Introduction to Microeconomics

These flashcards cover key concepts and definitions related to microeconomics, focusing on fundamental terms, theories, and market dynamics.

Economics

The study of how people act in their everyday lives, including how they earn and spend their income.

Microeconomics

The branch of economics that studies individual consumers and firms, focusing on their decision-making processes and the consequences for markets.

Scarcity

The limited availability of resources to meet unlimited wants, leading to the need for economic study.

Market Equilibrium

The state in which economic forces are balanced, where quantity demanded equals quantity supplied.

Law of Demand

States that there is an inverse relationship between quantity demanded and the price of a commodity.

Elasticity

Measures how much one variable responds to changes in another variable, particularly in terms of demand or supply in economics.

Normal Goods

Goods that people tend to buy more of when their income increases.

Inferior Goods

Goods that people usually buy less of as their income increases.

Trade-Offs

The decision-making process that involves giving up one thing to get another.

Demand Curve

A graphical representation of the relationship between the price of a commodity and the quantity demanded.

Substitution Effect

The change in quantity demanded of a good due to a change in its price relative to substitute goods.

Marginal Utility

The additional satisfaction a consumer gains from consuming one more unit of a good.

Cross-Price Elasticity of Demand

The percentage change in the quantity demanded of one good in response to a percentage change in the price of another good.