MICROECONOMICS 6TH EDITION PAUL
KRUGMAN ROBIN WELLS TEST BANK ALL
CHAPTERS 100% ORIGINAL VERIFIED A+
FINAL STUDY GUIDE 2026 SOLVED
QUESTIONS FULLY CORRECT
⫸ Economic goods Answer: A consumable item that is useful to people
but scarce in relation to its demand
⫸ Opportunity cost Answer: The value of the next best alternative
foregone
⫸ Positive statement Answer: An objective statement that can be tested,
amended or rejected by referring to available evidence
⫸ Normative statement Answer: A value judgement that is a subjective
statement of opinion rather than a fact that can be tested
⫸ Needs vs Wants Answer: Needs are defined as goods or services that
are required and cannot be done without. Wants are goods or services
that are not a necessity but we desire/wish for
⫸ Cost-benefit principle Answer: Every purchase is a trade-off
,⫸ Rational decision makers Answer: An assumption that economic
agents weigh the marginal benefit that one receives from a good or
service against its marginal cost
⫸ Economic agents Answer: Decision makers that have effects on the
economy of a country by buying selling, producing, investing, taxing,
etc. Government, firms and households
⫸ Government Answer: Elected representative of the consumers that
should act on behalf of the people. The government must decide whether
or not to intervene in the economy or leave it as is.
⫸ Firms Answer: An organisation that uses factors of production
alongside each other in order to produce output. They produce goods
and services demanded by consumers
⫸ Households Answer: A group of consumers that buy goods and
services. They also supply their labour to firms to produce goods and
services in order to earn the income needed to purchase g+s
⫸ Factors of production Answer: The available resource inputs used in
the production process of g+s (Capital, Enterprise, Land and Labour)
⫸ Capital Answer: Man made aids for production; goods used to make
other goods
,⫸ Entrepreneurship Answer: The willingness of an
entrepreneur/individual to take risks and organise production. An
entrepreneur is someone who bears the risk of a business and organises
production
⫸ Labour Answer: The human resource that is available in the
economy; the quantity and quality of human resources
⫸ Land Answer: The natural resources available in the economy; the
quantity and quality of natural resources
⫸ Factor payments/rewards Answer: Capital=Interest
Enterprise=Profits
Labour=wages
Land=rent
⫸ A model Answer: A simplified representation of reality used to create
hypotheses about economic decisions and events
⫸ Production Answer: Any economic activity that leads to a flow of
goods and services for which people are willing and able to pay
⫸ Production possibility frontier Answer: A curve showing the
maximum quantities of different combinations of goods and services that
, can be produced in a set time period given the available resources and
current state of technology
⫸ Law of diminishing returns Answer: As a firm adds variable factors
of production(usually labour) to fixed capital, the marginal returns that
the firm gains will gradually begin to decrease
⫸ Consumer good Answer: A finished good that is sold for
consumption
⫸ Capital good Answer: Ant tangible asset that an organisation uses to
produce goods or services such as office buildings, machinery etc.
⫸ Specialisation Answer: Where individuals, businesses and whole
economies are not self-sufficient but concentrate on producing certain
goods and services, then trading their surplus.
⫸ Division of labour Answer: The assignment of different parts of a
manufacturing process or task to different specialised people in order to
improve efficiency
⫸ Productivity Answer: Output of a good or service, per factor of
production, per period of time
⫸ Functions of money Answer: A medium of exchange-it should be
accepted universally for the payment of goods, services and debt
KRUGMAN ROBIN WELLS TEST BANK ALL
CHAPTERS 100% ORIGINAL VERIFIED A+
FINAL STUDY GUIDE 2026 SOLVED
QUESTIONS FULLY CORRECT
⫸ Economic goods Answer: A consumable item that is useful to people
but scarce in relation to its demand
⫸ Opportunity cost Answer: The value of the next best alternative
foregone
⫸ Positive statement Answer: An objective statement that can be tested,
amended or rejected by referring to available evidence
⫸ Normative statement Answer: A value judgement that is a subjective
statement of opinion rather than a fact that can be tested
⫸ Needs vs Wants Answer: Needs are defined as goods or services that
are required and cannot be done without. Wants are goods or services
that are not a necessity but we desire/wish for
⫸ Cost-benefit principle Answer: Every purchase is a trade-off
,⫸ Rational decision makers Answer: An assumption that economic
agents weigh the marginal benefit that one receives from a good or
service against its marginal cost
⫸ Economic agents Answer: Decision makers that have effects on the
economy of a country by buying selling, producing, investing, taxing,
etc. Government, firms and households
⫸ Government Answer: Elected representative of the consumers that
should act on behalf of the people. The government must decide whether
or not to intervene in the economy or leave it as is.
⫸ Firms Answer: An organisation that uses factors of production
alongside each other in order to produce output. They produce goods
and services demanded by consumers
⫸ Households Answer: A group of consumers that buy goods and
services. They also supply their labour to firms to produce goods and
services in order to earn the income needed to purchase g+s
⫸ Factors of production Answer: The available resource inputs used in
the production process of g+s (Capital, Enterprise, Land and Labour)
⫸ Capital Answer: Man made aids for production; goods used to make
other goods
,⫸ Entrepreneurship Answer: The willingness of an
entrepreneur/individual to take risks and organise production. An
entrepreneur is someone who bears the risk of a business and organises
production
⫸ Labour Answer: The human resource that is available in the
economy; the quantity and quality of human resources
⫸ Land Answer: The natural resources available in the economy; the
quantity and quality of natural resources
⫸ Factor payments/rewards Answer: Capital=Interest
Enterprise=Profits
Labour=wages
Land=rent
⫸ A model Answer: A simplified representation of reality used to create
hypotheses about economic decisions and events
⫸ Production Answer: Any economic activity that leads to a flow of
goods and services for which people are willing and able to pay
⫸ Production possibility frontier Answer: A curve showing the
maximum quantities of different combinations of goods and services that
, can be produced in a set time period given the available resources and
current state of technology
⫸ Law of diminishing returns Answer: As a firm adds variable factors
of production(usually labour) to fixed capital, the marginal returns that
the firm gains will gradually begin to decrease
⫸ Consumer good Answer: A finished good that is sold for
consumption
⫸ Capital good Answer: Ant tangible asset that an organisation uses to
produce goods or services such as office buildings, machinery etc.
⫸ Specialisation Answer: Where individuals, businesses and whole
economies are not self-sufficient but concentrate on producing certain
goods and services, then trading their surplus.
⫸ Division of labour Answer: The assignment of different parts of a
manufacturing process or task to different specialised people in order to
improve efficiency
⫸ Productivity Answer: Output of a good or service, per factor of
production, per period of time
⫸ Functions of money Answer: A medium of exchange-it should be
accepted universally for the payment of goods, services and debt
