Microeconomics Test 1 Review
Questions with Solutions
scarcity - -a situation in which unlimited wants exceed the limited resources
available to fulfill those wants
-economics is the study of _______ people make to attain their goals given
their scarce resources - -choices
-people are _______. people respond to _________. optimal decisions are made
at the ________. - --rational
-incentives
-margin
-formula for growth rate is - -new-old/old X 100%
-people face choices and ______ - -tradeoffs
-a tradeoff involves ______ v ________ - -efficiency v. equity
-efficiency - -society gets the most it can from its scarce resources
-equity: the benefits of those resources are distributed _________ among the
members of a society - -FAIRLY
-marginal changes are ________, incremental adjustments to an existing plan
of action - -small
-sunk cost - -money that you cannot recover
-slope - -change in y/change in x
-PPF stands for the ___ ___ _____ and demonstrates how a producer makes
decisions - -production possibilities frontier
-below the PPF=
above the PPF= - -inefficient
impossible
-______________ _____ is the value of the next best alternative that must be
given up when choosing one activity over the other - -opportunity cost
-opportunity cost= - -slope
Questions with Solutions
scarcity - -a situation in which unlimited wants exceed the limited resources
available to fulfill those wants
-economics is the study of _______ people make to attain their goals given
their scarce resources - -choices
-people are _______. people respond to _________. optimal decisions are made
at the ________. - --rational
-incentives
-margin
-formula for growth rate is - -new-old/old X 100%
-people face choices and ______ - -tradeoffs
-a tradeoff involves ______ v ________ - -efficiency v. equity
-efficiency - -society gets the most it can from its scarce resources
-equity: the benefits of those resources are distributed _________ among the
members of a society - -FAIRLY
-marginal changes are ________, incremental adjustments to an existing plan
of action - -small
-sunk cost - -money that you cannot recover
-slope - -change in y/change in x
-PPF stands for the ___ ___ _____ and demonstrates how a producer makes
decisions - -production possibilities frontier
-below the PPF=
above the PPF= - -inefficient
impossible
-______________ _____ is the value of the next best alternative that must be
given up when choosing one activity over the other - -opportunity cost
-opportunity cost= - -slope
