• A) A change in consumer income
• B) A change in the price of a substitute good
• C) A change in the price of the good itself
• D) A change in consumer preferences
Correct Option: C) A change in the price of the good itself
Rationale: A movement along the demand curve occurs when there is a change in the
price of the good, causing a change in the quantity demanded.
Question 3:
What does the term "opportunity cost" refer to?
• A) The amount of money spent on a good
• B) The benefit foregone by choosing one alternative over another
• C) The total cost of production
, • D) The loss incurred during trading
Correct Option: B) The benefit foregone by choosing one alternative over another
Rationale: Opportunity cost is a key concept in economics indicating the value of the
next best alternative that is given up when making a choice.
Question 4:
In the context of elasticity, what does a price elasticity of demand greater than 1 signify?
• A) Demand is elastic
• B) Demand is inelastic
• C) Demand is perfectly elastic
• D) Demand is unitary elastic
Correct Option: A) Demand is elastic
Rationale: A price elasticity of demand greater than 1 indicates that consumers are
highly responsive to price changes, meaning quantity demanded changes significantly
when price changes.
Question 5:
What is a key characteristic of monopolistic competition?
• A) One single producer
• B) Homogeneous products
• C) Many firms offering differentiated products
• D) Perfect information
Correct Option: C) Many firms offering differentiated products
Rationale: Monopolistic competition is characterized by many firms that sell products
which are similar but not identical, leading to product differentiation.
Question 6:
What is the main purpose of a price ceiling?
• A) To increase total revenue for producers
• B) To prevent prices from rising above a certain level
• C) To encourage investment in the market
• D) To regulate the supply of goods
, Correct Option: B) To prevent prices from rising above a certain level
Rationale: Price ceilings are implemented by governments to protect consumers by
making essential goods affordable, preventing prices from exceeding established limits.
Question 7:
When market demand exceeds market supply, this typically results in:
• A) A surplus
• B) Equilibrium price
• C) A shortage
• D) Price stability
Correct Option: C) A shortage
Rationale: When demand exceeds supply at a given price, a shortage occurs, often
leading to price increases until equilibrium is reached.
Question 8:
A firm's marginal cost curve is derived from which of the following?
• A) Average total cost
• B) Total cost function
• C) Economies of scale
• D) Production possibilities curve
Correct Option: B) Total cost function
Rationale: The marginal cost curve represents the change in total cost when one
additional unit is produced, thus it is derived from the total cost function.
Question 9:
Which of the following best describes a public good?
• A) Non-excludable and non-rivalrous
• B) Excludable and rivalrous
• C) Excludable but non-rivalrous
• D) Rivalrous but non-excludable
Assignment Study Guide | In-Depth Course Notes, Supply
& Demand Analysis, Elasticity, Market Structures,
Consumer Theory, Production & Costs, Graphs, Worked
Examples, Practice Questions & University-Level Exam
Prep
Question 1:
What is the primary concern of microeconomics?
• A) Aggregate economic indicators
• B) Individual consumer behavior and firm decisions
• C) Global trade patterns
• D) Government fiscal policy
Correct Option: B) Individual consumer behavior and firm decisions
Rationale: Microeconomics focuses on the actions of individuals and industries, such
as the dynamics of supply and demand within specific markets.
Question 2:
Which of the following represents a movement along the demand curve?
• A) A change in consumer income
• B) A change in the price of a substitute good
• C) A change in the price of the good itself
• D) A change in consumer preferences
Correct Option: C) A change in the price of the good itself
Rationale: A movement along the demand curve occurs when there is a change in the
price of the good, causing a change in the quantity demanded.
Question 3:
What does the term "opportunity cost" refer to?
• A) The amount of money spent on a good
• B) The benefit foregone by choosing one alternative over another
• C) The total cost of production
, • D) The loss incurred during trading
Correct Option: B) The benefit foregone by choosing one alternative over another
Rationale: Opportunity cost is a key concept in economics indicating the value of the
next best alternative that is given up when making a choice.
Question 4:
In the context of elasticity, what does a price elasticity of demand greater than 1 signify?
• A) Demand is elastic
• B) Demand is inelastic
• C) Demand is perfectly elastic
• D) Demand is unitary elastic
Correct Option: A) Demand is elastic
Rationale: A price elasticity of demand greater than 1 indicates that consumers are
highly responsive to price changes, meaning quantity demanded changes significantly
when price changes.
Question 5:
What is a key characteristic of monopolistic competition?
• A) One single producer
• B) Homogeneous products
• C) Many firms offering differentiated products
• D) Perfect information
Correct Option: C) Many firms offering differentiated products
Rationale: Monopolistic competition is characterized by many firms that sell products
which are similar but not identical, leading to product differentiation.
Question 6:
What is the main purpose of a price ceiling?
• A) To increase total revenue for producers
• B) To prevent prices from rising above a certain level
• C) To encourage investment in the market
• D) To regulate the supply of goods
, Correct Option: B) To prevent prices from rising above a certain level
Rationale: Price ceilings are implemented by governments to protect consumers by
making essential goods affordable, preventing prices from exceeding established limits.
Question 7:
When market demand exceeds market supply, this typically results in:
• A) A surplus
• B) Equilibrium price
• C) A shortage
• D) Price stability
Correct Option: C) A shortage
Rationale: When demand exceeds supply at a given price, a shortage occurs, often
leading to price increases until equilibrium is reached.
Question 8:
A firm's marginal cost curve is derived from which of the following?
• A) Average total cost
• B) Total cost function
• C) Economies of scale
• D) Production possibilities curve
Correct Option: B) Total cost function
Rationale: The marginal cost curve represents the change in total cost when one
additional unit is produced, thus it is derived from the total cost function.
Question 9:
Which of the following best describes a public good?
• A) Non-excludable and non-rivalrous
• B) Excludable and rivalrous
• C) Excludable but non-rivalrous
• D) Rivalrous but non-excludable
