23 Questions
What is the formula for consumer surplus?
Total value - Amount paid
Which chapter covers the concept of opportunity cost?
Chapter 1
What does the Law of Demand state?
As the price of a good increases, the quantity demanded decreases
What concept is associated with the idea of specialization and trade?
Absolute advantage
What is the formula for calculating the opportunity cost of a decision?
Value of the next best alternative - Value of the chosen option
Which chapter covers the concept of the Production Possibility Frontier (PPF)?
Chapter 2
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
Which term refers to the additional cost incurred by producing one more unit of a good?
Marginal cost
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
What concept is associated with the idea of economic growth and expanding the PPF?
Efficient, inefficient, unattainable
What is the term for decisions that involve weighing the benefits and costs of taking an action?
Marginal analysis
What is the term for the total satisfaction received from consuming a good or service?
Total value
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.
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.
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?
$MR = P$
What is the effect of a subsidy on producer surplus in a market with elastic supply?
Producer surplus increases
When does a perfectly competitive firm maximize its profit in the short run?
By producing the quantity where marginal cost equals marginal revenue
What is the consequence of market power in a monopoly situation?
An inefficiency in the allocation of resources
Which of the following best describes the concept of a public good?
Non-rival and non-excludable
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
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
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
Which of the following best represents the condition for economic profit in the long run?
Zero economic profit due to free entry and exit
Test your knowledge of microeconomics principles with this final exam review guide. The exam will feature 40 multiple choice questions, including topics such as game theory and public goods. Prepare by reviewing Powerpoint slides, old test questions, and practice problems to ensure success on the final exam.
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