Microeconomics Concepts and Decision Making

A set of flashcards covering key vocabulary and concepts in microeconomics related to decision making, opportunity costs, and factors of production.

Opportunity Cost

The loss of potential gain from other alternatives when one alternative is chosen.

Utility

A measure of satisfaction or pleasure derived from consuming goods and services.

Marginal Benefit

The additional satisfaction or utility gained from consuming one more unit of a good or service.

Marginal Cost

The additional cost incurred from consuming one more unit of a good or service.

Microeconomics

The branch of economics that studies individual agents and their interactions in markets.

Macroeconomics

The branch of economics that studies the behavior and performance of an economy as a whole.

Production Possibilities Frontier (PPF)

A curve depicting all maximum output possibilities for two goods given a set of inputs.

Budget Constraint

A line that represents the combinations of goods a consumer can purchase given their income and the prices of those goods.

Positive Statement

A statement that can be tested and validated; it describes what is.

Normative Statement

A statement that expresses a judgment or opinion about what ought to be; it cannot be tested.

Factors of Production

The inputs used to produce goods and services, typically classified as land, labor, capital, and entrepreneurship.

Rational Self-Interest

The assumption in economics that individuals make decisions aimed at maximizing their utility.

Trade Off

The concept of giving up something in order to gain something else.

Altruism

The selfless concern for the well-being of others, which can also increase one's own utility.

Human Capital

The economic value of a worker's experience and skills.