Microeconomics Essential Concepts
A system for coordinating a society's productive and consumptive activities -
answerseconomy
An economy in which the decisions of individual producers and consumers largely
determine production - answersmarket economy
Something that can be used to produce something else - answersresource
another name for a resource is a: - answersfactor of production
4 categories of FOP's: - answersland, labor, physical capital, and human capital
opportunity cost - answerswhat you must give up in order to get an item you want
economic analysis used to answer questions about how the world works; definite right
and wrong answers - answerspositive economics
economic analysis saying how the world should work - answersnormative economics
simplified version of reality used to better understand real world situations -
answersmodel
ceteris paribus - answersother things equal
circular flow diagram - answersrepresents the flow of goods and money in the economy.
Households purchase goods and services from firms; firms purchase FOP from the
households in factor markets. Money circulates
firm - answersorganization or business that produces goods or services for sale and
employs members of households
, product market - answersmarket in which households buy the goods and services they
want from firms
factor market - answersfirmest buy the FOP's they need to produce goods and services
one person's spending is another person's: - answersincome
PPF's are useful when thinking about the __________ necessary in an economy -
answerstrade-offs
an efficient economy has no missed ____________ - answersopportunities
efficiency requires that the economy ___________________ so that consumers are as
well off as possible - answersallocate its resources
the bowed-out shape of the PPF reflects increasing: - answersopportunity cost
economic growth means an expansion of the economy's: - answersproduction
possibilities (shift in PPF curve)
________ is the key to a much better standard of living for everyone - answerstrade
gains from trade arise from: - answersspecialization
when the opportunity cost for production of a good is lower for one country than for
other countries, that particular country has a(n): - answerscomparative advantage in
producing something
if one country can produce more output per worker than other countries, they have a(n):
- answersabsolute advantage in producing that good
a market in which there are many buyers and sellers of the same good or service -
answerscompetitive market
Name the five key components of the supply and demand model - answersthe demand
curve, the supply curve, the set of factors that causes either curve to shift, the market
equilibrium, and the way equilibrium changes as the supply and demand curves shift
the actual amount consumers are willing to buy at some specific price - answersquantity
demanded
What changes a shift in the demand curve? - answerspopulation increase/decrease;
changes in income; changes in tastes; changes in the prices of related goods or
services; change in popularity of good/service
A system for coordinating a society's productive and consumptive activities -
answerseconomy
An economy in which the decisions of individual producers and consumers largely
determine production - answersmarket economy
Something that can be used to produce something else - answersresource
another name for a resource is a: - answersfactor of production
4 categories of FOP's: - answersland, labor, physical capital, and human capital
opportunity cost - answerswhat you must give up in order to get an item you want
economic analysis used to answer questions about how the world works; definite right
and wrong answers - answerspositive economics
economic analysis saying how the world should work - answersnormative economics
simplified version of reality used to better understand real world situations -
answersmodel
ceteris paribus - answersother things equal
circular flow diagram - answersrepresents the flow of goods and money in the economy.
Households purchase goods and services from firms; firms purchase FOP from the
households in factor markets. Money circulates
firm - answersorganization or business that produces goods or services for sale and
employs members of households
, product market - answersmarket in which households buy the goods and services they
want from firms
factor market - answersfirmest buy the FOP's they need to produce goods and services
one person's spending is another person's: - answersincome
PPF's are useful when thinking about the __________ necessary in an economy -
answerstrade-offs
an efficient economy has no missed ____________ - answersopportunities
efficiency requires that the economy ___________________ so that consumers are as
well off as possible - answersallocate its resources
the bowed-out shape of the PPF reflects increasing: - answersopportunity cost
economic growth means an expansion of the economy's: - answersproduction
possibilities (shift in PPF curve)
________ is the key to a much better standard of living for everyone - answerstrade
gains from trade arise from: - answersspecialization
when the opportunity cost for production of a good is lower for one country than for
other countries, that particular country has a(n): - answerscomparative advantage in
producing something
if one country can produce more output per worker than other countries, they have a(n):
- answersabsolute advantage in producing that good
a market in which there are many buyers and sellers of the same good or service -
answerscompetitive market
Name the five key components of the supply and demand model - answersthe demand
curve, the supply curve, the set of factors that causes either curve to shift, the market
equilibrium, and the way equilibrium changes as the supply and demand curves shift
the actual amount consumers are willing to buy at some specific price - answersquantity
demanded
What changes a shift in the demand curve? - answerspopulation increase/decrease;
changes in income; changes in tastes; changes in the prices of related goods or
services; change in popularity of good/service
