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26 Cards in this Set
- Front
- Back
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What is scarcity?
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fundamental economic problem, inability to satisfy all our wants
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Microeconomics
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study of choices that individuals and businesses make, the way these choices interact, and the influences that govt exerts on these choices
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Three Big Microeconomic Question
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1. What G/S are produced and in what quantities
2. How are goods and servies produced 3.For whom are G/S produced? |
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Factors of Production?
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resources businesses use to produce G/S
1-Land 2-Labor 3-Capital 4-Entrepreneurship |
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Different type of income earned from the Factors of Production
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Land earns rent
labor earns wages Captial earns interest entrepreneurship earns profit |
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Tradeoff
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A choice, giving something to get something else
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opportunity cost
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choice of the highest-valued alternative forgone (single choice not multiple forgone because it is the highest-valued)
All tradeoffs involve OC |
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Margin
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When a choice is changed by a small amount or by a little at a time it is made at the margin
*Make choices by evalutating marginal benefit vs. marginal cost |
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Marginal Benefit
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*Benefit that arises from an increase in activity
*benefit from recieving one more unit of G/S *maximum amount a person is willing to pay |
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Marginal Cost
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*Cost of an increase in activity
*OC of producing one more unit of good *Best alternative forgone *total cost/increase in output |
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Positive statement
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What is....
Can be shown to be T/F How the world actually is not what one wishes |
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Normative statement
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What ought to be....
Matters of opinion |
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Ceteris paribus
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"other things being equal"
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What is scarcity?
|
fundamental economic problem, inability to satisfy all our wants
|
|
|
Microeconomics
|
study of choices that individuals and businesses make, the way these choices interact, and the influences that govt exerts on these choices
|
|
|
Three Big Microeconomic Question
|
1. What G/S are produced and in what quantities
2. How are goods and servies produced 3.For whom are G/S produced? |
|
|
Factors of Production?
|
resources businesses use to produce G/S
1-Land 2-Labor 3-Capital 4-Entrepreneurship |
|
|
Different type of income earned from the Factors of Production
|
Land earns rent
labor earns wages Captial earns interest entrepreneurship earns profit |
|
|
Tradeoff
|
A choice, giving something to get something else
|
|
|
opportunity cost
|
choice of the highest-valued alternative forgone (single choice not multiple forgone because it is the highest-valued)
All tradeoffs involve OC |
|
|
Margin
|
When a choice is changed by a small amount or by a little at a time it is made at the margin
*Make choices by evalutating marginal benefit vs. marginal cost |
|
|
Marginal Benefit
|
*Benefit that arises from an increase in activity
*benefit from recieving one more unit of G/S *maximum amount a person is willing to pay |
|
|
Marginal Cost
|
*Cost of an increase in activity
*OC of producing one more unit of good *Best alternative forgone *total cost/increase in output |
|
|
Positive statement
|
What is....
Can be shown to be T/F How the world actually is not what one wishes |
|
|
Normative statement
|
What ought to be....
Matters of opinion |
|
|
Ceteris paribus
|
"other things being equal"
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