MICROECONOMICS PRINCIPLES FOR A
CHANGING WORLD EXAM SCRIPT
UPDATED QUESTIONS AND ACCURATE
ANSWERS FULL SOLUTION
●● Economic goods
Answer: A consumable item that is useful to people but scarce in relation
to its demand
●● Opportunity cost
Answer: The value of the next best alternative foregone
●● Positive statement
Answer: An objective statement that can be tested, amended or rejected
by referring to available evidence
●● Normative statement
Answer: A value judgement that is a subjective statement of opinion
rather than a fact that can be tested
●● Needs vs Wants
,Answer: Needs are defined as goods or services that are required and
cannot be done without. Wants are goods or services that are not a
necessity but we desire/wish for
●● Cost-benefit principle
Answer: Every purchase is a trade-off
●● Rational decision makers
Answer: An assumption that economic agents weigh the marginal
benefit that one receives from a good or service against its marginal cost
●● Economic agents
Answer: Decision makers that have effects on the economy of a country
by buying selling, producing, investing, taxing, etc. Government, firms
and households
●● Government
Answer: Elected representative of the consumers that should act on
behalf of the people. The government must decide whether or not to
intervene in the economy or leave it as is.
●● Firms
,Answer: An organisation that uses factors of production alongside each
other in order to produce output. They produce goods and services
demanded by consumers
●● Households
Answer: A group of consumers that buy goods and services. They also
supply their labour to firms to produce goods and services in order to
earn the income needed to purchase g+s
●● Factors of production
Answer: The available resource inputs used in the production process of
g+s (Capital, Enterprise, Land and Labour)
●● Capital
Answer: Man made aids for production; goods used to make other goods
●● Entrepreneurship
Answer: The willingness of an entrepreneur/individual to take risks and
organise production. An entrepreneur is someone who bears the risk of a
business and organises production
●● Labour
Answer: The human resource that is available in the economy; the
quantity and quality of human resources
, ●● Land
Answer: The natural resources available in the economy; the quantity
and quality of natural resources
●● Factor payments/rewards
Answer: Capital=Interest
Enterprise=Profits
Labour=wages
Land=rent
●● A model
Answer: A simplified representation of reality used to create hypotheses
about economic decisions and events
●● Production
Answer: Any economic activity that leads to a flow of goods and
services for which people are willing and able to pay
●● Production possibility frontier
Answer: A curve showing the maximum quantities of different
combinations of goods and services that can be produced in a set time
period given the available resources and current state of technology
CHANGING WORLD EXAM SCRIPT
UPDATED QUESTIONS AND ACCURATE
ANSWERS FULL SOLUTION
●● Economic goods
Answer: A consumable item that is useful to people but scarce in relation
to its demand
●● Opportunity cost
Answer: The value of the next best alternative foregone
●● Positive statement
Answer: An objective statement that can be tested, amended or rejected
by referring to available evidence
●● Normative statement
Answer: A value judgement that is a subjective statement of opinion
rather than a fact that can be tested
●● Needs vs Wants
,Answer: Needs are defined as goods or services that are required and
cannot be done without. Wants are goods or services that are not a
necessity but we desire/wish for
●● Cost-benefit principle
Answer: Every purchase is a trade-off
●● Rational decision makers
Answer: An assumption that economic agents weigh the marginal
benefit that one receives from a good or service against its marginal cost
●● Economic agents
Answer: Decision makers that have effects on the economy of a country
by buying selling, producing, investing, taxing, etc. Government, firms
and households
●● Government
Answer: Elected representative of the consumers that should act on
behalf of the people. The government must decide whether or not to
intervene in the economy or leave it as is.
●● Firms
,Answer: An organisation that uses factors of production alongside each
other in order to produce output. They produce goods and services
demanded by consumers
●● Households
Answer: A group of consumers that buy goods and services. They also
supply their labour to firms to produce goods and services in order to
earn the income needed to purchase g+s
●● Factors of production
Answer: The available resource inputs used in the production process of
g+s (Capital, Enterprise, Land and Labour)
●● Capital
Answer: Man made aids for production; goods used to make other goods
●● Entrepreneurship
Answer: The willingness of an entrepreneur/individual to take risks and
organise production. An entrepreneur is someone who bears the risk of a
business and organises production
●● Labour
Answer: The human resource that is available in the economy; the
quantity and quality of human resources
, ●● Land
Answer: The natural resources available in the economy; the quantity
and quality of natural resources
●● Factor payments/rewards
Answer: Capital=Interest
Enterprise=Profits
Labour=wages
Land=rent
●● A model
Answer: A simplified representation of reality used to create hypotheses
about economic decisions and events
●● Production
Answer: Any economic activity that leads to a flow of goods and
services for which people are willing and able to pay
●● Production possibility frontier
Answer: A curve showing the maximum quantities of different
combinations of goods and services that can be produced in a set time
period given the available resources and current state of technology
