/Principles of Microeconomics
Principles of Microeconomics 2018-02-06T01:48:46+00:00

Overview

The Principles of Microeconomics CLEP exam covers material that is usually taught in a one-semester undergraduate course in introductory microeconomics, including economic principles that apply to the behavioral analysis of individual consumers and businesses. You will be required to apply analytical techniques to hypothetical as well as real-world situations and to analyze and evaluate economic decisions. You’re expected to demonstrate an understanding of how free markets work and allocate resources efficiently, how individual consumers make economic decisions to maximize utility, and how individual firms make decisions to maximize profits. You must be able to identify the characteristics of the different market structures and analyze the behavior of firms in terms of price and output decisions. You should also be able to evaluate the outcome in each market structure with respect to economic efficiency, identify cases in which private markets fail to allocate resources efficiently, and explain how government intervention fixes or fails to fix the resource allocation problem. It is also important to understand the determination of wages and other input prices in factor markets, and be able to analyze and evaluate the distribution of income.

The exam contains approximately 80 questions to be answered in 90 minutes.

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Knowledge and Skills Required

Questions on the Principles of Microeconomics exam require test takers to demonstrate one or more of the following abilities.

  • Understanding of important economic terms and concepts
  • Interpretation and manipulation of economic graphs
  • Interpretation and evaluation of economic data
  • Application of simple economic models

Exam Breakdown

The subject matter of the Principles of Microeconomics exam is drawn from the following topics. The percentages next to the main topics indicate the approximate percentage of exam questions on that topic.

Basic Economic Concepts (8%–14%)

  • Scarcity, choice, and opportunity cost
  • Production possibilities curve
  • Comparative advantage, specialization, and trade
  • Economic systems
  • Property rights and the role of incentives
  • Marginal analysis

The Nature and Functions of Product Markets (55%–70%)

15%–20% Supply and demand

  • Market equilibrium
  • Determinants of supply and demand
  • Price and quantity controls
  • Elasticity
  • Price, income, and cross-price elasticities of demand
  • Price elasticity of supply
  • Consumer surplus, producer surplus, and market efficiency
  • Tax incidence and deadweight loss

5%–10% Theory of consumer choice

  • Total utility and marginal utility
  • Utility maximization: equalizing marginal utility per dollar
  • Individual and market demand curves
  • Income and substitution effects

10%–15% Production and costs

  • Production functions: short and long run
  • Marginal product and diminishing returns
  • Short-run costs
  • Long-run costs and economies of scale
  • Cost minimizing input combination

23%–33% Firm behavior and market structure

Profit

  • Accounting versus economic profits
  • Normal profit
  • Profit maximization: MR=MC rule

Perfect competition

  • Profit maximization
  • Short-run supply and shut-down decision
  • Firm and market behaviors in short-run and long-run equilibria
  • Efficiency and perfect competition

Monopoly

  • Sources of market power
  • Profit maximization
  • Inefficiency of monopoly
  • Price discrimination

Oligopoly

  • Interdependence, collusion, and cartels
  • Game theory and strategic behavior

Monopolistic competition

  • Product differentiation and role of advertising
  • Profit maximization
  • Short-run and long-run equilibrium
  • Excess capacity and inefficiency

Factor Markets (8%–14%)

  • Derived factor demand
  • Marginal revenue product
  • Labor market and firms’ hiring of labor
  • Market distribution of income

Market Failure and the Role of Government (10%–16%)

Externalities

  • Marginal social benefit and marginal social cost
  • Positive externalities
  • Negative externalities
  • Remedies

Public goods

  • Public versus private goods
  • Provision of public goods

Public policy to promote competition

  • Antitrust policy
  • Regulation

Income distribution

  • Equity
  • Sources of income inequality
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User Test Results for the Principles of Microeconomics CLEP Exam

436 users have submitted their test results to us since March 2016

410 (94%) of those users have reported an ACE recommended passing score

The table below represents our users most recent test results for the Principles of Microeconomics CLEP exam after using Credits4Less.

Note: The date shown below represents the date that they reported their score to us.

DateResultScore
Feb 19, 2018Pass64
Feb 13, 2018Pass71
Feb 10, 2018Pass52
Feb 1, 2018Pass51
Jan 23, 2018Pass65

Our Study Guide

Credits4Less’ Principles of Microeconomics study guide will leave you fully prepared to pass your Principles of Microeconomics CLEP exam. Our study guide is broken down to match the exact make up of the actual CLEP exam with each unit containing a set of cheat sheet notes and dozens of practice questions.

1. Study guides that match the actual exam’s breakdown

2. Units that contain cheat sheet notes and practice questions

3. Hundreds of practice questions

4. Review your answers and learn from your mistakes

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