ECON 1002 MICROECONOMICS EXAM 2
ACTUAL TEST PAPER 2026 QUESTIONS WITH
ANSWERS GRADED A+
◉ Malthus model. Answer: showed that there was a diminishing
average product of labour as land was fixed therefore when workers
where added the output per worker would fall
◉ average product of labour equation. Answer: total output/total
number of workers
◉ why would technological improvement fall back to equilibrium
(income=standard of living) under mathlus model (mathlus trap).
Answer: living standards are low -> tech improves
average output per farmer rises leading to population rising as the
standard of living increases
less land per farmer means the average output per farmer falls
population is larger but living standards are back at equilibrium.
◉ how would population be restored under malthus model. Answer:
malthusian catastrophe would occur, restoring the balance of having
a low population with low living standards (diseases, etc.)
,◉ How was this link broken. Answer: through technological
innovations that increased food production and opportunities that
came from capitalism
◉ capitalism. Answer: an economic system (way of organizing the
economy) consisting of a combinations of institutions
◉ What are the types of institutions in capitalism. Answer: Private
property: owned by anyone that can exclude others and have full
controllability of the possessions
Markets: transferring of goods or services from one to another
Firms: sell good or services with the intention of making a profit,
pay wages or salaries, with the goods/services being the property of
the owner
◉ What are not firms. Answer: non-profits, family businesses, and
government agencies as they either don't make a profit or the
owners are not individuals who won the assets or employ others to
work there.
◉ Why are markets and private property essential for firms.
Answer: capital goods (buildings and machinery) are private
property and therefore so are the outputs
firms need to use the market in order to buy inputs and sell outputs
, ◉ organization of specialization. Answer: allowed for firms to
increase output with the same number of workers
◉ direct benefit. Answer: what you get
◉ direct cost. Answer: what you pay or give up
◉ opportunity cost. Answer: cost of the next best option (net
benefit)
◉ reservation option/price. Answer: the lowest amount that would
be accepted for a deal to occur or else it will be declined and will
stick with the next best option
◉ net benefit. Answer: direct benefit-direct cost
or
social benefit-cost of production
tells if the action gives more value than the cost
◉ economic cost. Answer: direct cost + opportunity cost
total cost including what you gave up
ACTUAL TEST PAPER 2026 QUESTIONS WITH
ANSWERS GRADED A+
◉ Malthus model. Answer: showed that there was a diminishing
average product of labour as land was fixed therefore when workers
where added the output per worker would fall
◉ average product of labour equation. Answer: total output/total
number of workers
◉ why would technological improvement fall back to equilibrium
(income=standard of living) under mathlus model (mathlus trap).
Answer: living standards are low -> tech improves
average output per farmer rises leading to population rising as the
standard of living increases
less land per farmer means the average output per farmer falls
population is larger but living standards are back at equilibrium.
◉ how would population be restored under malthus model. Answer:
malthusian catastrophe would occur, restoring the balance of having
a low population with low living standards (diseases, etc.)
,◉ How was this link broken. Answer: through technological
innovations that increased food production and opportunities that
came from capitalism
◉ capitalism. Answer: an economic system (way of organizing the
economy) consisting of a combinations of institutions
◉ What are the types of institutions in capitalism. Answer: Private
property: owned by anyone that can exclude others and have full
controllability of the possessions
Markets: transferring of goods or services from one to another
Firms: sell good or services with the intention of making a profit,
pay wages or salaries, with the goods/services being the property of
the owner
◉ What are not firms. Answer: non-profits, family businesses, and
government agencies as they either don't make a profit or the
owners are not individuals who won the assets or employ others to
work there.
◉ Why are markets and private property essential for firms.
Answer: capital goods (buildings and machinery) are private
property and therefore so are the outputs
firms need to use the market in order to buy inputs and sell outputs
, ◉ organization of specialization. Answer: allowed for firms to
increase output with the same number of workers
◉ direct benefit. Answer: what you get
◉ direct cost. Answer: what you pay or give up
◉ opportunity cost. Answer: cost of the next best option (net
benefit)
◉ reservation option/price. Answer: the lowest amount that would
be accepted for a deal to occur or else it will be declined and will
stick with the next best option
◉ net benefit. Answer: direct benefit-direct cost
or
social benefit-cost of production
tells if the action gives more value than the cost
◉ economic cost. Answer: direct cost + opportunity cost
total cost including what you gave up
