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Intro to Microeconomics Exam 1 questions with actual answers.
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Intro to Microeconomics Exam 1questions with actual answers.
Microeconomics ANS -Individual, Businesses and the role of Government in decision making
Opportunity Cost ANS -the most desirable alternative given up as the result of a decision; moving along
PPF line
- Increase opportunity cost = steeper line
Marginal Analysis ANS -Comparing Benefits and Costs
Optimization ANS -making the best feasible choice possible with given information
Equilibrium ANS -when everyone is optimizing; no
one would be better off with a different choice
Empiricism ANS -using data to figure out answers to interesting questions
Utility ANS -what makes you happy, that you're willing to spend money on (extra shit)
Scarcity ANS -every time you make a decision, you are giving up something else (money for goods)
Profit ANS -gain for business
Rational Self Interest and Incentives ANS -You have criteria when deciding, can be assumed, best
decision to make you happiest as possible
Model ANS -a simplified representation of a real situation that is used to better understand real-life
situations.
, Production Possibilities Frontier (PPF) ANS -is a diagram that shows the combinations of two goods that
are possible for a society to produce using all available resources:
Land, Labor, Economic Capital , Entrepreneur
Money ANS -a medium of exchange
Land ANS -- need a physical place to build, also resources like oil, trees, etc.
- Compensated by: Rent
Labor ANS -- someone has to produce it (go to work)
- Compensated by: Wages
Economic Capital ANS -- is a product or good that is used to produce other goods. (software, machines,
trucks)
- Compensated by: Interest
Entrepreneur ANS -- The individual(s) that collect the other portions and organize how this will lead to a
produce. They are the risk takers because they cannot guarantee that people will buy it, which will lead
to no profit
- Compensated by: Profits
PFF curve ANS -has quantity vs. quantity
Unefficient ANS -Below the PFF Curve; they aren't using their resources wisely
Not Feasible ANS -Above the PFF curve; don't have the resources to produce that much
Increasing Opportunity Cost graph ANS -The graph is bowed out and the one produce is more beneficial
than the other
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