Master Market Equilibrium: Interactive Quizzes for Economics MA Students

Question 1

In an oligopoly, the number of firms in the market is typically:

Accepted Answer

Moderate

Answer

Very high

Answer

Relatively small

Answer

Highly variable

Question 2

Which of the following is an example of a positive externality?

Accepted Answer

Education

Answer

Pollution from a factory

Answer

Traffic congestion

Answer

Smoking

Question 3

The equilibrium price in a market is primarily determined by:

Accepted Answer

The intersection of supply and demand curves

Answer

Government policies

Answer

The price sensitivity of consumers

Answer

The number of competing firms

Question 4

In a perfectly competitive market, the demand curve faced by an individual firm is:

Accepted Answer

Horizontal

Answer

Downward sloping

Answer

Upward sloping

Answer

U-shaped

Question 5

A key assumption of the Cournot oligopoly model is that:

Accepted Answer

Firms know and react to each other's output decisions

Answer

Firms produce identical products.

Answer

Firms compete only on price

Answer

Firms have complete market information

Question 6

Which of the following is NOT a characteristic of a monopoly?

Accepted Answer

Competitive market structure

Answer

Single seller

Answer

High barriers to entry

Answer

Price maker

Question 7

Which type of externality occurs when production or consumption creates benefits to third parties who are not involved in the market transaction?

Accepted Answer

Positive externality

Answer

Negative externality

Answer

Pecuniary externality

Answer

Technological externality

Question 8

In a market with positive externalities, the socially optimal output is:

Accepted Answer

Higher than the market equilibrium output

Answer

Lower than the market equilibrium output

Answer

Equal to the market equilibrium output

Answer

Impossible to determine without further information

Question 9

The concept of consumer surplus refers to:

Accepted Answer

The difference between the price consumers are willing to pay and the actual market price

Answer

The difference between the price producers are willing to accept and the actual market price

Answer

The total revenue earned by producers

Answer

The total expenditure incurred by consumers

Question 10

Which of the following could be a government intervention to address a negative externality?

Accepted Answer

Pigouvian tax

Answer

Subsidy

Answer

Price ceiling

Answer

Tariff

Question 11

The elasticity of demand measures the:

Accepted Answer

Responsiveness of quantity demanded to changes in price

Answer

Responsiveness of quantity supplied to changes in price

Answer

Ratio of price change to quantity change

Answer

Inverse relationship between price and quantity

Question 12

In a monopoly, who determines the price?

Accepted Answer

The monopolist

Answer

Market forces

Answer

The government

Answer

Consumers

Question 13

What is a potential negative externality?

Accepted Answer

Pollution

Answer

Education

Answer

Public parks

Answer

Fireworks displays

Question 14

How does a shift in the supply curve to the right affect equilibrium quantity?

Accepted Answer

Increase

Answer

Decrease

Answer

No change

Answer

Depends on the demand curve

Question 15

In an oligopoly, firms are typically:

Accepted Answer

Interdependent in their decision-making

Answer

Price takers

Answer

Independent in their decision-making

Answer

Monopolists

Question 16

The Nash equilibrium is:

Accepted Answer

The outcome of a game where no player has an incentive to change their strategy unilaterally

Answer

Always the same as the Pareto efficient outcome

Answer

Only possible in cooperative games

Answer

Named after the mathematician John von Neumann

Question 17

In a perfectly competitive market, which condition must be met for market equilibrium to occur?

Accepted Answer

Price equals marginal cost.

Answer

Quantity demanded is greater than quantity supplied.

Answer

Barriers to entry and exit restrict market participation.

Answer

Firms have significant market power.

Question 18

In market equilibrium, which condition must be satisfied?

Accepted Answer

Equality between quantity supplied and quantity demanded

Answer

Excess demand

Answer

Excess supply

Answer

Price above equilibrium

Question 19

Which of the following factors does NOT directly influence the equilibrium point in a market?

Accepted Answer

Government intervention

Answer

Production costs

Answer

Technological advancements

Answer

Consumer preferences

Question 20

In a perfectly competitive market, the equilibrium price is determined by the point where:

Accepted Answer

The quantity of goods supplied equals the quantity of goods demanded

Answer

The lowest price producers are willing to accept is reached

Answer

The highest price consumers are willing to pay is reached

Answer

A single producer sets the price

Question 21

Which market structure features numerous buyers and sellers, identical products, and minimal barriers to entry and exit?

Accepted Answer

Perfect competition

Answer

Monopoly

Answer

Oligopoly

Answer

Monopolistic competition

Question 22

A positive externality arises when:

Accepted Answer

The actions of one individual benefit others without requiring any compensation.

Answer

Producers gain an advantage over competitors.

Answer

The actions of one individual negatively impact others without any compensation.

Answer

Government regulates pricing in a market.

Question 23

A potential consequence of a negative externality is:

Accepted Answer

Market failure, where the market does not allocate resources efficiently.

Answer

Lower production costs for businesses.

Answer

Higher overall economic growth.

Answer

Increased consumer spending.

Question 24

Government intervention in a market can be used to:

Accepted Answer

Address market failures and improve resource allocation.

Answer

Always increase consumer satisfaction.

Answer

Eliminate competition entirely.

Answer

Prevent market fluctuations.

Question 25

In a monopolistically competitive market, firms typically:

Accepted Answer

Offer differentiated products and have some control over pricing.

Answer

Dominate the market with complete control over pricing.

Answer

Offer identical products and have no control over pricing.

Question 26

In a market with a binding price ceiling, the outcome is:

Accepted Answer

A shortage, where the quantity demanded exceeds the quantity supplied.

Answer

A surplus, where the quantity supplied exceeds the quantity demanded.

Answer

A more efficient allocation of resources.

Answer

The market reaching equilibrium at the price ceiling.

Question 27

The concept of market equilibrium is crucial because it:

Accepted Answer

Provides a framework for understanding how markets allocate resources and determine prices.

Answer

Guarantees complete satisfaction for all consumers and producers.

Answer

Is always perfectly achieved in real-world markets.