microecon

Here’s an organized study guide combining your terms from earlier and the additional list into categories for easier review:

1. Fundamentals of Economics

  • Economics: Study of how we handle scarcity and exchange goods/services.

  • Scarcity: Nothing is unlimited—money, resources, labor, or time—except our wants.

  • Positive Economics: Objective economic analysis.

  • Normative Economics: Non-objective, expresses value judgments.

  • Trade-offs: What you give up when making a decision, created by scarcity.

  • Opportunity Cost: The next best thing that you gave up in making a decision.

  • Ceteris Paribus: All else being equal.

2. Economic Systems

  • Economic System: The relationship between people, the government, businesses, and the rest of the world (e.g., traditional, command, market economies).

  • Traditional Economy: Based on barter and agriculture.

  • Command Economy: Government controls production and distribution.

  • Market Economy: Firms decide production based on consumer choices.

3. Microeconomics

  • Microeconomics: Study of smaller scales—cities, individual firms, or industries.

  • Consumer Goods: Used by customers for personal use.

  • Capital Goods: Used to produce other goods.

  • Utility: Total satisfaction from consuming a good/service.

    • Total Utility: Aggregate satisfaction from all consumption.

    • Marginal Utility: Additional satisfaction from one more unit.

    • Law of Diminishing Marginal Utility: Satisfaction decreases with each additional unit consumed.

  • Budget Constraint: Limitations due to limited resources.

  • Utility Maximizing Rule: Spend money so each dollar gives the same marginal utility.

4. Macroeconomics

  • Macroeconomics: Study of larger scales—nation-wide, international, and corporate economies.

  • Economic Growth: Increasing ability to satisfy people's wants.

  • Full Employment: All available resources are used.

  • Full Production: All resources used to maximize fulfillment of unlimited wants.

5. Market Concepts

  • Demand: Consumer willingness to purchase at various prices.

    • Law of Demand: Lower price = more demand, higher price = less demand.

    • Elastic Demand: Large changes in demand for small price changes.

    • Inelastic Demand: Little change in demand for price changes.

    • Factors of Demand: Price, income, substitutes, preferences, expectations, number of consumers.

    • Change in Demand: Shift in the entire curve.

    • Quantity Demanded: Specific point on the curve.

  • Supply: Producer willingness to sell at various prices.

    • Law of Supply: Higher price = more supply; lower price = less supply.

    • Factors of Supply: Input prices, technology, expectations, number of producers.

    • Change in Supply: Shift in the entire curve.

    • Quantity Supplied: Specific point on the curve.

  • Equilibrium: Where supply and demand meet.

    • Price Ceiling: Max price enforced by government.

    • Price Floor: Min price enforced by government.

6. Production and Costs

  • Factors of Production: Land, labor, capital, and entrepreneurship.

    • Land: Natural resources (e.g., oil, grass).

    • Labor: Physical work involved.

    • Capital: Money/resources needed to produce.

    • Entrepreneurship: Innovation and knowledge required.

  • Fixed Costs: Costs that don't change.

  • Variable Costs: Costs that vary with output.

  • Total Costs: Fixed + Variable Costs.

  • Marginal Cost (MC): Additional cost from producing one more unit.

  • Economies of Scale: Cost advantages from business expansion.

  • Diseconomies of Scale: Cost disadvantages from growing too large.

  • Law of Diminishing Marginal Returns: Additional input yields progressively smaller returns.

7. Market Structures

  • Pure Competition: Many firms, identical products, price set by the market.

  • Pure Monopoly: One firm dominates, controls prices.

  • Monopolistic Competition: Many firms, differentiated products.

  • Oligopoly: Few firms, can be homogeneous or differentiated products.

  • Imperfect Competition: Includes monopolies, oligopolies, and others.

  • Natural Monopoly: A monopoly that occurs naturally (e.g., utilities).

8. Taxes and Income Distribution

  • Tax Types:

    • Progressive Tax: Higher income = higher percentage paid.

    • Regressive Tax: Higher income = lower percentage paid.

    • Proportional Tax: Everyone pays the same percentage.

  • Lorenz Curve: Graph showing income inequality.

  • Poverty Line: Income level below which a family is considered in poverty.

  • Negative Income Tax: Subsidies for those under the poverty line.

9. Externalities and Public Goods

  • Externalities: Effects on third parties.

    • Negative Externality: Harm (e.g., pollution).

    • Positive Externality: Benefits (e.g., education).

    • Pigouvian Taxes: Tax on firms causing negative externalities.

  • Public Goods:

    • Non-Excludable: Everyone can use them (e.g., streetlights).

    • Non-Rival in Consumption: One's use doesn’t reduce availability (e.g., public parks).

  • Private Goods:

    • Excludable: Only those who pay can use.

    • Rival in Consumption: Use by one person reduces availability.

10. Special Topics

  • Game Theory: Mathematical decision-making method.

    • Prisoner’s Dilemma: Scenario showing strategic decision-making.

    • Nash Equilibrium: No one benefits from changing strategy alone.

  • Black Market: Market operating outside government regulation.

  • Pigouvian Subsidy: Incentive for firms creating positive externalities.

  • Tradable Emissions Permits: Permits to regulate pollution.

Key Rules and Principles

  • MR = MC Rule: Firms maximize profit where marginal revenue equals marginal cost.

  • Utility Maximization: Equalize marginal utility per dollar spent.

  • Marginal Productivity Theory: Income distributed based on societal contribution.

This guide can help you study efficiently by focusing on each section individually. Let me know if you'd like additional features, like flashcards, quizzes, or examples!