Microeconomics Final Exam
Questions with Answers A+ Rated
absolute advantage - -the ability to produce a good using fewer inputs than
another producer
-average fixed cost (AFC) - -Total fixed cost divided by the number of units
of output; a per-unit measure of fixed costs. AFC = FC/Q
-average total cost (ATC) - -Total cost divided by the number of units of
output ATC = TC/Q or ATC = AFC + AVC
-average variable cost (AVC) - -variable cost divided by the number of units
of output AVC = VC/Q
-budget constraint - -the limits imposed on household choices by income,
wealth, and product prices.
-capital - -goods used to produce other goods
-cartel - -a group of firms that gets together and makes joint price and
output decisions to maximize joint profits
-ceteris paribus - -a devise used to analyze the relationship between two
variable while the values of other variables are held unchanged.
-clayton act - -act outlawed specific monopolistic behaviors such as tying
contracts
-command economy - -An economy in which a central government either
directly or indirectly sets output targets, incomes, and prices
-comparative advantage - -the ability to produce a good at a lower
opportunity cost than another producer
-complements - -two goods for which an increase in the price of one leads
to a decrease in the demand for the other and vice versa
-consumer goods - -goods produced for present consumption
-consumer sovereignty - -The idea that consumers ultimately dictate what
will be produced (or not produced) by choosing what to purchase (and what
not to purchase).
, -consumer surplus - -The difference between the maximum amount a
person is willing to pay for a good and its current market price.
-cross price elasticity of demand - -measures the responsiveness of the
quantity demand of a good to a change in the price of another good.
-diseconomies of scale - -The property whereby long-run average total cost
rises as the quantity of output increases (right-most upward sloping part of
the long-run ATC)
-demand curve - -a graph that shows the amount of a product that would be
bought at all possible prices in the market
-depreciation - -the decline in an asset's economic value over time
-diminishing marginal utility - -the point reached when an additional unit of
a product consumed is less satisfying than the one before
-economic theory - -A statement or set of related statements about cause
and effect, action and reaction
-economics - -the study of how individuals and nations make choices about
ways to use scarce resources to fulfill their needs and wants
-efficiency - -producing what people want at the least possible cost
-elastic demand - -the percentage change in quantity demanded is greater
than the percentage change in price in absolute value
-elasticity - -a measure of responsiveness that tells us how a dependent
variable such as quantity responds to a change in an independent variable
such as price
-equilibrium - -the point at which quantity demanded and quantity supplied
are equal
-entrepreneur - -a person who organizes, manages, and takes on the risks
of a business
-equity - -(n.) the state of being just, fair, or impartial; fair and equal
treatment; something that is fair; the money value of a property above and
beyond any mortgage or other claim
-shortage - -quantity demanded exceeds quantity supplied
-surplus - -quantity supplied exceeds quantity demanded
Questions with Answers A+ Rated
absolute advantage - -the ability to produce a good using fewer inputs than
another producer
-average fixed cost (AFC) - -Total fixed cost divided by the number of units
of output; a per-unit measure of fixed costs. AFC = FC/Q
-average total cost (ATC) - -Total cost divided by the number of units of
output ATC = TC/Q or ATC = AFC + AVC
-average variable cost (AVC) - -variable cost divided by the number of units
of output AVC = VC/Q
-budget constraint - -the limits imposed on household choices by income,
wealth, and product prices.
-capital - -goods used to produce other goods
-cartel - -a group of firms that gets together and makes joint price and
output decisions to maximize joint profits
-ceteris paribus - -a devise used to analyze the relationship between two
variable while the values of other variables are held unchanged.
-clayton act - -act outlawed specific monopolistic behaviors such as tying
contracts
-command economy - -An economy in which a central government either
directly or indirectly sets output targets, incomes, and prices
-comparative advantage - -the ability to produce a good at a lower
opportunity cost than another producer
-complements - -two goods for which an increase in the price of one leads
to a decrease in the demand for the other and vice versa
-consumer goods - -goods produced for present consumption
-consumer sovereignty - -The idea that consumers ultimately dictate what
will be produced (or not produced) by choosing what to purchase (and what
not to purchase).
, -consumer surplus - -The difference between the maximum amount a
person is willing to pay for a good and its current market price.
-cross price elasticity of demand - -measures the responsiveness of the
quantity demand of a good to a change in the price of another good.
-diseconomies of scale - -The property whereby long-run average total cost
rises as the quantity of output increases (right-most upward sloping part of
the long-run ATC)
-demand curve - -a graph that shows the amount of a product that would be
bought at all possible prices in the market
-depreciation - -the decline in an asset's economic value over time
-diminishing marginal utility - -the point reached when an additional unit of
a product consumed is less satisfying than the one before
-economic theory - -A statement or set of related statements about cause
and effect, action and reaction
-economics - -the study of how individuals and nations make choices about
ways to use scarce resources to fulfill their needs and wants
-efficiency - -producing what people want at the least possible cost
-elastic demand - -the percentage change in quantity demanded is greater
than the percentage change in price in absolute value
-elasticity - -a measure of responsiveness that tells us how a dependent
variable such as quantity responds to a change in an independent variable
such as price
-equilibrium - -the point at which quantity demanded and quantity supplied
are equal
-entrepreneur - -a person who organizes, manages, and takes on the risks
of a business
-equity - -(n.) the state of being just, fair, or impartial; fair and equal
treatment; something that is fair; the money value of a property above and
beyond any mortgage or other claim
-shortage - -quantity demanded exceeds quantity supplied
-surplus - -quantity supplied exceeds quantity demanded
