Micro Exam Knowledge

Question 1

Consumer surplus

Answer 1

Difference between the price a customer would be willing to pay and what he actually has to pay

Question 2

Define PED

Answer 2

Responsiveness of demand to a change in price

Question 3

Define allocative efficiency

Answer 3

When consumer satisfaction is maximised (MB=MC)

Question 4

Define productive efficiency

Answer 4

Attained when producing at the minimum of average total costs

Question 5

Define economic efficiency

Answer 5

This is where both allocative and productive efficiency is achieved

Question 6

Define the economic problem

Answer 6

How to allocate scarce resources among alternative uses

Question 7

What is meant by a market?

Answer 7

Where buyers and sellers meet to exchange goods and services.

Question 8

How is the price of a good determined?

Answer 8

Where the market clears

Question 9

Define public goods

Answer 9

Goods that are collectively consumed and have the characteristics of non-excludability and non-rivalry