Introduction to Microeconomics. Basic economic consepts. Questions related to the topic

Introduction to Microeconomics. Basic economic consepts.
Questions related to the topic.
1. What is the difference between Macroeconomics and Microeconomics?
2. How do you understand the Fundamental (Central) problem of economics?
3. What is Rational Choice?
4. Give definition of Opportunity Cost. Explain the phenomenon of Increasing Opportunity Cost.
5. What are three questions that any economy must face?
6. What does it mean scarcity in the economy, how scarcity can effect to the consumers’ choices and producers’ production power.
7. Explain the LLC, what does this capital letters mean in economy?
8. What are the differences of these three terms ECONOMY, ECONOMICS, ECONOMIC ACTIVITY?
9. In what way you understand the term of TRADE OF in economy.
10. What does it mean opportunity cost, please explain it with life examples.
11. Explain the Rational choice.
12. Explain the economic models, how they are important in the economy?
13. What is the difference between positive and normative analysis?
14. What does it mean market, and what types of market models you can say in the economy.
15. Explain briefly of these market models. Competitive market, Monopoly, Monopolistic competition, Oligoploy, Duopoly, Monopsony….
16. Give your personal idea about the Extent of the market.
17. What does it mean Market price.
18. Explain the Real price and Nominal price.
19. What does it mean CPI (Consumer Price Index).
20. What does it mean ‘ceteris paribus’?
21. Why do economists make assumptions?
22. What does it mean PPF (Production Possibility Curve or frontier)?
23. In which market single buyer or seller can not affect the market price?
24. IOS and Android are the only operation systems for the mobile phones. What type of market is it? Explain it.
25. What is the main economic difference between competitive and non-competitive markets?
26. What does it mean PPI (Producer Price Index)?


Critical Thinking Questions
1. Why should people need incentives to do ‘good’ things like donating blood or putting out more rubbish for recycling?
2. What is meant by the ‘principal–agent’ issue?
3. What might be the price and psychological effect if students were given a monetary incentive to attain top
grades in their university exams?


Math problems related to the topic.
1. Jim, a consultant, earns £85 an hour. Instead of working one might, he goes to a Premier League football match in Manchester which costs him £55 and lasts two hours. What is the opportunity cost of watching the football instead of working?

2. Graham has received a £15,000 windfall and decides to invest his money. He has a choice to either buy shares of company that makes Advocate or leave the money in a savings account that earns 5% per year. He decides to purchase shares in the Advocat company and after a year he sells them for £15,300. What was the opportunity cost (in £) of investing in the shares instead of placing the money in a savings account?

3. Geoff makes £200 an hour as a lawyer specialising in workplace injury claims. He is considering paying someone £500 a month to clean his swimming pool (which takes 2 hours each time, 4 times each month). If he decides to do it himself, it will take 12 hours a month. What is Geoff’s opportunity cost if he decides to clean his own pool?

4. Jayne decides to use the train to get to work rather than driving each day. The train fare each month will be £350. After one month, she calculates that she is spending £250 less on petrol and about £25 less on maintaining her car. What is the opportunity cost of using the train?

5. Janet has £25,000 worth of shares in her portfolio that she can sell now to her friend Michelle for $30,000. She wanted to wait six months because she expected the value of her shares but decides to sell them to Michelle. Six months later Michelle sells the shares with a £2,000 profit. What is the opportunity cost to Janet of selling her shares immediately to Michelle?

6. Ruth has a mobile hot-dog stand. She wants to employ 2 students to work for her between June and August. She expects each employee to generate £250 a day each of the 78 working days of this period. However, if she lost 2 days at the start of the period and fully trained her employees they could generate £260 a day. What is the opportunity cost of not training her employees?

7. Consumer price Index in 2000 was 172,2 and in 2010 it was 218,1. Nominal prices of butter in 2000 was 1,62 $ and in 2010 it was 2,64 $. Calculate the real price of butter in 2010 in terms of 2000 dollars.

8. Consumer price Index in 2000 was 172,2 and in 1990 it was 130,7. Nominal prices of butter in 2000 was 1,62 $ and in 1990 it was 1,01 $. Calculate the real price of butter in 2000 in terms of 1990 dollars.

9. Consumer price Index in 1980 was 82,4 and in 1990 it was 130,7. Nominal prices of butter in 1980 was 0,84 $ and in 1990 it was 1,01 $. Calculate the real price of butter in 1990 in terms of 1980 dollars.

10. Consumer price Index in 1980 was 82,4 and in 2010 it was 218,1. Nominal prices of butter in 1980 was 0,84 $ and in 2010 it was 1,54 $. Calculate the real price of butter in 2010 in terms of 1980 dollars.

11. Consumer price Index in 1990 was 130,7 and in 2010 it was 218,1. Nominal prices of butter in 1990 was 1,05 $ and in 2010 it was 1,54 $. Calculate the real price of butter in 2010 in terms of 1990 dollars.

12.