ECON 203 MICROECONOMICS THEORY AND MARKET ANALYSIS TEST PAPER SOLUTIONS 2026

ECON 203 MICROECONOMICS THEORY
AND MARKET ANALYSIS TEST PAPER
SOLUTIONS 2026


◉ Perfect competition
Answer: A market with many buyers and sellers, so that no single
buyer or seller has a significant impact on price.


◉ Normal good
Answer: a good is normal if income rises and the demand for the
good goes up


◉ Inferior goods
Answer: a good is inferior if an increase in income causes a decrease
in demand


◉ Substitute goods
Answer: two goods for which an increase in the price of one leads to
an increase in the quantity demanded of the other


◉ Complementary goods

, Answer: two goods for which an increase in the price of one leads to
a decrease in the quantity demanded of the other


◉ Equilibrium
Answer: the state of the economy in which the price equates the
quantity supplied to the quantity demanded. A state of rest.


◉ Basket of commodities
Answer:


◉ Commodity space
Answer:


◉ Transitive preferences
Answer: if A is preferred to B, and B is preferred to C, then A is
preferred to C


◉ Utility function
Answer: formula that assigns a level of utility to individual market
baskets


◉ Indifference curve through (x0, y0)