Intro to Microeconomics: Unit 1

Ch 1,2,3,4, and 19

Economics

How humans make decision in scarcity

Scarity

Humans wants are more than what available

FRED

Database with economic data and research resources

Division of labour

Tasks should be separated among workers to increase efficiency and productivity.

Specialization

A person being good at one task ex host

Economic scale

If production increase than cost decreases

Macroeconomics

Focuses on looking at the economics as a whole

Microeconomics

Looking at induvial agents of the economy

Monetary policy

The process by which a central bank manages the money supply and interest rates to influence economic activity and achieve macroeconomic goals.

Fiscal policy

Government spending and taxes

Theory

How two or more variables may react

Model

Tests theories

Traditional economy

Families make their own goods and services

Command economy

Economic goals are passed down by a ruler/ruling class

Market economy

Induvial or business decides for themselves what good/services people want

Black market

Underground economies making transaction without telling the government

Globalization

Spreading ideas around the world

Exports

Made domestical and sold abroad

Imports

Make abord sold domestically

Gross domestic production (gdp)

Measure total production by taking ratio of exports divided by total economic production sold in a country

Budget Constraints

Show the combination of two goods you could buy

Opportunity Cost

What you give up to get what you desire

Marginal Analysis

What the benefits and costs of added a little more or a little less

Utility

Subjective; peoples satfication of goods

Law of diminishing marginal utility

The more often you enjoy a good, the less you like it (Ex. First slice is better than the sixth)

Sunk Cost

Cost lost in the past, cannot be recovered

Production Possibility Frontier (PPF)

Diagram showing two products and economy could produce

Law of increasing opportunity cost

The more that a good and services is produced, the marginal opportunity cost also goes up

Productive efficiency

Is it possible to produce more of a good without decreasing quantity

Allocative efficiency

Show the combation of goods society wants

Comparative advantage

When a country can produce a good at a lower opportunity cost

Positive statements

Describes the world as it is

Normative statement

Descbrise things as it should be

Resource

Anything that can be used to make something else

Scarce

In short supply

Trade-off

comparison of cost+benefits

Marginal Decision

Do a little more or a little less

Marginal Analysis

Studying marginal decision

Incentive

Rewards to change behavior

Trade

Exchange of goods between two parties

Specialization

Each person does one task to get better at it (ex host)

Where do markets try to go towards

Equilibrium

Efficient

Making someone better off without affecting others

Equity

Everyone gets a fair share

One persons spending is another’s….

income

What are the 3 questions fundamental economic questions about productions?

What to produce? How to produce it? For who are we producing for

Theory of comparative advantage

Produce what you are good at, buy the rest

Absolute Advantage

Producing a good at the lowest opportunity cost

Gain from trade

Getting more produte than you are able to produce