Micro Chapters 1-5

First Principles

Fundamental concepts that form the basis for a theory or system.

Economic Models

Simplified representations of economic processes used to understand and predict behavior.

Trade-offs

Alternatives that must be given up when one option is chosen over others.

Supply and Demand

Economic model that determines price in a market based on the quantity of goods available and the desire of consumers.

Consumer Surplus

The difference between what consumers are willing to pay for a good and what they actually pay.

Producer Surplus

The difference between what producers are willing to accept for a good and the price they actually receive.

Price Controls

Government-imposed limits on the prices that can be charged for goods and services.

Quotas

Limits on the amount of a product that can be produced or imported.