BSNS 113 - Pre Midterm Exam Questions
With Correct Answers
Positive |Economics |- |CORRECT |ANSWER✔✔-Is |objective |and |fact |based |as |apposed |to |
normative |economcis |which |is |about |what |the |world |should |look |like.
Opportunity |Cost |- |CORRECT |ANSWER✔✔-The |value |of |the |next |best |alternative |forgone
Production |Possibilites |Frontier |- |CORRECT |ANSWER✔✔-Show |the |combination |of |technically |
efficient |goods |that |an |economy |can |produce |given |a |certain |level |of |resources |and |
technology
Why |is |the |PPF |bowed |outwards? |- |CORRECT |ANSWER✔✔-because |some |resources |are |more |
suited |to |the |production |of |one |good |than |another |(the |law |of |increasing |opportunity |cost).
Technical |Efficiency |- |CORRECT |ANSWER✔✔-Points |along |the |PPF |curve |- |when |the |economy |
is |producing |the |maximum |amount |of |goods |given |it's |services.
Economic |Efficiency |- |CORRECT |ANSWER✔✔-The |'best |combination |of |goods |that |delivers |the |
preference |of |consumers.
Absolute |Advantage |- |CORRECT |ANSWER✔✔-the |ability |to |produce |a |good |using |fewer |inputs |
than |another |produce
Comparative |Advantage |- |CORRECT |ANSWER✔✔-Ability |to |produce |at |a |lower |opportunity |
cost |than |someone |else |- |people |should |specialise |where |they |have |a |comparative |advantage
, Terms |of |Trade |- |CORRECT |ANSWER✔✔-The |terms |at |which |a |party |would |source |a |good |or |
service |from |another |person, |rather |than |just |do |it |themselves |- |The |price |will |be |found |
between |opportunity |costs.
Unit |of |account |- |CORRECT |ANSWER✔✔-Common |denominator |that |allows |us |to |compare |
prices |e.g. |money
Medium |of |exchange |- |CORRECT |ANSWER✔✔-money |for |something
Store |of |value |- |CORRECT |ANSWER✔✔-Allows |you |to |sell |now |and |buy |later
What |happens |in |equilibrium |- |CORRECT |ANSWER✔✔-the |market |clears, |all |are |willing |to |buy |
at |their |desired |price |and |all |are |willing |to |sell |at |their |desired |price.
Point |Elasticity |Formula |- |CORRECT |ANSWER✔✔-(P |/ |Qd) |x |(1 |/ |Slope)
Midpoint |formula |(Arc |Elasticity) |- |CORRECT |ANSWER✔✔-(Change |in |Qd/Average |Qd) |/ |
(Change |in |P |/ |Average |P)
PED |> |1 |- |CORRECT |ANSWER✔✔-elastic |- |a |small |change |in |price |has |a |large |effect |on |quantity
|demanded |- |usually |luxuries |that |will |have |more |substitutes.
PED |< |1 |- |CORRECT |ANSWER✔✔-Inelastic |- |Unresponsive |to |change |in |price |e.g. |normal |
goods, |addictive |goods
PED |= |1 |- |CORRECT |ANSWER✔✔-Unitary |elastic |(horizontal) |- |exactly |proportionate |change |in |
price |results |in |a |significant |effect |on |QD
Substitute |goods |- |CORRECT |ANSWER✔✔-have |a |positive |cross |price |elasticity |of |demand
With Correct Answers
Positive |Economics |- |CORRECT |ANSWER✔✔-Is |objective |and |fact |based |as |apposed |to |
normative |economcis |which |is |about |what |the |world |should |look |like.
Opportunity |Cost |- |CORRECT |ANSWER✔✔-The |value |of |the |next |best |alternative |forgone
Production |Possibilites |Frontier |- |CORRECT |ANSWER✔✔-Show |the |combination |of |technically |
efficient |goods |that |an |economy |can |produce |given |a |certain |level |of |resources |and |
technology
Why |is |the |PPF |bowed |outwards? |- |CORRECT |ANSWER✔✔-because |some |resources |are |more |
suited |to |the |production |of |one |good |than |another |(the |law |of |increasing |opportunity |cost).
Technical |Efficiency |- |CORRECT |ANSWER✔✔-Points |along |the |PPF |curve |- |when |the |economy |
is |producing |the |maximum |amount |of |goods |given |it's |services.
Economic |Efficiency |- |CORRECT |ANSWER✔✔-The |'best |combination |of |goods |that |delivers |the |
preference |of |consumers.
Absolute |Advantage |- |CORRECT |ANSWER✔✔-the |ability |to |produce |a |good |using |fewer |inputs |
than |another |produce
Comparative |Advantage |- |CORRECT |ANSWER✔✔-Ability |to |produce |at |a |lower |opportunity |
cost |than |someone |else |- |people |should |specialise |where |they |have |a |comparative |advantage
, Terms |of |Trade |- |CORRECT |ANSWER✔✔-The |terms |at |which |a |party |would |source |a |good |or |
service |from |another |person, |rather |than |just |do |it |themselves |- |The |price |will |be |found |
between |opportunity |costs.
Unit |of |account |- |CORRECT |ANSWER✔✔-Common |denominator |that |allows |us |to |compare |
prices |e.g. |money
Medium |of |exchange |- |CORRECT |ANSWER✔✔-money |for |something
Store |of |value |- |CORRECT |ANSWER✔✔-Allows |you |to |sell |now |and |buy |later
What |happens |in |equilibrium |- |CORRECT |ANSWER✔✔-the |market |clears, |all |are |willing |to |buy |
at |their |desired |price |and |all |are |willing |to |sell |at |their |desired |price.
Point |Elasticity |Formula |- |CORRECT |ANSWER✔✔-(P |/ |Qd) |x |(1 |/ |Slope)
Midpoint |formula |(Arc |Elasticity) |- |CORRECT |ANSWER✔✔-(Change |in |Qd/Average |Qd) |/ |
(Change |in |P |/ |Average |P)
PED |> |1 |- |CORRECT |ANSWER✔✔-elastic |- |a |small |change |in |price |has |a |large |effect |on |quantity
|demanded |- |usually |luxuries |that |will |have |more |substitutes.
PED |< |1 |- |CORRECT |ANSWER✔✔-Inelastic |- |Unresponsive |to |change |in |price |e.g. |normal |
goods, |addictive |goods
PED |= |1 |- |CORRECT |ANSWER✔✔-Unitary |elastic |(horizontal) |- |exactly |proportionate |change |in |
price |results |in |a |significant |effect |on |QD
Substitute |goods |- |CORRECT |ANSWER✔✔-have |a |positive |cross |price |elasticity |of |demand
