Exam (elaborations)
ECN 101 Final Exam Questions And Answers Latest Update
- Course
- ECN 101
- Institution
- Arizona State University
ECN 101 Final Exam Questions And Answers Latest Update
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Solution 2024/2025Pepper
ECN 101 Final Exam Questions And Answers
Latest Update
What is economics? ANS✔✔ The study of how individuals and societies
manage scarce resources
What is the definition of elasticity? ANS✔✔ A measure of how buyers or
sellers respond to changing market conditions
What is the equation for profit? ANS✔✔ Total Revenue - Total Cost
Why is scarcity the fundamental concept of economics? ANS✔✔ Scarcity
compels us to make choices
What is Price Elasticity of Demand? ANS✔✔ A measure of how the quantity
demanded of a good response to a change in its price
What is total revenue? What is the equation for total revenue? ANS✔✔ The
amount a firm receives from the sale of its output. Price x Quantity
What is the difference between microeconomics and macroeconomics?
ANS✔✔ Microeconomics- studies the decision-making of individuals and
firms and how these decisions are coordinated in markets
Macroeconomics- studies economy-wide phenomenon such as aggregate
production, unemployment, and inflation
, Solution 2024/2025
Pepper
What is the basic formula of Price Elasticity of Demand? ANS✔✔ Ep= |%
change in QD| / |% change in P|
What is total cost? What is the equation for total cost? ANS✔✔ The market
value of the inputs a firm uses in production. Explicit Costs + Implicit Costs
Fixed Cost + Variable Cost
Why do people face tradeoffs? ANS✔✔ What must be given up when making
a particular choice
What is the midpoint formula? ANS✔✔ |(Q2 -
Q1/Qaverage)|/|(P2-P1/Paverage)|
What are explicit costs? ANS✔✔ Input costs that require an outlay of money
by the firm. Example: paying wages to workers
What is the difference between equity and efficiency tradeoffs? ANS✔✔
Equity (equality)- property of distributing prosperity uniformly among
members in society
Efficiency- property of getting the most it can from scarce resources
What are the determinants of Price elasticity of demand? How do they affect
the price elasticity of demand? ANS✔✔ Necessity (medicine)- inelastic,
Luxury (designer clothing)- elastic
Few substitutes (salt)- inelastic, Lots of substitutes (root beer)- elastic
Broad markets (food)- inelastic, Narrow markets (chips)- elastic
Short time horizon- inelastic, Long time horizon- elastic
, Solution 2024/2025
Pepper
What are implicit costs? ANS✔✔ Input costs that do not require an outlay of
money by the firm. Example: the opportunity cost of the owner's time
What is opportunity cost? ANS✔✔ Whatever must be given up when making
a particular choice
What is elastic demand? ANS✔✔ Quantity demanded is highly responsive to
a price change
% change QD > % change P (Ep > 1)
What is accounting profit? ANS✔✔ Total Revenue - Explicit Costs (ignores
implicit costs)
What is economic profit? ANS✔✔ Total Revenue - Total Cost (Explicit +
Implicit)
What is inelastic demand? ANS✔✔ Quantity demanded is less responsive to
a price change
% change QD < % change P (Ep < 1)
What is the difference between explicit and implicit costs? ANS✔✔ Explicit:
costs that require a cash outlay
Implicit: costs that do not require a cash outlay
What is sunk cost? ANS✔✔ A cost that has already been committed and
cannot be recovered
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