Microeconomics Final Exam Questions With Verified Answers.
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Microeconomics
Institution
Microeconomics
Microeconomics Final Exam Questions
With Verified Answers.
Opportunity cost - answerwhat you sacrifice to get something
What is the opportunity cost of a final degree? - answeropportunity cost of money spent on
tuition and books: $40,000
Opportunity cost of college time (four years working for...
Microeconomics Final Exam Questions With Verified Answers. Opportunity cost - answer✔✔what you sacrifice to get something What is the opportunity cost of a final degree? - answer✔✔opportunity cost of money spent on tuition and books: $40,000 Opportunity cost of college time (four years working for $20,000 per year)=$80,000 Economic cost or total opportunity cost=$120,000 **the costs of food or housing aren't included because the student must eat and live somewhere even if they didn't go to college production possibilities curve - answer✔✔a curve that shows the possible combinations of products that an economy can produce, given that its productive resources are fully employed and efficiently used -curves down -horizontal axis shows the quantity of one product while the vertical axis shows the quantity of another product -the shaded area under the curve shows all the possibl e combinations of the two goods the economy can produce marginal benefit - answer✔✔the additional benefit resulting from a small increase in some activity marginal cost - answer✔✔the additional cost resulting from a small increase in some activity marginal principle - answer✔✔increase the level of an activity as long as its marginal benefit exceeds its marginal cost -decrease the level of an activity if its marginal benefit is less than its marginal cost -choose the level at which the marginal benefit equal s the marginal cost principle of voluntary exchange - answer✔✔a voluntary exchange between two people makes both people better off What does it mean if both people say "thank you" in a voluntary exchange? - answer✔✔double "thank you" reveals that both peop le are better off self-sufficiency - answer✔✔-alternative to exchange -each of us could produce everything for him - or herself principle of diminishing returns - answer✔✔-suppose output is produced with two or more inputs, and we increase one input while h olding the other input or inputs fixed. Beyond some point -called the point of diminishing returns -output will increase at a decreasing rate perfectly competitive market - answer✔✔a market with many sellers and buyers of a homogeneous product and no barrier s to entry variables that affect an individual consumer's decision - answer✔✔-price of the product -consumer's income -price of substitute goods -price of complementary goods -consumer's preferences or tastes -consumer's expectations about future prices quantity demanded - answer✔✔the amount of a product that consumers are willing and able to buy demand schedule - answer✔✔a table that shows the relationship between the price of a product and the quantity demanded, ceteris paribus ceteris paribus - answer✔✔everything held fixed individual demand curve - answer✔✔a curve that shows the relationship between the price of a good and quantity demanded by an individual consumer, ceteris paribus law of demand - answer✔✔there is a negative relationship between price and quantity demanded, ceteris paribus change in quantity demanded - answer✔✔a change in the quantity consumers are willing and able to buy when the price changes; represented graphically by movement along the demand curve market demand curve - answer✔✔a curve showing the relationship between price and quantity demanded by all consumers, ceteris paribus manager's decision on how much to produce - answer✔✔-price of product -wage paid to workers
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