Principles of Microeconomics

Flashcards covering key concepts from the Principles of Microeconomics lecture on economic forces, decision making, and market structures.

Scarcity refers to the fact that our resources are__ while our wants are___

limited; unlimited

Marginal cost is defined as the __ cost to you beyond the cost you have already incurred.

additional

Sunk cost is a cost which __ be recovered.

cannot

The opportunity cost of using resources in one activity is the __ of those resources used in their next best alternative.

value

Consumers in households aim to maximize __ or satisfaction.

utility

Firms act to maximize __ in their production activities.

profits

Economic models assume that all individuals act in their own __.

self-interest

The Production Possibilities Model illustrates all possible combinations of goods and services that can be produced with a __ set of resources.

fixed

The law of increasing opportunity cost means:

The more you make of one thing, the more you have to give up of something else.

Allocative efficiency means:

Producing the mix of goods that people want the most (preffered)

The comparative advantage exists when one can produce a product at a __ opportunity cost than another.

lower

Positive statements are based on __, while normative statements are based on opinions and judgments.

facts

The __ flow model represents the interaction between consumers and producers in an economy.

circular

Demand refers to the relationship between the __ demanded and the product price.

quantity

Marginal benefit means:

the extra benefit you get from doing one more of something.