Introduction to Microeconomics

These flashcards cover the key concepts of Introductory Microeconomics, including definitions and distinctions between micro and macroeconomic principles, fundamental problems of economics, factors of production, and the economic way of thinking.

Microeconomics

The study of individual economic agents and individual markets, such as the demand and supply of particular goods.

Macroeconomics

The study of economic aggregates, including inflation, exchange rates, unemployment, and economic growth.

Scarcity

The fundamental economic problem indicating that we have limited resources to satisfy unlimited wants.

Constrained Optimization

The process by which individuals and firms make decisions to make themselves as well-off as possible given limited resources.

Factors of Production

The resources used to produce goods and services, categorized into Land, Labour, Capital, and Entrepreneurship.

Opportunity Cost

The highest-valued alternative that must be given up to acquire something.

Rational Choice

A choice that maximizes benefits by comparing costs and benefits.

Self-Interest

The pursuit of choices that are best for the individual making those choices.

Social Interest

Choices that are best for society as a whole, encompassing efficiency and equity.

Positive Statements

Statements that can be tested and validated based on factual evidence.

Normative Statements

Statements that express opinions and cannot be tested, relying on value judgments.

Incentives

Rewards that encourage actions or penalties that discourage actions, impacting decision making.