question
Scarcity
answer
Desired but not enough to meet demand
question
Opportunity cost
answer
best alternative sacrificed for a chosen alternative
question
Macro-economics
answer
societal level
question
Micro-economics
answer
individual level
question
Markets
answer
buyers and sellers exchange goods and services
question
Amoral
answer
lacking ethical principles
question
Strong Assumptions
answer
unrealistic, simple models
question
Weak Assumptions
answer
realistic, complex models
question
Role of assumptions
answer
simplify complex world
question
Ceteris Paribus
answer
all other things held constant
question
Assumptions
answer
a systematic abstraction from reality
question
Rational
answer
logical
question
Utility
answer
satisfaction from consumption
question
Consume
answer
to derive utility
question
Goods
answer
tangible things that can be stored
question
Services
answer
intangible things that cannot be stored
question
Marginal Utility
answer
satisfaction from one unit
question
Total Utility
answer
total satisfaction from consuming good or service
question
Diminishing Marginal Utility
answer
as time passes then productivity will decrease
question
Decision Rule Model
answer
how we make choices
question
Satiate
answer
to satisfy
question
Bliss Point
answer
total satisfaction achieved with no scarcity
question
Relaxing Assumptions
answer
assumptions become weaker for complexity and reality
question
Constrained Optimization Problem
answer
maximize utility while facing scarcity
question
Constrained Optimization equation
answer
MU1=MU2=..MUn or MU1/time=MU2/time=MUn/time
question
Endowment
answer
all natural resources from goods and services are produced
question
Finite
answer
limited
question
Marginal Product
answer
an additional output that comes from an additional unit of input
question
Marginal Product Equation
answer
MP1=MP2=MP3=MPn=0
question
Value of the Marginal Product
answer
utility for last marginal unit of input towards a given product
question
Intertemporal Choices
answer
choices across time
question
Discount Rates
answer
your waiting rate
question
Present Value
answer
future utility from a choice is worth to one now
question
Risk
answer
negative outcome that can not control but can assign a probability to
question
Uncertainty
answer
negative outcome that can not have a probability
question
Expected Present Value
answer
present value of an option adjusted for ones perception of the risk associated with that choice
question
Rare
answer
infrequent, demand does not matter
question
Errors in Economic Theory
answer
Lack of care, bias
question
Factors of production
answer
basic inputs we use to produce
question
Natural Resources
answer
Raw materials from nature
question
Labor
answer
human work
question
Capital
answer
produced means of prouduction
question
Physical capital
answer
tools and machines
question
Human capital
answer
knowledge and skills to increase productivity
question
Marginal Productivity
answer
additional output that comes from an additional unit of input
question
Value from the Marginal Product equation
answer
V = MP + MU
question
Marginal Product Value Equation
answer
V1=V2=V3=Vn
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