Microeconomics Midterm Exam Review

A situation in which unlimited wants exceed the limited resources available to fulfill those wants

in, at, or near the edge or margin; only barely good, large, or important enough for the purpose

the additional benefit to a consumer from consuming one more unit of a good or service

anything that motivates a person to do something

deciding whether to do or use one additional unit of some resource

What to produce? How to produce? For whom to produce?

a scenario where different economic firms are in contention to obtain goods that are limited by varying prices, products, places

the act of buyers and sellers freely and willingly engaging in market transactions

an economic system combining private and public enterprise.

the fair distribution of economic benefits

using resources in such a way as to maximize the production of goods and services

an economy in which the government decides how economic resources will be allocated

analysis concerned with what is

analysis concerned with what ought to be (opinion)

social science

the study of how households and firms make decisions and how they interact in markets

the study of economy-wide phenomena, including inflation, unemployment, and economic growth

Revenue= all money made for a company (Price X Quantity)

Profit= money left over after paying for all costs, plus expenses (Revenue - Expenditures)

the skills and knowledge gained by a worker through education and experience

the process of starting, organizing, managing, and assuming the responsibility for a business

the stock of equipment and structures that are used to produce goods and services

An improvement of an existing technological product, system, or method

the means through which goods and services are produced

land, labor, capital, entrepreneurship

a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology

The next best alternative use of money, time, or resources when a choice is made

Medical cost and consumption has gone up and will always go up

the ability to produce more of a given product using a given amount of resources

the ability to produce a good at a lower opportunity cost than another producer

a market where productive resources are bought and sold

the market in which households purchase the goods and services that firms produce

factors of production

A diagram that traces the flow of resources, products, income, and revenue among economic decision makers

English economist who advocated the use of government monetary and fiscal policy to maintain full employment without inflation

Recognized as the father of communism. Believed in a classless society.

Said "An increase of labour and capital leads generally to improved organization which increases the efficiency of the work of labour and capital

Scottish economist who wrote the Wealth of Nations a precursor to modern Capitalism (no government intervention)

Economic decisions are made by individuals or the open market.

An economic system in which prices and wages are determined by unrestricted competition between businesses, without government regulation or fear of monopolies.

term economists use to describe the self-regulating nature of the marketplace

An "increase in demand" is represented by a rightward shift of the demand curve

An "increase in quantity demanded" is represented by a movement along a given demand curve.

The major difference in both terms is that Individual demand refers to the quantity demanded by a single consumer whereas Market demand refers to the quantity demanded by all consumers in the market.

a table that shows the relationship between the price of a good and the quantity demanded

a good that consumers demand more of when their incomes increase

a good that consumers demand less of when their incomes increase

a product often used with another product

A product that can be used in place of another product

all other things held constant

the demand curve for a luxury is more elastic than the demand curve for a necessity

the change in the quantity demanded of a good that results from the effect of a change in the good's price on consumers' purchasing power

consumers buy more of a good when its price decreases and less when its price increases

A situation in which quantity demanded is greater than quantity supplied

A situation in which quantity supplied is greater than quantity demanded

A legal maximum on the price at which a good can be sold

A legal minimum on the price at which a good can be sold

the manner in which the burden of a tax is shared among participants in a market

The demand for a product is highly responsive to price changes. The range of a demand curve where elasticities of demand are greater than 1.0.

The demand for a product is not very responsive to price changes. The range of a demand curve where elasticities of demand are less than 1.0.

substitutability, proportion of income, luxuries vs necessities, time

Price x Quantity

sensitivity of demand for a product relative to changes in income

a measure of how much the quantity demanded of one good responds to a change in the price of another good.

Computed as the percentage change in quantity demanded of the first good divided by the percentage change in the price of the second good

a measure of the way quantity supplied reacts to a change in price