D089 ECON 2000
Principles of Economics
Final Assessment (Qns & Ans)
2025
1. Which of the following best describes the concept of
"opportunity cost"?
- A) The total cost of producing goods
- B) The cost of the next best alternative foregone
- C) The cost of all available alternatives
- D) The cost of resources used in production
©2024/2025
, - ANS: B
- Rationale: Opportunity cost refers to the value of the next
best alternative that is foregone when a decision is made.
2. What is the primary focus of microeconomics?
- A) The study of national economies
- B) The analysis of individual markets and consumer behavior
- C) The examination of global trade
- D) The study of government policies
- ANS: B
- Rationale: Microeconomics focuses on the behavior of
individuals and firms in making decisions regarding the allocation
of limited resources.
3. Which of the following is NOT a characteristic of a perfectly
competitive market?
- A) Many buyers and sellers
- B) Homogeneous products
- C) Barriers to entry and exit
- D) Perfect information
- ANS: C
©2024/2025
, - Rationale: A perfectly competitive market is characterized
by many buyers and sellers, homogeneous products, and perfect
information, with no barriers to entry and exit.
Fill-in-the-Blank Questions
4. The law of __________ states that, all else being equal, as the
price of a good increases, the quantity demanded decreases.
- ANS: Demand
- Rationale: The law of demand states that there is an inverse
relationship between the price of a good and the quantity
demanded.
5. __________ is the measure of the responsiveness of the
quantity demanded of a good to a change in its price.
- ANS: Price elasticity of demand
- Rationale: Price elasticity of demand measures how much
the quantity demanded of a good responds to changes in its price.
True/False Questions
6. True or False: In the short run, at least one factor of
production is fixed.
©2024/2025
, - ANS: True
- Rationale: In the short run, at least one factor of production
(such as capital) is fixed, while others (such as labor) can be
varied.
7. True or False: A monopoly is a market structure with many
firms producing identical products.
- ANS: False
- Rationale: A monopoly is a market structure where a single
firm produces a unique product with no close substitutes.
Multiple Response Questions
8. Which of the following are determinants of demand? (Select
all that apply)
- A) Consumer preferences
- B) Price of related goods
- C) Production technology
- D) Income levels
- ANS: A, B, D
- Rationale: Determinants of demand include consumer
preferences, the price of related goods, and income levels.
Production technology is a determinant of supply, not demand.
©2024/2025
Principles of Economics
Final Assessment (Qns & Ans)
2025
1. Which of the following best describes the concept of
"opportunity cost"?
- A) The total cost of producing goods
- B) The cost of the next best alternative foregone
- C) The cost of all available alternatives
- D) The cost of resources used in production
©2024/2025
, - ANS: B
- Rationale: Opportunity cost refers to the value of the next
best alternative that is foregone when a decision is made.
2. What is the primary focus of microeconomics?
- A) The study of national economies
- B) The analysis of individual markets and consumer behavior
- C) The examination of global trade
- D) The study of government policies
- ANS: B
- Rationale: Microeconomics focuses on the behavior of
individuals and firms in making decisions regarding the allocation
of limited resources.
3. Which of the following is NOT a characteristic of a perfectly
competitive market?
- A) Many buyers and sellers
- B) Homogeneous products
- C) Barriers to entry and exit
- D) Perfect information
- ANS: C
©2024/2025
, - Rationale: A perfectly competitive market is characterized
by many buyers and sellers, homogeneous products, and perfect
information, with no barriers to entry and exit.
Fill-in-the-Blank Questions
4. The law of __________ states that, all else being equal, as the
price of a good increases, the quantity demanded decreases.
- ANS: Demand
- Rationale: The law of demand states that there is an inverse
relationship between the price of a good and the quantity
demanded.
5. __________ is the measure of the responsiveness of the
quantity demanded of a good to a change in its price.
- ANS: Price elasticity of demand
- Rationale: Price elasticity of demand measures how much
the quantity demanded of a good responds to changes in its price.
True/False Questions
6. True or False: In the short run, at least one factor of
production is fixed.
©2024/2025
, - ANS: True
- Rationale: In the short run, at least one factor of production
(such as capital) is fixed, while others (such as labor) can be
varied.
7. True or False: A monopoly is a market structure with many
firms producing identical products.
- ANS: False
- Rationale: A monopoly is a market structure where a single
firm produces a unique product with no close substitutes.
Multiple Response Questions
8. Which of the following are determinants of demand? (Select
all that apply)
- A) Consumer preferences
- B) Price of related goods
- C) Production technology
- D) Income levels
- ANS: A, B, D
- Rationale: Determinants of demand include consumer
preferences, the price of related goods, and income levels.
Production technology is a determinant of supply, not demand.
©2024/2025
