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CLEP^®

Description of the Examination

The Principles of Microeconomics examination covers material that is usually taught in a one-semester undergraduate course in introductory microeconomics. This aspect of economics deals with the principles of economics that apply to the analysis of the behavior of individual consumers and businesses in the economy. Questions on this exam require candidates to apply analytical techniques to hypothetical as well as real-world situations and to analyze and evaluate economic decisions. Candidates are expected to demonstrate an understanding of how free markets work and allocate resources efficiently. They should understand how individual consumers make economic decisions to maximize utility, and how individual firms make decisions to maximize profits. Candidates 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. They should also be able to evaluate the outcome in each market structure with respect to economic efficiency, and identify cases in which private markets fail to allocate resources efficiently, and 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 analyze and evaluate the distribution of income.

The examination contains 80 questions to be answered in 90 minutes. Some of these are pretest questions that will not be scored. Any time candidates spend on tutorials and providing personal information is in addition to the actual testing time.

Knowledge and Skills Required

Questions on the Principles of Microeconomics examination require candidates 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

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

Study resources

Most textbooks used in college-level introduction of microeconomics courses cover the topics in the outline given earlier, but the approaches to certain topics and the emphasis given to them may differ. To prepare for the Principles of Microeconomics exam, it is advisable to study one or more college textbooks, which can be found in most college bookstores. When selecting a textbook, check the table of contents against the "Knowledge and Skills Required" for this test.

There are many introductory economics textbooks that vary greatly in difficulty. Most books are published in one-volume editions, which cover both microeconomics and macroeconomics; some are also published in two-volume editions, with one volume covering macroeconomics and the other microeconomics. A companion study guide/work-book is available for most textbooks. The study guides typically include brief reviews, definitions of key concepts, problem sets, and multiple-choice test questions with answers. Many publishers also make available computer-assisted learning packages.

To broaden your knowledge of economic issues, you may read relevant articles published in the economics periodicals that are available in most college libraries—for example, the Economist, the Wall Street Journal and the New York Times—along with local papers, may also enhance your understanding of economic issues. In addition, many college faculty members post their course materials on their school websites, and there are a number of educational websites that contain useful resources organized by subject.

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