Intro to Microeconomics Exam Questions
with Correctly Detailed Answers
Microeconomics - Answer Individual, Businesses and the role of Government in decision making
Opportunity Cost - Answer the most desirable alternative given up as the result of a decision; moving
along PPF line
- Increase opportunity cost = steeper line
Marginal Analysis - Answer Comparing Benefits and Costs
Optimization - Answer making the best feasible choice possible with given information
Equilibrium - Answer when everyone is optimizing; no
one would be better off with a different choice
Empiricism - Answer using data to figure out answers to interesting questions
Utility - Answer what makes you happy, that you're willing to spend money on (extra shit)
Scarcity - Answer every time you make a decision, you are giving up something else (money for goods)
Profit - Answer gain for business
Rational Self Interest and Incentives - Answer You have criteria when deciding, can be assumed, best
decision to make you happiest as possible
Model - Answer a simplified representation of a real situation that is used to better understand real-life
situations.
, Production Possibilities Frontier (PPF) - Answer is a diagram that shows the combinations of two goods
that are possible for a society to produce using all available resources:
Land, Labor, Economic Capital , Entrepreneur
Money - Answer a medium of exchange
Land - Answer - need a physical place to build, also resources like oil, trees, etc.
- Compensated by: Rent
Labor - Answer - someone has to produce it (go to work)
- Compensated by: Wages
Economic Capital - Answer - is a product or good that is used to produce other goods. (software,
machines, trucks)
- Compensated by: Interest
Entrepreneur - Answer - The individual(s) that collect the other portions and organize how this will lead
to a produce. They are the risk takers because they cannot guarantee that people will buy it, which will
lead to no profit
- Compensated by: Profits
PFF curve - Answer has quantity vs. quantity
Unefficient - Answer Below the PFF Curve; they aren't using their resources wisely
Not Feasible - Answer Above the PFF curve; don't have the resources to produce that much
Increasing Opportunity Cost graph - Answer The graph is bowed out and the one produce is more
beneficial than the other
with Correctly Detailed Answers
Microeconomics - Answer Individual, Businesses and the role of Government in decision making
Opportunity Cost - Answer the most desirable alternative given up as the result of a decision; moving
along PPF line
- Increase opportunity cost = steeper line
Marginal Analysis - Answer Comparing Benefits and Costs
Optimization - Answer making the best feasible choice possible with given information
Equilibrium - Answer when everyone is optimizing; no
one would be better off with a different choice
Empiricism - Answer using data to figure out answers to interesting questions
Utility - Answer what makes you happy, that you're willing to spend money on (extra shit)
Scarcity - Answer every time you make a decision, you are giving up something else (money for goods)
Profit - Answer gain for business
Rational Self Interest and Incentives - Answer You have criteria when deciding, can be assumed, best
decision to make you happiest as possible
Model - Answer a simplified representation of a real situation that is used to better understand real-life
situations.
, Production Possibilities Frontier (PPF) - Answer is a diagram that shows the combinations of two goods
that are possible for a society to produce using all available resources:
Land, Labor, Economic Capital , Entrepreneur
Money - Answer a medium of exchange
Land - Answer - need a physical place to build, also resources like oil, trees, etc.
- Compensated by: Rent
Labor - Answer - someone has to produce it (go to work)
- Compensated by: Wages
Economic Capital - Answer - is a product or good that is used to produce other goods. (software,
machines, trucks)
- Compensated by: Interest
Entrepreneur - Answer - The individual(s) that collect the other portions and organize how this will lead
to a produce. They are the risk takers because they cannot guarantee that people will buy it, which will
lead to no profit
- Compensated by: Profits
PFF curve - Answer has quantity vs. quantity
Unefficient - Answer Below the PFF Curve; they aren't using their resources wisely
Not Feasible - Answer Above the PFF curve; don't have the resources to produce that much
Increasing Opportunity Cost graph - Answer The graph is bowed out and the one produce is more
beneficial than the other
