Principles of Microeconomics Review Questions with complete Solutions Rated A+
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Course
Microeconomics
Institution
Microeconomics
Principles of Microeconomics Review Questions with complete Solutions Rated A+
Microeconomics - Answers the study of how
households and firms
make decisions and how
they interact in markets
Macroeconomics - Answers the study of economywide
phenomena, including
inflation, unemployment,
and e...
Principles of Microeconomics Review Questions with complete Solutions Rated A+
Microeconomics - Answers the study of how
households and firms
make decisions and how
they interact in markets
Macroeconomics - Answers the study of economywide
phenomena, including
inflation, unemployment,
and economic growth
Scarcity - Answers the limited nature of society's
resources
Opportunity Cost - Answers whatever must be
given up to obtain some item
Consumer Surplus - Answers the amount a buyer is
willing to pay for a good
minus the amount the
buyer actually pays for it
Producer Surplus - Answers the amount a seller is
paid for a good minus the
seller's cost of providing it
Direct Relationship - Answers Two variables move in the same direction. It one increases the other
increases. If one decreases the other decreases.
Inverse Relationship - Answers Two variables move in opposite directions. If one increases the other
decreases; and if one decreases the other increases.
Independent Relationship (Zero Relationship) - Answers No relationship at all.
Price Ceiling - Answers a legal maximum on the
, price at which a good can be sold
Price Floor - Answers a legal minimum on the
price at which a good can be sold
Positive Economics - Answers The scientific aspect of economics that determines "what is?"
Normative Economics - Answers The portion of economics that attempts to address "what should be?"
Law of Supply - Answers the claim that, other
things equal, the quantity supplied of a
good rises when the price of the good
rises
Law of Demand - Answers the claim that, other
things equal, the quantity demanded of a
good falls when the price of the good rises
Equilibrium - Answers a situation in which
the market price has
reached the level at which
quantity supplied equals
quantity demanded
Price Elasticity of Supply - Answers a measure of how much
the quantity supplied of
a good responds to a
change in the price of
that good, computed as
the percentage change in
quantity supplied divided
by the percentage change
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