Vietnam Economics Olympiad - Microeconomics

Flashcards covering key concepts from the lecture on microeconomics.

Economics

The study of how a society manages its scarce resources to fulfill the needs and wants of its people.

Scarcity

The limitation of resources relative to the wants and needs of a society.

Opportunity Cost

The opportunity cost of an item is what you give up to obtain that item; the next best alternative forgone.

Market Economy

An economy characterized by private ownership of resources and the use of market and prices to coordinate economic activities.

Command Economy

An economy in which resources are owned by the government and economic decision making occurs through a central economic plan.

Microeconomics

The branch of economics that studies the behavior of individual economic units such as consumers and firms.

Macroeconomics

The branch of economics that studies the aggregate behavior of the economy.

Demand

The amount of some good or service that consumers are willing and able to purchase at each price.

Law of Demand

All else equal, as the price falls the quantity demanded rises, and as the price rises, the quantity demanded falls.

Supply

The amount of a product that producers are willing and able to sell at each price.

Law of Supply

All else equal, as price rises the quantity supplied rises, and as price falls the quantity supplied falls.

Market Equilibrium

Achieved at the price where quantities demanded and supplied are equal.

Price Ceiling

A legal maximum on the price at which a good can be sold.

Price Floor

A legal minimum on the price at which a good can be sold.

Elasticity

A measure of how much buyers and sellers respond to changes in market conditions.

Cross Price Elasticity of Demand

A measure of the responsiveness in quantity demanded of one good to changes in the price of another good.

Income Elasticity of Demand

A measure of the responsiveness in quantity demanded to changes in income.

Indifference Curve

A curve that shows all combinations of goods that provide a consumer with the same level of satisfaction.

Total Revenue

The amount that a seller receives from the sale of a good, calculated as price times quantity.

Market Failure

A circumstance where private markets do not allocate resources that best satisfy society's wants.