Fall Semester 2025 UNISA Assignment: ECS2601 / MRL2601
Microeconomics – Complete Solved Assignment with Step-
by-Step Answers and Exam-Focused Study Guide (Updated
2025 Edition)
Question 1
What is the primary purpose of the demand curve in microeconomics?
A) To illustrate the total revenue of a firm
B) To show the relationship between price and quantity demanded
C) To represent the cost structure of a firm
D) To indicate the level of production efficiency
CORRECT ANSWER: B)
Rationale: The demand curve illustrates the relationship between the price of a good
and the quantity demanded by consumers, reflecting how demand changes as price
fluctuates.
Question 2
Which of the following is an example of a price ceiling?
A) A minimum wage law
B) Rent control in a city
C) A sales tax on luxury goods
D) A subsidy for farmers
CORRECT ANSWER: B)
Rationale: A price ceiling is a government-imposed limit on how high a price can be
charged for a product, such as rent control, which seeks to make housing more
affordable.
Question 3
In a perfectly competitive market, firms are price takers because:
A) They can influence the market price with their output
B) There are many substitutes for their products
C) The market sets the price based on overall supply and demand
D) They have no competitors in the market
CORRECT ANSWER: C)
,Rationale: In a perfectly competitive market, individual firms have no power to
influence the market price; they must accept the price dictated by the overall market
supply and demand.
Question 4
What does the term 'elasticity of demand' refer to?
A) The responsiveness of the quantity demanded to a change in income
B) The responsiveness of quantity demanded to a change in price
C) The fixed quantity demanded regardless of price changes
D) The relationship between price and utility
CORRECT ANSWER: B)
Rationale: Elasticity of demand measures how sensitive the quantity demanded of a
good is to changes in its price, indicating how responsive consumers are to price
changes.
Question 5
Which of the following best describes a 'public good'?
A) A good that is excludable and rivalrous
B) A good that can be produced by any firm in the market
C) A good that is non-excludable and non-rivalrous
D) A good with a high market price due to scarcity
CORRECT ANSWER: C)
Rationale: Public goods are characterized by being non-excludable (people cannot be
prevented from using them) and non-rivalrous (one person's use does not reduce
availability for others), such as national defense.
Question 1
What is the primary purpose of the demand curve in microeconomics?
A) To illustrate the total revenue of a firm
B) To show the relationship between price and quantity demanded
C) To represent the cost structure of a firm
D) To indicate the level of production efficiency
CORRECT ANSWER: B)
Rationale: The demand curve represents the relationship between the price of a good
and the quantity demanded by consumers. It is essential for understanding consumer
behavior and market dynamics.
, Question 2
Which of the following is an example of a price ceiling?
A) A minimum wage law
B) Rent control in a city
C) A sales tax on luxury goods
D) A subsidy for farmers
CORRECT ANSWER: B)
Rationale: A price ceiling is a maximum allowable price set by the government, such as
rent control, aimed at protecting consumers from high prices.
Question 3
In a perfectly competitive market, firms are price takers because:
A) They can influence the market price with their output
B) There are many substitutes for their products
C) The market sets the price based on overall supply and demand
D) They have no competitors in the market
CORRECT ANSWER: C)
Rationale: Firms in a perfectly competitive market cannot influence market prices due
to the large number of sellers and homogeneous products; they must accept the market
price.
Question 4
What does the term 'elasticity of demand' refer to?
A) The responsiveness of the quantity demanded to a change in income
B) The responsiveness of quantity demanded to a change in price
C) The fixed quantity demanded regardless of price changes
D) The relationship between price and utility
CORRECT ANSWER: B)
Rationale: Elasticity of demand calculates how the quantity demanded changes in
response to price changes, revealing consumer sensitivity to price.
Question 5
Which of the following best describes a 'public good'?
Microeconomics – Complete Solved Assignment with Step-
by-Step Answers and Exam-Focused Study Guide (Updated
2025 Edition)
Question 1
What is the primary purpose of the demand curve in microeconomics?
A) To illustrate the total revenue of a firm
B) To show the relationship between price and quantity demanded
C) To represent the cost structure of a firm
D) To indicate the level of production efficiency
CORRECT ANSWER: B)
Rationale: The demand curve illustrates the relationship between the price of a good
and the quantity demanded by consumers, reflecting how demand changes as price
fluctuates.
Question 2
Which of the following is an example of a price ceiling?
A) A minimum wage law
B) Rent control in a city
C) A sales tax on luxury goods
D) A subsidy for farmers
CORRECT ANSWER: B)
Rationale: A price ceiling is a government-imposed limit on how high a price can be
charged for a product, such as rent control, which seeks to make housing more
affordable.
Question 3
In a perfectly competitive market, firms are price takers because:
A) They can influence the market price with their output
B) There are many substitutes for their products
C) The market sets the price based on overall supply and demand
D) They have no competitors in the market
CORRECT ANSWER: C)
,Rationale: In a perfectly competitive market, individual firms have no power to
influence the market price; they must accept the price dictated by the overall market
supply and demand.
Question 4
What does the term 'elasticity of demand' refer to?
A) The responsiveness of the quantity demanded to a change in income
B) The responsiveness of quantity demanded to a change in price
C) The fixed quantity demanded regardless of price changes
D) The relationship between price and utility
CORRECT ANSWER: B)
Rationale: Elasticity of demand measures how sensitive the quantity demanded of a
good is to changes in its price, indicating how responsive consumers are to price
changes.
Question 5
Which of the following best describes a 'public good'?
A) A good that is excludable and rivalrous
B) A good that can be produced by any firm in the market
C) A good that is non-excludable and non-rivalrous
D) A good with a high market price due to scarcity
CORRECT ANSWER: C)
Rationale: Public goods are characterized by being non-excludable (people cannot be
prevented from using them) and non-rivalrous (one person's use does not reduce
availability for others), such as national defense.
Question 1
What is the primary purpose of the demand curve in microeconomics?
A) To illustrate the total revenue of a firm
B) To show the relationship between price and quantity demanded
C) To represent the cost structure of a firm
D) To indicate the level of production efficiency
CORRECT ANSWER: B)
Rationale: The demand curve represents the relationship between the price of a good
and the quantity demanded by consumers. It is essential for understanding consumer
behavior and market dynamics.
, Question 2
Which of the following is an example of a price ceiling?
A) A minimum wage law
B) Rent control in a city
C) A sales tax on luxury goods
D) A subsidy for farmers
CORRECT ANSWER: B)
Rationale: A price ceiling is a maximum allowable price set by the government, such as
rent control, aimed at protecting consumers from high prices.
Question 3
In a perfectly competitive market, firms are price takers because:
A) They can influence the market price with their output
B) There are many substitutes for their products
C) The market sets the price based on overall supply and demand
D) They have no competitors in the market
CORRECT ANSWER: C)
Rationale: Firms in a perfectly competitive market cannot influence market prices due
to the large number of sellers and homogeneous products; they must accept the market
price.
Question 4
What does the term 'elasticity of demand' refer to?
A) The responsiveness of the quantity demanded to a change in income
B) The responsiveness of quantity demanded to a change in price
C) The fixed quantity demanded regardless of price changes
D) The relationship between price and utility
CORRECT ANSWER: B)
Rationale: Elasticity of demand calculates how the quantity demanded changes in
response to price changes, revealing consumer sensitivity to price.
Question 5
Which of the following best describes a 'public good'?
