Microeconomics UNIT 1 & 2

Land

Any natural resource or raw material that is used to produce goods and services, including minerals, water, and agricultural land.

role of property rights in market economy

they create more efficient outcomes and expand the wealth

opportunity cost

includes both implicit and explicit costs. basic items like food, shelter and clothes do not account for opportunity cost because we do this stuff anyway.

What causes a PPC to be concave

the resources used to produce one good are not perfectly adaptable to produce the other good.

What causes a PPC to be a straight line

the resources used to produce one good are perfectly adaptable to produce another good.

what can cause a ppc to shift outward or inward

an increase or decrease in the quantity or quality of resources

comparative advantage

The ability to produce an item with a lower opportunity cost than some other person, country, or economy.

absolute advantage

The ability to produce an item in greater quantities or using fewer resources than some other person, country, or economy.

output problem

what you give up/what you gain

input problem

what you gain/what you give up

Marginal utility when consumption is given

consume less of what gives you less MU and more of what gives you more MU

a change in quantity demanded/supplied comes from a change in

price

what does not change demand

price

elastic

P and TR are in opposite directions

inelastic

TR and P are in the same direction

PED formula

XED formula

economic surplus

CS + PS + tax revenue