ECON 102 - Principles of Microeconomics - Final Exam Study Guide

These flashcards cover key concepts and definitions from the Principles of Microeconomics course material from Chapters 1 to 14, aiding students in final exam preparation.

What is an Economic Agent?

Any group or individual that makes choices, such as consumers, firms, parents, politicians.

What are Scarce Resources?

Things that people want, where the quantity wanted often exceeds the quantity available.

What is Positive Economics?

Describes what people actually do.

What is Normative Economics?

Recommends what people, including society, ought to do.

Define Microeconomics.

The study of how individuals, firms, and governments make choices.

Define Macroeconomics.

The study of the whole economy.

What does the Principle of Empiricism entail?

The use of data to test theories and understand how the world works; also referred to as the scientific method.

What does Optimization refer to in economics?

Choosing the best available option when faced with limited resources.

What is Equilibrium in economics?

A situation in which no one would benefit by changing their own behavior.

What is a Trade-off?

When some benefits must be given up in order to gain others.

What is Opportunity Cost?

The best alternative use of a resource, or what you give up.

What does Cost-Benefit Analysis involve?

A calculation that identifies the best option by summing benefits and subtracting costs.

What is the Scientific Method in economic modeling?

A model that is a simplified description of reality based on assumptions.

Define Empirical Evidence/Data.

Facts or information gathered by observation or experiment used to test models.

What is a Hypothesis in economic research?

A prediction generated by a model that can be tested with data.

What is Causation?

When one thing directly affects another.

What does Correlation mean?

When two things are related, but it does not imply causality.

What is meant by Positive Correlation?

Both variables change in the same direction.

What is the Law of Demand?

The quantity demanded rises when the price falls, holding all else equal.

What is Excess Supply?

Occurs when Quantity Supplied (Qs) is greater than Quantity Demanded (Qd).

Define Consumer Surplus (CS).

The difference between what a buyer is willing to pay for a good and what the buyer actually pays.

What is Price Elasticity of Demand?

Measures how much Quantity Demanded (Qd) changes when the good's price changes.

What is the definition of a Monopoly?

An extreme market structure with a single seller of a good or service with no close substitutes.

Define Price Discrimination.

Charging different customers different prices for the same good or service.

What is Nash Equilibrium?

A situation where each player chooses a strategy that is best given the strategies of others.

What is the Herfindahl-Hirschman Index (HHI)?

A measure of market concentration calculated as the sum of the squares of the market shares of each firm.