Microeconomics 1014 Mizzou Exam 1
Latest Questions with Solved Answers
2025-2026 Updated.
Big Microeconomic Ideas - Answer Incentives matter, good institutions align self-interest
with the social interest, Trade-offs are everywhere, Thinking on the margin, and The power of
trade.
Incentives Matter - Answer People respond to incentives in predictable ways.
Self-interest does not - Answer equal greed
Good institutions align self-interest with the social construct - Answer Invisible hand.
Individuals working for their own self-interest, often produce outcomes that help society as a
whole. (Walmart)
Trade-offs are everywhere - Answer All decisions involve trade offs.
Opportunity Cost - Answer The true cost of a decision
Thinking on the margin - Answer Looking at the change
Margin - Answer Additional or extra
The Power of Trade - Answer As long as it is not coerced, both parties gain from trade.
Division of labor/specialization - Answer Makes the economic pie bigger and makes
comparative advantages.
Positive Statement - Answer Objective and fact based statements. Must be able to be tested
and proved or disproved.
Normative Statement - Answer Expresses a value judgement about whether a situation is
, Normative Economics - Answer Involves recommendations or arguments about what public
policy should or should not be.
Comparative Advantage - Answer Ability of an individual or group to produce goods at a
lower opportunity cost than other economic actors.
Absolute Advantage - Answer Ability of an individual or group to produce a good at a lower
cost per unit than other economic actors.
Arbitrage - Answer Buy low and sell high. What pushes countries to trade. As long as there is
a difference in price, there is an opportunity for trade.
Division of labor is limited by the - Answer extent of the market
Specialization allows for greater - Answer collective knowledge
Specialization - Answer The process of concentrating on and becoming an expert in a
particular subject or skill.
Gains from trade= - Answer Consumer Surplus+Producer Surplus
Factors that shift the Demand Curve - Answer Income, Population, Prices of substitute or
complement goods, Expectations, and Taxes.
Quantity Demanded - Answer Amount of a good that consumers are willing to buy at any
given price. Reflects the preferences of all consumers in the market.
Consumer Surplus(General term/Market term) - Answer CS is above the consumers pay, and
below the demand curve. The sum of CS for all individuals who purchase the good at market
price.
Change in own price - Answer Change in quantity demanded. Movement along the curve.
Change in anything but price - Answer Change in demand. Entire curve shifts.
Latest Questions with Solved Answers
2025-2026 Updated.
Big Microeconomic Ideas - Answer Incentives matter, good institutions align self-interest
with the social interest, Trade-offs are everywhere, Thinking on the margin, and The power of
trade.
Incentives Matter - Answer People respond to incentives in predictable ways.
Self-interest does not - Answer equal greed
Good institutions align self-interest with the social construct - Answer Invisible hand.
Individuals working for their own self-interest, often produce outcomes that help society as a
whole. (Walmart)
Trade-offs are everywhere - Answer All decisions involve trade offs.
Opportunity Cost - Answer The true cost of a decision
Thinking on the margin - Answer Looking at the change
Margin - Answer Additional or extra
The Power of Trade - Answer As long as it is not coerced, both parties gain from trade.
Division of labor/specialization - Answer Makes the economic pie bigger and makes
comparative advantages.
Positive Statement - Answer Objective and fact based statements. Must be able to be tested
and proved or disproved.
Normative Statement - Answer Expresses a value judgement about whether a situation is
, Normative Economics - Answer Involves recommendations or arguments about what public
policy should or should not be.
Comparative Advantage - Answer Ability of an individual or group to produce goods at a
lower opportunity cost than other economic actors.
Absolute Advantage - Answer Ability of an individual or group to produce a good at a lower
cost per unit than other economic actors.
Arbitrage - Answer Buy low and sell high. What pushes countries to trade. As long as there is
a difference in price, there is an opportunity for trade.
Division of labor is limited by the - Answer extent of the market
Specialization allows for greater - Answer collective knowledge
Specialization - Answer The process of concentrating on and becoming an expert in a
particular subject or skill.
Gains from trade= - Answer Consumer Surplus+Producer Surplus
Factors that shift the Demand Curve - Answer Income, Population, Prices of substitute or
complement goods, Expectations, and Taxes.
Quantity Demanded - Answer Amount of a good that consumers are willing to buy at any
given price. Reflects the preferences of all consumers in the market.
Consumer Surplus(General term/Market term) - Answer CS is above the consumers pay, and
below the demand curve. The sum of CS for all individuals who purchase the good at market
price.
Change in own price - Answer Change in quantity demanded. Movement along the curve.
Change in anything but price - Answer Change in demand. Entire curve shifts.
