Microeconomics Revision Flashcards

These flashcards focus on key concepts, definitions, and significant terms from the Microeconomics lecture on the market system and circular flow.

Economic Systems

Institutional arrangements coordinating the use of markets and government control in decision-making.

Laissez-Faire Capitalism

An economic system where the government does not interfere with market activities.

The Command System

An economic system characterized by government ownership of resources and central planning.

The Market System

A system that combines decentralized decision-making with some degree of government control.

Private Property

Ownership of resources and goods by individuals or businesses.

Consumer Sovereignty

The concept that consumer preferences determine the production of goods and services.

The Five Fundamental Questions

What goods/services will be produced? How will they be produced? Who will get them? How will the system change? How will it promote technological progress?

Specialization

The division of labor and focus on specific tasks to increase efficiency.

The Invisible Hand

A concept by Adam Smith that suggests individuals’ pursuit of self-interest can benefit society as a whole.

Creative Destruction

The hypothesis that innovation leads to the downfall of established businesses, making way for new products and production methods.

The Circular Flow Model

A model representing the flow of goods, services, and money between households and businesses.

Business Risks

Potential losses faced by business owners and investors due to various factors affecting their operations.

Hyperinflation

An extremely high and typically accelerating inflation rate, causing a rapid erosion of the real value of the local currency.

Bolivarian Socialism

A political ideology that aims to create a socialist society in Venezuela, often associated with the policies of Hugo Chávez.