Microeconomics Principles Final Exam Review Quiz

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What is the formula for consumer surplus?

Total value - Amount paid (correct)

Total value - Willingness to pay

Amount paid - Willingness to pay

Willingness to pay - Amount paid

Which chapter covers the concept of opportunity cost?

Chapter 1 (correct)

Chapter 3

Chapter 4

Chapter 2

What does the Law of Demand state?

As the price of a good increases, the quantity demanded decreases (correct)

As the price of a good decreases, the quantity demanded increases

As the price of a good increases, the quantity demanded increases

As the price of a good decreases, the quantity demanded decreases

What concept is associated with the idea of specialization and trade?

Absolute advantage Signup and view all the answers

What is the formula for calculating the opportunity cost of a decision?

Value of the next best alternative - Value of the chosen option Signup and view all the answers

Which chapter covers the concept of the Production Possibility Frontier (PPF)?

Chapter 2 Signup and view all the answers

What type of goods are substitutes and complements?

Substitutes are goods that can be used in place of each other, while complements are goods that are used together Signup and view all the answers

Which term refers to the additional cost incurred by producing one more unit of a good?

Marginal cost Signup and view all the answers

What is the formula for calculating the production possibility frontier (PPF)?

Quantity of Good A on the x-axis vs. Quantity of Good B on the y-axis Signup and view all the answers

What concept is associated with the idea of economic growth and expanding the PPF?

Efficient, inefficient, unattainable Signup and view all the answers

What is the term for decisions that involve weighing the benefits and costs of taking an action?

Marginal analysis Signup and view all the answers

What is the term for the total satisfaction received from consuming a good or service?

Total value Signup and view all the answers

In the context of elasticity of demand, which of the following correctly defines the term 'unit elastic'?

When the percentage change in quantity demanded is equal to the percentage change in price. Signup and view all the answers

Which of the following best describes the Coase Theorem?

If property rights are well-defined and transaction costs are low, then private bargaining will result in an efficient solution to the problem of externalities. Signup and view all the answers

In the context of firm supply decisions, which of the following accurately represents the relationship between marginal revenue (MR) and price (P) for a price-taking firm?

$MR = P$ Signup and view all the answers

What is the effect of a subsidy on producer surplus in a market with elastic supply?

Producer surplus increases Signup and view all the answers

When does a perfectly competitive firm maximize its profit in the short run?

By producing the quantity where marginal cost equals marginal revenue Signup and view all the answers

What is the consequence of market power in a monopoly situation?

An inefficiency in the allocation of resources Signup and view all the answers

Which of the following best describes the concept of a public good?

Non-rival and non-excludable Signup and view all the answers

What is the term for the situation where individuals under-consume public goods due to the ability to enjoy the benefits without contributing?

Free rider problem Signup and view all the answers

In the context of game theory, what is the condition where each player's strategy is the best response to the strategies chosen by all other players?

Nash equilibrium Signup and view all the answers

What is the term for the situation where the total cost of providing a good or service is not fully borne by the producer or consumer, leading to an inefficient allocation of resources?

Externality Signup and view all the answers

Which of the following best represents the condition for economic profit in the long run?

Zero economic profit due to free entry and exit Signup and view all the answers