MICROECONOMICS ECO182 FINAL EXAM (UNIVERSITY AT
BUFFALO, MONICA LITZENBERGER, CHERRY) EXAM
QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS
VERIFIED
Economics
Study of how scarce resources are allocated among competing uses
When making a decision we only consider 1._______ of that decision not the
2.______
1.Marginal cost 2.Sunk cost
We will chose to do something as long as the 1. _______ is less than the 2.
_______
1.Marginal cost 2.Marginal benefit
The efficient outcome occurs when the 1._______ of doing something is just
equal to its 2._______
1.Marginal benefit 2.Marginal cost
Opportunity cost
Measures the best alternative forgone when making choices
Economic reality is not only controlled by economic forces but by _______ as
well
Social and political forces
,Macroeconomics
Study of economic aggregates such as national production and the price level
Microeconomics
The study of the behavior of individual consumers and producers operating in the
individual markets of the economy
Production possibilities frontier
Shows the boundary between combination of goods an economy can produce and
those it can not
PPF curve negative slope
To produce more of one good an economy must produce less of the other (if it is
producing efficiently)
PPF curve curved shaped
Opportunity cost of producing more of one good increases as you produce more of it
because resources are specialized
PPF will shift out if there are changes in either
Technology or available resources
Absolute advantage
When a country produces a good using the minimum quantity of inputs
Comparative advantage
The ability to be better suited to production of one good than to the production of
another good.
Comparative advantage happens when
They can produce a good at the lowest opportunity cost
, All countries benefit from
Trade
U.S. has benefited greatly from globalization due to increased markets for their
products and cheaper prices for all goods, but there have been cost like
Losses in jobs and increase competition for domestic companies
Demand curve
Shows the quantities of a good a consumer is willing and able to buy at alternative
prices given tastes, income, related prices and number of buyers
Law of demand
Increase in price causes decrease in quantity demand (movement along curve)
What changes the demand curve to shift left or right
Income, tastes, price of substitutes, price of complements
Supply curve
A curve which shows the quantities of a good a seller is willing and able to sell at
alternative prices at a given cost of production determined by input pruces and
technology and number of sellers
Law of supply
Increase in price causes increase in quantity supplied (movement along the supply
curve)
Equilibrium
When price is set where quantity demanded = quantity supplied
Price controls
BUFFALO, MONICA LITZENBERGER, CHERRY) EXAM
QUESTIONS AND ANSWERS WITH COMPLETE SOLUTIONS
VERIFIED
Economics
Study of how scarce resources are allocated among competing uses
When making a decision we only consider 1._______ of that decision not the
2.______
1.Marginal cost 2.Sunk cost
We will chose to do something as long as the 1. _______ is less than the 2.
_______
1.Marginal cost 2.Marginal benefit
The efficient outcome occurs when the 1._______ of doing something is just
equal to its 2._______
1.Marginal benefit 2.Marginal cost
Opportunity cost
Measures the best alternative forgone when making choices
Economic reality is not only controlled by economic forces but by _______ as
well
Social and political forces
,Macroeconomics
Study of economic aggregates such as national production and the price level
Microeconomics
The study of the behavior of individual consumers and producers operating in the
individual markets of the economy
Production possibilities frontier
Shows the boundary between combination of goods an economy can produce and
those it can not
PPF curve negative slope
To produce more of one good an economy must produce less of the other (if it is
producing efficiently)
PPF curve curved shaped
Opportunity cost of producing more of one good increases as you produce more of it
because resources are specialized
PPF will shift out if there are changes in either
Technology or available resources
Absolute advantage
When a country produces a good using the minimum quantity of inputs
Comparative advantage
The ability to be better suited to production of one good than to the production of
another good.
Comparative advantage happens when
They can produce a good at the lowest opportunity cost
, All countries benefit from
Trade
U.S. has benefited greatly from globalization due to increased markets for their
products and cheaper prices for all goods, but there have been cost like
Losses in jobs and increase competition for domestic companies
Demand curve
Shows the quantities of a good a consumer is willing and able to buy at alternative
prices given tastes, income, related prices and number of buyers
Law of demand
Increase in price causes decrease in quantity demand (movement along curve)
What changes the demand curve to shift left or right
Income, tastes, price of substitutes, price of complements
Supply curve
A curve which shows the quantities of a good a seller is willing and able to sell at
alternative prices at a given cost of production determined by input pruces and
technology and number of sellers
Law of supply
Increase in price causes increase in quantity supplied (movement along the supply
curve)
Equilibrium
When price is set where quantity demanded = quantity supplied
Price controls
