Microeconomics Chapter 1-2

The study of how people collectively and individually manage resources

The study of how individuals and firms manage resources

The study of the economy on a regional, national, or international scale

Making choices to achieve goals in the most effective way possible

The condition of wanting more than we can get with the available resources

The value of what you have to give up in order to get something. The value of the next best alternative

The comparison of the additional benefits of a choice against the additional costs it would bring, without considering related benefits or costs of past choices

A cost that has already been incurred and cannot be refunded

Something that causes people to behave in a certain way by changing the trade-offs that they face

A situation in which resources are used in the most productive way possible to produce goods and services that have the greatest total economic value

A consistently observed relationship between two events or variables

A relationship between two events in which one brings about the other

1. predicts causes and effects
2. makes clear assumptions
3. Describes the real world accurately

Reflects all of the activity involved in buying and selling goods and services. In this market household spend their wages from labor and income from land and capital and firms earn revenue selling their goods and services

Market where households supply land, labor, and capital and firms hire and purchase or rent these inputs

A statement that makes a factual claim about how the world actually works

A statement that makes a claim about how the world should be

Alternative combinations of final goods and services (outputs) that could be produced in a given period of time with all available technology and resources