Microeconomics - College Level

Front 1

what are resources?

Back 1

the inputs or factors used to produce the goods and services that people want.

Front 2

what are the 4 broad categories of resources?

Back 2

labor
capital
natural resources
entrepreneurial ability

Front 3

what is labor?

Back 3

human effort, both physical and mental

Front 4

what is capital?

Back 4

all human creations used to produce goods and services.

Front 5

what are some things that are considered physical capital?

Back 5

factories, tools, machines, computers, buildings, airports, highways, etc.

Front 6

what is human capital?

Back 6

knowledge and skills people acquire to increase their productivity

Front 7

what are natural resources?

Back 7

gifts of nature, including bodies of water, trees, oil reserves, mineral, and even animals.

Front 8

what is a renewable resource?

Back 8

a natural resource that can be drawn on indefinitely if used conservitively. i.e. timber is renewable if felled trees are replaced steadily

Front 9

what is an exhaustible resource?

Back 9

it does not renew itself and is available in a limited amount. i.e. oil, coal, or copper ore

Front 10

what is the $ related to labor?

Back 10

wages

Front 11

what is the $ related to capital?

Back 11

interest

Front 12

what is the $ related to the use of natural resources?

Back 12

rent

Front 13

what is the $ for entrepreneurial ability?

Back 13

profit

Front 14

what is a good?

Back 14

something you can see, feel, and touch; it requires scarce resources to produce and it satisfies human wants.

Front 15

what is a service?

Back 15

something that is intangible, yet it uses scarce resources to satisfy human wants.
i.e. lectures, movies, concerts, phone service, yoga lessons, dry cleaning, and haircuts.

Front 16

how is it determined whether or not a good is scarce?

Back 16

a good is scarce if the amount people desire exceeds the amount available at a zero price.

Front 17

what does the phrase "there is no such thing as free lunch" mean?

Back 17

that even if something is free to you, it has come at a cost to someone.

Front 18

what are markets?

Back 18

the means by which buyers and sellers carry out exchange.

Front 19

what is rational self-interest?

Back 19

when individuals try to maximize the expected benefit achieved with a given cost; or to minimize the expected cost of achieving a given benefit.

Front 20

what does marginal mean?

Back 20

incremental, additional, or extra

Front 21

what is microeconomics?

Back 21

the study of your economic behavior and the economic behavior of others who make choices about such matters as how much to borrow and save, what to buy and sell.

Front 22

what is macroeconomics?

Back 22

the study of the performance of the economy as a whole.

Front 23

what is an economic theory/model?

Back 23

a simplification of economic reality that is used to make predictions about the real world.

Front 24

what is a variable?

Back 24

a measure that can take on different values at different times.

Front 25

what is the primary behavioral assumption?

Back 25

rational self-interest

Front 26

what is a hypothesis?

Back 26

a theory about how key variables relate to each other.

Front 27

what is a positive economic statement?

Back 27

an assertion about economic reality that can be supported or rejected by reference to the facts.

Front 28

what is a normative economic statement?

Back 28

a statement that reflects an opinion; it can not be shown to be true or false by reference to the facts.

Front 29

what is the assocation-is-causation fallacy?

Back 29

a common error of assuming that event A caused event B simply because the two are associated in time.

Front 30

what is the fallacy of composition?

Back 30

an erroneous belief that what is true for the individual, or the part, is also true for the group, or the whole.

Front 31

what are secondary effects?

Back 31

unintended consequences

Front 32

what is opportunity cost?

Back 32

the value of the best alternative that is forgone. (i.e. opportunity lost)

Front 33

what is sunk cost?

Back 33

a cost that has already been incurred and cannot be recovered, regardless of what you do next.

Front 34

what is the law of comparative advantage?

Back 34

the individual with the lower opportunity cost of producing a particular output should specialize in producing that output.

Front 35

what is an absolute advantage?

Back 35

when you make something using fewer resources than other producers require.

Front 36

what is comparative advantage?

Back 36

specializing in the task for which you have the lower opportunity cost. (i.e. you may be better at ironing than sewing)

Front 37

what is bartering?

Back 37

when products are traded directly for other products.

Front 38

what are mediums of exchange?

Back 38

something everyone accepts in return for good and services- money !

Front 39

what is division of labor?

Back 39

when each worker specializes in a separate task rather than preparing the entire thing.

Front 40

what does specialization of labor allow for?

Back 40

the introduction of more sophisticated techniques that would not make sense on a smaller scale.

Front 41

what is efficiency?

Back 41

getting the most from available resources.

Front 42

what is the purpose of the production possibilities frontier (PPF)?

Back 42

to identify possible combinations of two types of goods that can be produced when all available resources are employed efficiently.

Front 43

what is the law of increasing opportunity cost?

Back 43

if the economy uses all resources efficiently, each additional increment of one good requires the economy to sacrifice successively larger and larger increments of the other good.

Front 44

what is economic growth?

Back 44

an expansion in the economy's production possibilities.

Front 45

what are the rules of the game?

Back 45

the formal and informal institutions that support the economy- the laws, custons, manners, conventions, and other institutional underpinnings that encourage people to pursue productive activity.