INTERMEDIATE MICROECONOMICS A
MODERN APPROACH 10TH EDITION ACTUAL
EXAM QUESTIONS AND CORRECT ANSWERS
◉ 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.
MODERN APPROACH 10TH EDITION ACTUAL
EXAM QUESTIONS AND CORRECT ANSWERS
◉ 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.
