Introduction of Microeconomics Test 30

Economic activity deals with the production, distribution, consumption and exchange of economic goods which are scarce in nature as compared to their demand and also those goods which have the utility to satisfy human wants.

The law of demand is a fundamental microeconomic principle that states that, all else being equal, as the price of a good or service rises, the quantity demanded for that good or service decreases.

A capitalist economy is characterized by private ownership of factors of production, while a socialist economy is characterized by state ownership of factors of production. A mixed economy, on the other hand, is characterized by private and state ownership of factors of production.

The government announces Minimum Support Prices (MSP) for agricultural commodities each year in both Crop seasons after taking into account the recommendations of the Commission for Agricultural Costs and Prices (CACP).

Opportunity cost in microeconomics refers to the value of the next best alternative that must be foregone when making a choice. It reflects the trade-offs associated with decision-making.

Option (B) is an example of positive economics because it describes a cause-and-effect relationship between the price of gasoline and the quantity demanded without expressing any value judgments.

Option (D) is an example of positive economic analysis because it describes an expected outcome based on economic data and trends without expressing a value judgment.

“These are limited as compared to wants” and “These have alternative uses” is the salient feature of factors (or resources).

The demand curve is the relationship between the price and quantity of a good or service. There is an inverse relationship between price and demand and due to this the demand curve always has a downward slope.

The labor market in microeconomics primarily focuses on understanding the interactions between individual workers and firms in terms of employment, wages, and labor supply.