Principles of Microeconomics(Final Exam) (2025)
ACTUAL EXAM (TESTING REAL EXAM QUESTIONS)
AND VERIFIED ANSWERS |COMPLETE SOLUTIONS
|A+ GRADED |100% CORRECT!!
scarcity - (ANSWER)unlimited wants exceed the limited resources available to
fulfill those wants
rational - (ANSWER)systematically and purposefully do the best they can to
achieve an objective
incentive - (ANSWER)induces someone to act
marginal - (ANSWER)small, incremental changes
Law of Diminishing Marginal Utility - (ANSWER)law of decreasing small changes in
pleasure
trade-offs - (ANSWER)produce more of one good or service, means we need to
produce less of another
opportunity cost - (ANSWER)highest valued alternative that must be given up to
engage in activity; whatever must be given up to obtain some item; marginal
benefit>marginal cost
,centrally planned economy - (ANSWER)government decides how economic
resources will be allocated--communism
market economy - (ANSWER)decisions of the household and firms interacting in
markets that allocate resources--resources are allocated among households and
firms with little to no government interference
mixed economy - (ANSWER)when most economic decisions result from the
interaction of buyers and sellers but the government plays a significant role in the
allocation of resources
productive efficiency - (ANSWER)good or service is produced at the lowest
possible cost
allocative efficiency - (ANSWER)production is in in accordance with consumer
preferences
production possibilities frontier - (ANSWER)curve showing the maximum
attainable combinations of two goods that can be produced with available
resources and current technology, positive tool -- "what is" -- shows trade-off
curve between two quantities
ceteris paribus - (ANSWER)to hold all else constant
, Law of increasing marginal opportunity cost - (ANSWER)opportunity cost of
production in a good rises as society produces more of it
absolute advantage - (ANSWER)ability of one producers to make more than
another producer with the same quantity of resources
comparative advantage - (ANSWER)ability of an individual, a firm, or country to
produce a good or service at a lower opp cost than competitors
competitive market - (ANSWER)many buyers and sellers
quantity demanded - (ANSWER)amount of a good or service that a consumer is
willing and able to purchase at a given price
law of demand - (ANSWER)given ceteris paribus quantity demanded falls when
prices rise and QD rises when prices fall
substitution effect - (ANSWER)change in QD of good that results from a change in
price, making the good more or less expensive relative to other goods that are
substitutes
income effect - (ANSWER)change in QD of good that results from the effect of a
change in the goods price on consumer's purchasing power
ACTUAL EXAM (TESTING REAL EXAM QUESTIONS)
AND VERIFIED ANSWERS |COMPLETE SOLUTIONS
|A+ GRADED |100% CORRECT!!
scarcity - (ANSWER)unlimited wants exceed the limited resources available to
fulfill those wants
rational - (ANSWER)systematically and purposefully do the best they can to
achieve an objective
incentive - (ANSWER)induces someone to act
marginal - (ANSWER)small, incremental changes
Law of Diminishing Marginal Utility - (ANSWER)law of decreasing small changes in
pleasure
trade-offs - (ANSWER)produce more of one good or service, means we need to
produce less of another
opportunity cost - (ANSWER)highest valued alternative that must be given up to
engage in activity; whatever must be given up to obtain some item; marginal
benefit>marginal cost
,centrally planned economy - (ANSWER)government decides how economic
resources will be allocated--communism
market economy - (ANSWER)decisions of the household and firms interacting in
markets that allocate resources--resources are allocated among households and
firms with little to no government interference
mixed economy - (ANSWER)when most economic decisions result from the
interaction of buyers and sellers but the government plays a significant role in the
allocation of resources
productive efficiency - (ANSWER)good or service is produced at the lowest
possible cost
allocative efficiency - (ANSWER)production is in in accordance with consumer
preferences
production possibilities frontier - (ANSWER)curve showing the maximum
attainable combinations of two goods that can be produced with available
resources and current technology, positive tool -- "what is" -- shows trade-off
curve between two quantities
ceteris paribus - (ANSWER)to hold all else constant
, Law of increasing marginal opportunity cost - (ANSWER)opportunity cost of
production in a good rises as society produces more of it
absolute advantage - (ANSWER)ability of one producers to make more than
another producer with the same quantity of resources
comparative advantage - (ANSWER)ability of an individual, a firm, or country to
produce a good or service at a lower opp cost than competitors
competitive market - (ANSWER)many buyers and sellers
quantity demanded - (ANSWER)amount of a good or service that a consumer is
willing and able to purchase at a given price
law of demand - (ANSWER)given ceteris paribus quantity demanded falls when
prices rise and QD rises when prices fall
substitution effect - (ANSWER)change in QD of good that results from a change in
price, making the good more or less expensive relative to other goods that are
substitutes
income effect - (ANSWER)change in QD of good that results from the effect of a
change in the goods price on consumer's purchasing power
