question
Explicit Cost
answer
a cost that involves spending money
question
implicit costs
answer
input costs that do not require an outlay of money by the firm
question
sunk cost
answer
Nonrefundable cost, not relevant to decision making
question
Micro
answer
Study of individual decision making units within the economy
question
Macro
answer
Study of Opp. of economy as whole/nation
question
Positive analysis traits
answer
-attempts to explain what is or what is not
-scientific method
-data driven
-testable
-scientific method
-data driven
-testable
question
Normative analysis traits
answer
-attempts to explain what should or should not be
-opinion driven
-not testable
-trying to predict a behavior
-opinion driven
-not testable
-trying to predict a behavior
question
Three types of models
answer
1) economic model
2) circular flow model
3)plotted models
2) circular flow model
3)plotted models
question
Edogenous variables
answer
variable in a statistical model that's changed or determined by its relationship with other variables within the model.
question
exogenous variable
answer
variable that affects the outcome of the model, is taken as given but can change over time
question
PPF equation
answer
Q=F[A(K,L)]
Q= Quanity
F= function of
A= productivity measure
K= capital
L= labor
Q= Quanity
F= function of
A= productivity measure
K= capital
L= labor
question
PPF assumptions
answer
1) society producing 2 goods
2)resources are fully utilized
3)hold technology constant
2)resources are fully utilized
3)hold technology constant
question
law of increasing opportunity cost
answer
the more of a good produced the greater the opp cost is to make 1 additional unit
question
What does an outward shift of the PPF show?
answer
economic growth
question
What does a pivot shift of the PPF show?
answer
Change in resources, technology
question
Two different types of decision?
answer
1) either or?
2) how many/ how much?
2) how many/ how much?
question
either or decisions
answer
when faced with a choice between two activities, choose the one with the positive economic profit
question
marginal analysis
answer
change in economic benefit and opp cost for each additional unit of consumption/ production
question
marginal benefit
answer
incrimental increase in total utility/benefit for each additional unit of a good consumed
question
law of diminishing marginal utility
answer
the principle that consumers experience diminishing additional satisfaction as they consume more of a good or service during a given period of time
question
marginal cost
answer
incrimental increase in opp cost for each additional unit consumed/produced
question
Law of Demand
answer
inverse relationship between price and quantity demanded
question
Demand Function equation
answer
Qd=-(D)P+X
Q= quantity
D= price sensitivity
P= price
X= exogenous variable
Q= quantity
D= price sensitivity
P= price
X= exogenous variable
question
What are the two ways the price of good are related?
answer
1) substitution for one another
2) compliments of each other
2) compliments of each other
question
Law of Supply
answer
producers offer more of a good as its price increases and less as its price falls
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