MICROECONOMICS ACTUAL EXAM
SCRIPT 2026 QUESTIONS AND SOLUTIONS
GRADED A+
◉average fixed cost (AFC). Answer: Total fixed cost divided by the
number of units of output; a per-unit measure of fixed costs. AFC =
FC/Q
◉average total cost (ATC). Answer: Total cost divided by the number
of units of output ATC = TC/Q or ATC = AFC + AVC
◉average variable cost (AVC). Answer: variable cost divided by the
number of units of output AVC = VC/Q
◉budget constraint. Answer: the limits imposed on household
choices by income, wealth, and product prices.
◉capital. Answer: goods used to produce other goods
◉cartel. Answer: a group of firms that gets together and makes joint
price and output decisions to maximize joint profits
,◉ceteris paribus. Answer: a devise used to analyze the relationship
between two variable while the values of other variables are held
unchanged.
◉clayton act. Answer: act outlawed specific monopolistic behaviors
such as tying contracts
◉command economy. Answer: An economy in which a central
government either directly or indirectly sets output targets,
incomes, and prices
◉comparative advantage. Answer: the ability to produce a good at a
lower opportunity cost than another producer
◉complements. Answer: two goods for which an increase in the
price of one leads to a decrease in the demand for the other and vice
versa
◉consumer goods. Answer: goods produced for present
consumption
◉consumer sovereignty. Answer: The idea that consumers
ultimately dictate what will be produced (or not produced) by
choosing what to purchase (and what not to purchase).
, ◉consumer surplus. Answer: The difference between the maximum
amount a person is willing to pay for a good and its current market
price.
◉cross price elasticity of demand. Answer: measures the
responsiveness of the quantity demand of a good to a change in the
price of another good.
◉diseconomies of scale. Answer: The property whereby long-run
average total cost rises as the quantity of output increases (right-
most upward sloping part of the long-run ATC)
◉demand curve. Answer: a graph that shows the amount of a
product that would be bought at all possible prices in the market
◉depreciation. Answer: the decline in an asset's economic value
over time
◉diminishing marginal utility. Answer: the point reached when an
additional unit of a product consumed is less satisfying than the one
before
◉economic theory. Answer: A statement or set of related statements
about cause and effect, action and reaction
SCRIPT 2026 QUESTIONS AND SOLUTIONS
GRADED A+
◉average fixed cost (AFC). Answer: Total fixed cost divided by the
number of units of output; a per-unit measure of fixed costs. AFC =
FC/Q
◉average total cost (ATC). Answer: Total cost divided by the number
of units of output ATC = TC/Q or ATC = AFC + AVC
◉average variable cost (AVC). Answer: variable cost divided by the
number of units of output AVC = VC/Q
◉budget constraint. Answer: the limits imposed on household
choices by income, wealth, and product prices.
◉capital. Answer: goods used to produce other goods
◉cartel. Answer: a group of firms that gets together and makes joint
price and output decisions to maximize joint profits
,◉ceteris paribus. Answer: a devise used to analyze the relationship
between two variable while the values of other variables are held
unchanged.
◉clayton act. Answer: act outlawed specific monopolistic behaviors
such as tying contracts
◉command economy. Answer: An economy in which a central
government either directly or indirectly sets output targets,
incomes, and prices
◉comparative advantage. Answer: the ability to produce a good at a
lower opportunity cost than another producer
◉complements. Answer: two goods for which an increase in the
price of one leads to a decrease in the demand for the other and vice
versa
◉consumer goods. Answer: goods produced for present
consumption
◉consumer sovereignty. Answer: The idea that consumers
ultimately dictate what will be produced (or not produced) by
choosing what to purchase (and what not to purchase).
, ◉consumer surplus. Answer: The difference between the maximum
amount a person is willing to pay for a good and its current market
price.
◉cross price elasticity of demand. Answer: measures the
responsiveness of the quantity demand of a good to a change in the
price of another good.
◉diseconomies of scale. Answer: The property whereby long-run
average total cost rises as the quantity of output increases (right-
most upward sloping part of the long-run ATC)
◉demand curve. Answer: a graph that shows the amount of a
product that would be bought at all possible prices in the market
◉depreciation. Answer: the decline in an asset's economic value
over time
◉diminishing marginal utility. Answer: the point reached when an
additional unit of a product consumed is less satisfying than the one
before
◉economic theory. Answer: A statement or set of related statements
about cause and effect, action and reaction
