ECPI EXAM 2 REVIEW CHAPTERS 4 5
6 7 FINAL PAPER 2026 FULL
QUESTIONS AND ACCURATE
SOLUTIONS STUDY GUIDE
◉ Agent. Answer: Economic agent is a decision-maker that has an effect
on an economy by buying, selling and producing. Households, firms,
businesses, individuals are the examples of economic agents
◉ Average Fixed Cost. Answer: In economics, average fixed cost (AFC)
is the fixed costs of production (FC) divided by the quantity (Q) of
output produced. Fixed costs are those costs that must be incurred in
fixed quantity regardless of the level of output produced. Average fixed
cost is fixed cost per unit of output
◉ Average Revenue. Answer: Average revenue is the revenue generated
per unit of output sold. It plays a role in the determination of a firm's
profit. Per unit profit is average revenue minus average (total) cost. A
firm generally seeks to produce the quantity of output that maximizes
profit.
◉ Average Total Cost. Answer: total cost divided by the quantity of
output
◉ Average Variable Cost. Answer: variable cost divided by the quantity
of output
, ◉ Budget Constraint. Answer: In economics, a budget constraint
represents all the combinations of goods and services that a consumer
may purchase given current prices within his or her given income.
◉ Cartel. Answer: a group of firms that collude by agreeing to restrict
output to increase prices and profits
◉ Collusion. Answer: Collusion is a non-competitive, secret, and
sometimes illegal agreement between rivals which attempts to disrupt
the market's equilibrium. The act of collusion involves people or
companies which would typically compete against one another, but who
conspire to work together to gain an unfair market advantage.
◉ Competitive Market. Answer: a market in which there are many
buyers and many sellers so that each has a negligible impact on the
market price
◉ Diminishing Marginal Product. Answer: the property whereby the
marginal product of an input declines as the quantity of the input
increases
◉ Diminishing Marginal Utility. Answer: the common pattern that each
marginal unit of a good consumed provides less of an addition to utility
than the previous unit.
◉ Economic Profit. Answer: total revenue minus total cost, including
both explicit and implicit costs
6 7 FINAL PAPER 2026 FULL
QUESTIONS AND ACCURATE
SOLUTIONS STUDY GUIDE
◉ Agent. Answer: Economic agent is a decision-maker that has an effect
on an economy by buying, selling and producing. Households, firms,
businesses, individuals are the examples of economic agents
◉ Average Fixed Cost. Answer: In economics, average fixed cost (AFC)
is the fixed costs of production (FC) divided by the quantity (Q) of
output produced. Fixed costs are those costs that must be incurred in
fixed quantity regardless of the level of output produced. Average fixed
cost is fixed cost per unit of output
◉ Average Revenue. Answer: Average revenue is the revenue generated
per unit of output sold. It plays a role in the determination of a firm's
profit. Per unit profit is average revenue minus average (total) cost. A
firm generally seeks to produce the quantity of output that maximizes
profit.
◉ Average Total Cost. Answer: total cost divided by the quantity of
output
◉ Average Variable Cost. Answer: variable cost divided by the quantity
of output
, ◉ Budget Constraint. Answer: In economics, a budget constraint
represents all the combinations of goods and services that a consumer
may purchase given current prices within his or her given income.
◉ Cartel. Answer: a group of firms that collude by agreeing to restrict
output to increase prices and profits
◉ Collusion. Answer: Collusion is a non-competitive, secret, and
sometimes illegal agreement between rivals which attempts to disrupt
the market's equilibrium. The act of collusion involves people or
companies which would typically compete against one another, but who
conspire to work together to gain an unfair market advantage.
◉ Competitive Market. Answer: a market in which there are many
buyers and many sellers so that each has a negligible impact on the
market price
◉ Diminishing Marginal Product. Answer: the property whereby the
marginal product of an input declines as the quantity of the input
increases
◉ Diminishing Marginal Utility. Answer: the common pattern that each
marginal unit of a good consumed provides less of an addition to utility
than the previous unit.
◉ Economic Profit. Answer: total revenue minus total cost, including
both explicit and implicit costs
