Microeconomics and Demand Flashcards

Vocabulary flashcards based on lecture notes about Microeconomics and Demand.

Microeconomics

Branch of economics dealing with individual behavior, firms, and individual decision-making.

Microeconomics

Also referred to as Price Theory, acts as an indicator of resource allocation.

Price Determination

Alfred Marshall presented a theory in which both forces of demand and supply interact to determine the price of a product.

Three Central Problems of Economies

What goods/services are produced, How goods/services are produced/distributed, and For whom to produce.

Law of Diminishing Marginal Utility

Theoretical basis for explaining the rationale behind the introduction of progression in taxation.

Basis of Welfare Economics

Built on price theory and allocation of resources should be promoted for the greatest happiness of the greatest number.

Laissez Faire Policy

Assumes free and without interference of government.

Managerial Economics

Business firms making use of microeconomics to make managerial decisions.

Theory of Demand

Studies how the demand for a commodity is determined and the law of demand.

Theory of Production

Studies the theory related to the production of goods with the help of factors of production.

Theory of Price Determination

Deals with the theory of price determination and how the price of goods is produced under different market conditions.

Welfare Economics

Studies welfare economics and spells out an ideal economy, dealing with the welfare of people as consumers and producers.

Theory of Factor Pricing

Income received by the sale of goods produced with the help of different factors of production, interest, and profit.

Demand

Quantity of goods or services a consumer is willing and able to purchase at different price levels in a given time.

Elements of Demand

Essential elements include quantity, willingness to purchase, time period, and price at each quantity level.

Demand Curve

Graph plotting the relationship between price and quantity demanded.

Taste and Preferences

Influenced by the consumer's taste and preferences.

Complementary Goods

Goods used with a primary good.

Substitute Goods

Goods that can be used in place of primary goods.

Demand Function

States the relationship between the demand for a product and its various determinants.

Law of Demand

Explains the tendency of consumer behavior when quantity of a commodity and its price are given.