20 short questions with answers on microeconomics for graduation students:

1.Question: What is the fundamental problem that microeconomics seeks to address?

Answer: Scarcity and how individuals and firms make choices under limited resources to satisfy their unlimited wants.

2.Question: Define the concept of opportunity cost.

Answer: The value of the next best alternative forgone when making a choice.

3.Question: State the law of demand. Answer: As the price of a good or service increases, the quantity demanded decreases, ceteris paribus.

4.Question: What is the difference between a change in demand and a change in quantity demanded?

Answer: A change in demand is a shift of the entire demand curve due to non-price factors, while a change in quantity demanded is a movement along the demand curve due to a change in price.

5.Question: List three determinants of the price elasticity of demand.

Answer: Availability of substitutes, necessity of the good, and proportion of income spent on the good.

6.Question: Explain the concept of diminishing marginal utility.

Answer: As an individual consumes more units of a good, the additional satisfaction (marginal utility) derived from each additional unit decreases.

7.Question: What is the difference between fixed costs and variable costs?

Answer: Fixed costs are costs that do not vary with the level of output, while variable costs change with the level of output.

8.Question: Define marginal cost. Answer: The additional cost incurred by producing one more unit of output.

9.Question: What is the profit-maximizing condition for a firm in a perfectly competitive market? Answer: Marginal cost (MC) equals marginal revenue (MR), which is also equal to the market price (P).

10.Question: What are the characteristics of a perfectly competitive market?

Answer: Many buyers and sellers, homogeneous products, free entry and exit, and perfect information.

11.Question: How does a monopoly differ from perfect competition in terms of the demand curve faced by the firm?

Answer: A monopolist faces a downward-sloping demand curve (market demand), while a perfectly competitive firm faces a perfectly elastic (horizontal) demand curve.

12.Question: What is price discrimination?

Answer: Charging different prices to different consumers for the same good or service.

13.Question: What are the conditions necessary for price discrimination to be possible?

Answer: Market power, ability to segment the market, and prevention of resale.

14.Question: Define oligopoly.

Answer: A market structure with a small number of large firms that have significant market power and are interdependent.

15.Question: What is a Nash equilibrium in game theory?

Answer: A situation in which each player chooses their best strategy given the strategies chosen by all other players, and no player has an incentive to unilaterally deviate.

16.Question: Explain the concept of a public good.

Answer: A good that is non-rivalrous (one person's consumption does not prevent another's) and non-excludable (it is difficult or impossible to prevent people from consuming it even if they don't pay).

17.Question: What is a negative externality? Provide an example.

Answer: A cost imposed on a third party who is not directly involved in the production or consumption of a good or service. Example: Pollution from a factory.

18.Question: What is the role of government intervention in the presence of externalities?

Answer: To internalize the externality through policies like taxes (for negative externalities) or subsidies (for positive externalities) to achieve a socially optimal outcome.

19.Question: Define the concept of consumer surplus.

Answer: The difference between the maximum price a consumer is willing to pay for a good and the actual price they pay.

20.Question: What is the Gini coefficient and what does it measure?

Answer: A measure of income inequality within a population, ranging from 0 (perfect equality) to 1 (perfect inequality).