EKN 110 Chapter 1 Exam Questions
and Answers
Microeconomics - ANSWERS -deals with individual units. Person, household, firm or industry.
Economics - ANSWERS -Study of how individuals, businesses and institutions make choices, to
optimise their level of satisfaction under conditions of scarcity
Scarcity - ANSWERS -Limited goods and services as well as limited time
Opportunity Cost - ANSWERS -Value of the next best alternative that is forfeited to undertake
the activity
Rational Behaviour - ANSWERS -self-interest. Desire to maximise level of satisfaction/utility
Utility - ANSWERS -pleasure, happiness or satisfaction obtained from consuming a good or
service
Rational Consumer and Producer - ANSWERS -Consumer:
greatest possible U with unlimited wants/needs & certain budget constraints
Producer:
max profit with cost constraints and certain production techniques
Marginal Analysis - ANSWERS -Compares marginal benefits & costs
Benefit: perceived pleasure and utility
and Answers
Microeconomics - ANSWERS -deals with individual units. Person, household, firm or industry.
Economics - ANSWERS -Study of how individuals, businesses and institutions make choices, to
optimise their level of satisfaction under conditions of scarcity
Scarcity - ANSWERS -Limited goods and services as well as limited time
Opportunity Cost - ANSWERS -Value of the next best alternative that is forfeited to undertake
the activity
Rational Behaviour - ANSWERS -self-interest. Desire to maximise level of satisfaction/utility
Utility - ANSWERS -pleasure, happiness or satisfaction obtained from consuming a good or
service
Rational Consumer and Producer - ANSWERS -Consumer:
greatest possible U with unlimited wants/needs & certain budget constraints
Producer:
max profit with cost constraints and certain production techniques
Marginal Analysis - ANSWERS -Compares marginal benefits & costs
Benefit: perceived pleasure and utility
