1.1 Micro

Question 1

What is individual demand known as?

Answer 1

Utility

Question 2

What is utility measured in?

Answer 2

Utils

Question 3

What is utility?

Answer 3

The satisfaction derived from consuming a good or service

Question 4

What is maximisation?

Answer 4

When an economic agent tries to gain the most from an economic activity

Question 5

What do household look to do?

Answer 5

Maximise utility and gain the most satisfaction

Question 6

What do firms wish to do?

Answer 6

Maximise profits

Question 7

What does the government wish to do?

Answer 7

Maximise the welfare of the population

Question 8

What are the FOP?

Answer 8

Land
Labour
Enterprise
Capital

Question 9

Name the economic agents

Answer 9

Households
Government
Firms

Question 10

What is profit satisficing?

Answer 10

A level of profit below profit maximum, but satisfies the need of the owner

Question 11

What is the utility theory?

Answer 11

The satisfaction that an individual derives from consuming a good or service

Question 12

What is total utility?

Answer 12

The aggregate amount of satisfaction

Question 13

What is marginal utility?

Answer 13

The amount of satisfaction an individual derives from consuming one extra unit

Question 14

What does total utility do over time?

Answer 14

Diminishes

Question 15

Why does total utility diminish over time?

Answer 15

The consumer becomes satiated

Question 16

How do you calculate marginal utility?

Answer 16

Change in total utility/ change in number of units consumed

Question 17

Consumer will only consume after satiating because of what?

Answer 17

A decrease in price

Question 18

How do you work out the maximum utility gained from a good or a service?

Answer 18

MUx/Px