PRINCIPLES OF MICROECONOMICS
ECO 2023 (GRADUATE-LEVEL,
HARVARD)UPDATED 2025/2026
FINAL EXAM WITH QUESTIONS AND
RATIONALE ANSWERS ~A+
55 Questions with Detailed Rationale
Unit 1: Introduction and Core Concepts
1. What is microeconomics?
Answer: Study of individual and firm-level
decision-making under scarcity and resource
allocation.
Rationale: Graduate students must analyze the
analytical framework, focusing on incentives,
,optimization under constraints, and interactions
in markets. This is foundational for predicting
behavior in real-world scenarios, like pricing
strategies, labor allocation, or policy
responses.
2. Difference between microeconomics and
macroeconomics
Answer: Micro: individual/firm decisions;
Macro: aggregate economy, inflation,
unemployment, GDP.
Rationale: Students must distinguish
analytical tools and levels of abstraction.
Micro-level reasoning predicts behavioral
responses and efficiency, whereas macro
evaluates system-wide aggregates, essential for
designing interventions.
3. Opportunity cost
Answer: Value of the next best alternative
foregone.
Rationale: At a graduate level, this includes
, quantitative and qualitative trade-offs, e.g.,
policy budgeting, production decisions, and
labor allocation. Students should compute
opportunity costs in complex, multi-option
scenarios.
4. Scarcity and choice
Answer: Limited resources require
prioritization of wants.
Rationale: Scarcity drives resource allocation,
market pricing, and efficiency. Graduate
learners must apply this to real-world policy or
investment decisions, such as prioritizing
health programs over infrastructure projects.
5. Marginal analysis
Answer: Decision-making based on incremental
changes in costs or benefits.
Rationale: Central to profit maximization,
production optimization, and consumer
choice. Students need to apply marginal cost
ECO 2023 (GRADUATE-LEVEL,
HARVARD)UPDATED 2025/2026
FINAL EXAM WITH QUESTIONS AND
RATIONALE ANSWERS ~A+
55 Questions with Detailed Rationale
Unit 1: Introduction and Core Concepts
1. What is microeconomics?
Answer: Study of individual and firm-level
decision-making under scarcity and resource
allocation.
Rationale: Graduate students must analyze the
analytical framework, focusing on incentives,
,optimization under constraints, and interactions
in markets. This is foundational for predicting
behavior in real-world scenarios, like pricing
strategies, labor allocation, or policy
responses.
2. Difference between microeconomics and
macroeconomics
Answer: Micro: individual/firm decisions;
Macro: aggregate economy, inflation,
unemployment, GDP.
Rationale: Students must distinguish
analytical tools and levels of abstraction.
Micro-level reasoning predicts behavioral
responses and efficiency, whereas macro
evaluates system-wide aggregates, essential for
designing interventions.
3. Opportunity cost
Answer: Value of the next best alternative
foregone.
Rationale: At a graduate level, this includes
, quantitative and qualitative trade-offs, e.g.,
policy budgeting, production decisions, and
labor allocation. Students should compute
opportunity costs in complex, multi-option
scenarios.
4. Scarcity and choice
Answer: Limited resources require
prioritization of wants.
Rationale: Scarcity drives resource allocation,
market pricing, and efficiency. Graduate
learners must apply this to real-world policy or
investment decisions, such as prioritizing
health programs over infrastructure projects.
5. Marginal analysis
Answer: Decision-making based on incremental
changes in costs or benefits.
Rationale: Central to profit maximization,
production optimization, and consumer
choice. Students need to apply marginal cost
