Micro Exam

Question 1

Analysis concerned with what ought to be

Answer 1

Normative Analysis

Question 2

(If i buy this I can’t buy that)

Answer 2

Opportunity Cost

Question 3

(Analysis concerned with what is)

Answer 3

Positive Analysis

Question 4

(is simplified version of reality used to analyze real-world situations)

Answer 4

Economic Model

Question 5

(Something Measurable that can have different values)

Answer 5

Economic Variable

Question 6

(The study of the choice people make to attain their goals, given their scarce resources)

Answer 6

Economics

Question 7

(unlimited wants exceed the limited resources available)

Answer 7

Scarcity

Question 8

(The fair distribution of economic benefits)

Answer 8

Equity

Question 9

(Analysis that involves comparing marginal benefits and marginal costs)

Answer 9

Marginal Analysis

Question 10

(is the study of how households and firms make choices)

Answer 10

Microeconomics

Question 11

(is the study of the economy as a whole)

Answer 11

Macroeconomics

Question 12

Rations consumers and firms use all available information as they act to achieve their goals

Answer 12

People are rational

Question 13

Economists emphasize that individuals and firms consistently respond to economic incentives

Answer 13

People Respond to Economic Incentives

Question 14

Economists use the word marginal to mean an extra or additional benefit or cost from making a decision

Answer 14

Optimal decisions are made at the margin

Question 15

(The ability of an individual, firm, country to produce more of a good or service than competitors, using the same amount of resources)

Answer 15

Absolute Advantage

Question 16

(The ability of an individual, firm, or a country to produce a good or service at a lower opportunity cost than competitors)

Answer 16

Comparative Advantage

Question 17

(A market with few government restrictions on how a good or service can be produced or sold or on how a factor of production can be employed)

Answer 17

Free Market

Question 18

(A group of buyers and sellers of a good or service and institution or arrangement by which they come together to trade)

Answer 18

Market

Question 19

(Labor, capital, natural resources, and other inputs used to make goods and services)

Answer 19

Factors of Production

Question 20

(a curve that shows the relationship between the price of a product and the quantity of the product demanded)

Answer 20

Demand Curve

Question 21

(A market that meets the conditions of having 1 many buyers and sellers, 2 all firms selling identical products and 3 no barriers to new firms entering the market)

Answer 21

Perfectly Competitive Market

Question 22

(The change in the quantity demanded of a good that results from the effect of a change in price on consumer purchasing power)

Answer 22

Income Effect

Question 23

(holding everything else constant, when the price of a product falls the quantity of demanded of the produce will increase)

Answer 23

Law of Demand

Question 24

(holding everything else constant, increases in price cause increases in the quantity supplied, and decreases price case decreases in quantity supplied)

Answer 24

Law of Supply

Question 25

(The change in the quantity demanded of a good that results from a change in price making the good more or less expensive relative to other goods)

Answer 25

Substitution effect

Question 26

(A situation in which the quantity supplied is greater than the quantity demanded)

Answer 26

Surplus

Question 27

(A measure of how much one economic variable responds to changes in another economic variable)

Answer 27

Elasticity

Question 28

(The responsiveness of the quantity supplied to a change in price, measured by dividing the percentage change in quantity supplied of a product by the percentage change in the products price)

Answer 28

Price elasticity of supply

Question 29

(The total amount of funds a seller receives from selling of a good or service, calculated by multiplying price per unit by the number of units sold)

Answer 29

Total Revenue

Question 30

percentage change in quantity/percentage change in price

Answer 30

Price elasticity of demand

Question 31

(economic decisions result from the interaction of buyers and sellers in markets but in which the government plays a significant role in the allocation of resources)

Answer 31

Mixed Economy

Question 32

A state of the economy in which production is in accordance with consumer preferences

Answer 32

Allocative Efficiency