Principles of Microeconomics Exam 1 Questions And Answers (Verified And Updated)

Principles of Microeconomics Exam 1 Questions And Answers (Verified And Updated) Microeconomics - answerthe study of how households and firms make decisions and how they interact in markets Macroeconomics - answerthe study of economywide phenomena, including inflation, unemployment, and economic growth Scarcity - answerthe limited nature of society's resources Opportunity Cost - answerwhatever must be given up to obtain some item Consumer Surplus - answerthe amount a buyer is willing to pay for a good minus the amount the buyer actually pays for it Producer Surplus - answerthe amount a seller is paid for a good minus the seller's cost of providing it Direct Relationship - answerTwo variables move in the same direction. It one increases the other increases. If one decreases the other decreases. Inverse Relationship - answerTwo variables move in opposite directions. If one increases the other decreases; and if one decreases the other increases. Independent Relationship (Zero Relationship) - answerNo relationship at all. Price Ceiling - answera legal maximum on the price at which a good can be sold Price Floor - answera legal minimum on the price at which a good can be sold Positive Economics - answerThe scientific aspect of economics that determines "what is?" Normative Economics - answerThe portion of economics that attempts to address "what should be?" Law of Supply - answerthe claim that, other things equal, the quantity supplied of a good rises when the price of the good rises Law of Demand - answerthe claim that, other things equal, the quantity demanded of a good falls when the price of the good rises Equilibrium - answera situation in which the market price has reached the level at which quantity supplied equals quantity demanded Price Elasticity of Supply - answera 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