Microeconomics Exam Practice Cards - License Exam 2026-2027

Vocabulary-style flashcards covering microeconomic principles including demand elasticity, consumer theory, production costs, market structures, and externalities, externalities based on the Lucian Blaga University of Sibiu license exam prep.

Elastic Demand (Price/Revenue Relationship)

A condition where a decrease in the price of a good leads to an increase in the total revenue collected by producers.

Elasticity of Supply ($E_s$)

A measure of the responsiveness of the quantity supplied to a change in price, calculated as the percentage change in quantity divided by the percentage change in price; for example, if a $50\%$ price increase leads to a quantity increase from $10$ to $20$ units, $E_s = 2$.

Marginal Utility ($U_{mg}$)

The additional satisfaction or utility gained from consuming one more unit of a good; it coincides with total utility only for the first unit consumed.

Law of Diminishing Marginal Utility

The principle stating that as the quantity consumed of a good increases, the marginal utility provided by each additional dose decreases ($U_{mg}$ falls).

Indifference Curve

A graph representing combinations of two goods that provide the consumer with an equal level of total utility.

Budget Line Intersections

The points where the budget line meets the axes of a coordinate system, signifying that the consumer spends their entire income on only one of the two goods.

Substitution Effect

One of the two general effects of a price increase, consisting of an increase in the quantity demanded of other goods whose prices have not increased.

Circulating Capital

A component of technical capital, such as fuel, that is profoundly transformed during the production process and must be replaced after each production cycle.

Fixed Capital

Technical capital that participates in multiple production cycles, is replaced after several years of use, and transfers its value to the new product through depreciation (amortization).

Consumed Technical Capital

The sum of the circulating capital consumed and the amortization (depreciation) of the fixed capital used during a specific period.

Average Fixed Cost ($CFM$)

The total fixed cost divided by the volume of production ($Q$); it increases if the production volume decreases while fixed costs remain constant.

Perfect Competition

A market structure characterized by many sellers of standardized products, where firms are 'price-takers' and individual demand is perfectly elastic.

Monopolistic Competition

A market structure characterized by many sellers offering differentiated (non-homogeneous) products with a downward-sloping demand curve.

Monopoly

A market structure where there is a single producer of a product for which there are no close substitutes and where significant barriers to entry exist.

Profit Maximization Condition

The point of production where marginal revenue equals marginal cost ($V_{mg} = C_{mg}$).

Public Goods

Goods characterized by the properties of non-exclusion (cannot prevent non-payers from consuming) and non-rivalry (one person's consumption does not reduce availability for others).

Externalities Internalization

Methods such as fines, taxes, or the merger of a producer and a receiver of effects intended to align private costs with social costs; closing firms is not considered an internalization pathway.

Coase Theorem

The theory proposed by R. Coase stating that the problem of externalities can be resolved under certain conditions through private negotiations without government intervention.

Opportunity Cost

The value of the alternative given up when choosing to produce more of one good over another, often measured in terms of the other good's price or quantity.

Natural Economy

An economic system characterized by the satisfaction of community and individual needs through their own production rather than through exchange.

Human Needs (Trebuințele umane)

Human requirements that are unlimited in number and competitive, though they may be satisfied momentarily.