Introduction of Microeconomics Test 29

Duopoly is a special case of oligopoly, where there are only two firms dominating the market. In an oligopoly, a few large firms dominate the market, and each firm's actions directly affect the others. Duopoly is characterized by intense competition between the two firms, often leading to strategic interactions such as price competition, collusion, or differentiated product offerings. 

The ceteris paribus principle assumes that all relevant variables, except the ones under consideration, remain constant. This allows economists to isolate the effects of specific factors in economic analysis.

The ceteris paribus principle in microeconomics assumes that all relevant variables, other than the ones under examination, remain constant. This allows for the isolation of specific factors in economic analysis.

A positive economic statement in microeconomics is one that describes what "is" or what "will be" without expressing value judgments. Option (B) states, "If the price of coffee increases, the demand for tea may rise." This statement describes a cause-and-effect relationship between the price of coffee and the demand for tea without making any normative judgments about whether this is good or bad. It simply states a possible outcome based on economic principles.

Elasticity in microeconomics measures how sensitive the quantity demanded or supplied of a good is to changes in its price or income. It is a crucial concept in understanding consumer and producer behavior.

Scarcity of resources gives rise to the fundamental economic problem of choice. As a society cannot produce enough goods and services to satisfy all the wants of its people, it has to make choices.

The Lorenz curve is used to measure inequality of income distribution within a population. It graphically represents the cumulative distribution of income against the cumulative share of the population. The greater the distance between the Lorenz curve and the line of perfect equality (where income distribution is perfectly equal), the greater the income inequality within the population.

Consumer surplus in microeconomics is the difference between the price consumers are willing to pay for a good and the actual price they pay. It represents the additional value consumers receive from a purchase.

Consumer theory in microeconomics focuses on understanding how individual consumers make choices in order to maximize their satisfaction or utility, given their budget constraints and preferences.

Normative statements involve value judgments about what "ought to be" rather than describing what "is."Therefore, option (C) is correct.