advance micro PPT1

Microeconomics

- a branch of economics that deals with the behavior of individual economic units—consumers, firms, workers, and investors—as well as the markets that these units comprise.

Macroeconomics

- a branch of economics that deals with aggregate economic variables, such as the level and growth rate of national output, interest rates, unemployment, and inflation.

planned economy

In a ____, these allocation decisions are made mostly by the government. Much of what we will discuss do not apply to these countries. In this economy, prices are set by the government.

market economies

In modern , consumers, workers, and firms have much more flexibility and choice when it comes to allocating scarce resources. In this economy, prices are determined by the interactions of consumers, workers, and firms.

trade-offs

Microeconomics describes the ___ that consumers, workers, and firms face, and shows how these trade-offs are best made.

Theories

In economics, as in other sciences, explanation and prediction are based on theories. ___ are developed to explain observed phenomena in terms of a set of basic rules and assumptions.

Economic theories

_____ are also the basis for making predictions. With the application of statistical and econometric techniques, theories can be used to construct models from which quantitative predictions can be made.

model

A ___ is a mathematical representation, based on economic theory, of a firm, a market, or some other entity.

theory

When evaluating a ___, it is important to keep in mind that it is invariably imperfect. This is the case in every branch of science

Positive Analysis

____ - Analysis describing relationships of cause and effect. *facts

Normative Analysis

- Analysis describing value judgments (What is ought to be?) *opinions

Competitive market

- (often called a perfectly competitive market), many buyers and sellers trade identical products

Noncompetitive markets

- (or imperfectly competitive markets) lack robust competition, allowing firms to act as "price makers".

supply curve

The ___ shows the quantity of a good that producers are willing to sell at a given price, holding constant any other factors that might affect the quantity supplied.

supply curve

The ____ is thus a relationship between the quantity supplied and the price. We can write this generalrelationship as an equation: Q_S = Q_S(P)

demand curve

The ____ shows the quantity of a good that consumers are willing to buy at a given price, holding constant any other factors that might affect the quantity demanded.

- It is the general relationship between the quantity of a good that consumers are willing to buy and the price of the good.

- We can write this relationship between quantity demanded and price as an equation: Q_D = Q_D(P)

substitute goods

In economics, ____ compete to satisfy the same consumer need and can replace each other

complementary goods

whereas ___ are consumed together to provide a combined benefit.

equilibrium

The two curves intersect at the ___, or market-clearing price and quantity.

Equilibrium

At this price, the quantity supplied and the quantity demanded are just equal.

market mechanism

The ____ is the tendency in a free market for the price to change until the market clears i.e., until the quantity supplied and the quantity demanded are equal.

surplus

In economics, a ___ occurs when supply exceeds demand (causing prices to drop)

shortage

whereas a ____ occurs when demand exceeds supply (causing prices to rise).

disequilibrium

In economics, a surplus occurs when supply exceeds demand (causing prices to drop), whereas a shortageoccurs when demand exceeds supply (causing prices to rise). Both states represent market ____, acting as self-correcting signals that ultimately push the market back toward balance.

Advanced Microeconomics

- Explores how individual economic agents (consumer and firms) allocate limited resources, shifting from basic principles to rigorous mathematical modeling. It builds foundational frameworks in consumer and producer theory before advancing into general equilibrium, game theory, and the economics of information.