Exam (elaborations)
MICROECONOMICS Key Terms questions with correct answers
- Course
- Institution
MICROECONOMICS Key Terms Exam
[Show more]
Seller
Follow
Content preview
MICROECONOMICS Key TermsEconomics - answersstudy of how individuals and societies deal with scarcity; study of
choices
Scarcity - answersunlimited wants but limited resources
Microeconomics - answersstudy of small economic units such as individuals, firms, and
industries (ex: supply and demand in specific markets, production costs, labor
markets...)
Theoretical Economics - answersuse scientific method to make generalizations and
abstractions to develop theories.
Policy Economics - answerstheories are applied to fix problems or meet economic goals
Positive Statements - answersbased of facts; avoid value judgments (what is)
Normative Statement - answersincludes value judgments (what ought to be)
5 Key Economic Assumptions - answers1. Scarcity
2. Trade-off
3. Make choices that maximize satisfaction
4. Make decisions by comparing the marginal costs and marginal benefits of every
choice
5. Real-life situations can be explained and analyzed through simplified models and
graphs
Marginal Analysis - answersthinking on the margin; decisions based on the additional
benefit vs. the additional costs
Marginal = Additional
Trade-offs - answersall the the alternatives that we give up whenever we choose one
course of action over others
, Opportunity Cost - answersmost desirable alternative given up as a result of a decision
Economic Terminology - answersUtility = Satisfaction
Marginal = Additional
Allocate = Distribute
Shortage - answerswhen producer will not or cannot offer goods or services at current
prices; it is temporary
Price - answersamount buyer pays
Cost - answersamount seller pays to produce a good
Investment - answersthe money spent by businesses to improve their production
Goods - answersphysical objects that satisfy needs and wants
Consumer Goods - answerscreated for direct consumption (ex. pizza)
Capital Goods - answerscreated for indirect consumption; goods used to make
consumer goods (ex. oven, blenders, knives...)
Services - answersactions or activities that one person performs for another (ex.
teaching, cleaning, cooking)
Explicit Costs - answerstraditional "out-of-pocket costs" of decision making
Implicit Costs - answersopportunity costs (ex. forgone time and forgone income)
4 Factors of Production - answers1. Land
2. Labor
3. Capital
4. Entrepreneurship
Land - answersall natural resources that are used to produce goods and services
Labor - answersany effort a person devotes to a task for which that person is paid
Physical Capital - answersany human-made resource that is used to create other goods
and services
Human Capital - answersany skills or knowledge gained by a worker through education
and experience
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller SALVADO. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $16.49. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
81989 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now