Montclair State University

Microeconomics
Exam 1
1. What is the definition of economics?
2. What is the definition of opportunity cost
3. What is the meaning of there is no free lunch
4. Explain opportunity cost
5. What is the scientific method
6. Explain the steps of the scientific method
7. Define each of the steps of the scientific method
8. What is a theory
9. What is the meaning of ceteris paribus?
10.What the purpose of ceteris paribus
11.What is the difference between macroeconomics and microeconomics
12.Define microeconomics
13.What is the difference between positive economics and normative economics
?
14.Define normative economics
15.Define economizing problem

16. Define the budget line

17. An example of labor resource as a factor of production
18. An example of capital resource as a factor of production
19.What are the four factors of production?
20.What is an example of land resource?
21.Define production possibilities curve
22.Define the law of increasing opportunity cost
Chapter 3
23.Define a market
24.Define the law of demand
25.Define demand
26.What are the main reasons why the demand curve is downsloping
27.Identify whether the following goods are complement or substitute
28.What are the determinants of demand
29. Compare and contrast the relationship that exists between complements
and substitutes
30.Identify whether the following goods are complement or substitute
31.Identify whether the following goods are normal or inferior
32. Compare the law of demand with the law of supply

33.What are the determinants of supply?

34.Please find the equilibrium price and quantity on the graph
35.What is the difference between surplus and shortage and where would be the
price related to the equilibrium price for each.
36.Compare and contrast productive efficiency and allocative efficiency
37.Define equilibrium
38. If the price is below equilibrium what would be the trend most likely ,
decreasing further or increasing
39.What is the basic formula of elasticity of demand
40.Describe the five coefficients of elasticity and their meaning ( Ex E d=0 Unit
Elastic etc etc)
41. Define elasticity of demand
42.Difference between perfectly elastic and perfectly inelastic
43. What is the total revenue test for elastic and inelastic ( example if demand is
inelastic , when price increases what happened to total revenue)
44.What is elasticity of supply?
45.What is the law of diminishing marginal utility?
46.What is marginal utility ?
47.What is the formula for consumer equilibrium or consumer maximizing rule ?

48.What are the three reasons why the demand curve is downsloping ?
49.Explain the difference behavioral economics and neo-classical economics .
50.Define heuristics
51.Define system 1 and system 2 in human brain modularity
52.What is the endowment effect?
53. How do system 1 and system 2 in the human brain modularity work?