Microeconomics: Limits, Alternatives, and Choices

Flashcards covering key concepts from the lecture on Microeconomics, including definitions and explanations related to economics, scarcity, opportunity costs, production possibilities, and more.

Economics

A social science concerned with making optimal choices under conditions of scarcity.

Scarcity

A situation where economic wants exceed society's productive capacity.

Opportunity Cost

The cost of the next best alternative that must be forgone when making a decision.

Marginal Analysis

The comparison of marginal benefits and marginal costs for decision-making.

Microeconomics

The study of individual consumers, firms, or markets.

Macroeconomics

The study of the entire economy or major aggregates of the economy.

Positive Economics

Economic statements that are factual and can be tested or proven.

Normative Economics

Economic statements that involve value judgments and opinions.

Production Possibilities Model

An economic model that shows different combinations of two goods that an economy can produce.

Law of Increasing Opportunity Costs

As more of a particular good is produced, its marginal opportunity costs increase.

Entrepreneurial Ability

A special human resource that involves innovation and risk-taking in the production process.

Budget Line

A graphical representation showing the combinations of two goods that can be purchased with a given income.

Ceteris Paribus

The assumption that all other variables are held constant when analyzing the relationship between two variables.

Factors of Production

Resources used in the production of goods and services, including land, labor, capital, and entrepreneurial ability.

Full Employment

A situation where all who are willing and able to work at prevailing wage rates can find employment.

Graphical Expression

A visual representation of economic data or principles, often using graphs.

Utility

The satisfaction or benefit derived from consuming a good or service.