CLEP Microeconomics QUESTIONS AND DETAILED ANSWERS 2023/2024

CLEP Microeconomics QUESTIONS AND DETAILED ANSWERS 2023/2024 Scarcity - correct answer Limited quantities of resources to meet unlimited wants Needs - correct answer Things that are required in order to live Wants - correct answer Those things which make our lives more comfortable but are not needed for survival Economic Choice - correct answer The decision to buy one thing instead of another. Trade-Off - correct answer An alternative that we sacrifice when we make a decision PPF Curve - correct answer (Production Possibilities Frontier) A graph that shows the possibilities of combinations of goods and services Law of Diminishing Marginal Returns - correct answer As successive units of a variable input are added to a fixed input, beyond some point the marginal product declines Law of Increasing Opportunity Cost - correct answer To produce more of one good, a successively larger amount of the other good must be sacrificed Law of Supply - correct answer As supply increases, prices go down; as supply decreases, prices go up. Law of Demand - correct answer As demand increases, prices go up; as demand decreases, prices go down. Determinants of Supply - correct answer Factors other than price that determine the quantities supplied of a good or service. Determinants of Demand - correct answer Factors other than price that determine the quantities demanded of a good or service Change in Quantity Supplied - correct answer A movement along the supply curve that occurs in response to a change in price Change in Quantity Demanded - correct answer A movement along the demand curve that occurs in response to a change in price Change in Supply - correct answer A change in supply that is shown by drawing a new supply curve