Chapter 1 Microeconomics – Flashcards
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economic resources needed to make goods and services are in limited supply. This ___ restricts options and demands choices.
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Scarcity
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True or False: "there is no free lunch"
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true
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Such sacrifices like mangerial talent and scarce inputs of land are called
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opportunity costs: to obtain more of one thing, society forgoes the opportunity of getting the next best thing.
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Human behavior reflects
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"rational self-interest"
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the pleaure, happiness, or satisfaction obtained from consuming a good or service.
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utility
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people make decisions with some desired outcome in mind
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purposeful behavior
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Rational self-interest is NOT the same as
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selfishness
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behavior designed to increase personal satisfaction, however it may be derived
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self-interested behavior
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comparisons of marginal benefits and marginal costs, usually for decision making. "extra", "additional"
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marginal analysis
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perceived lifetime pleasure
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marginal benefit
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like the physical and life sciences, as well as other social sciences, economics relies on the
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scientific method
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statement about economic behavior or the economy that enables prediction of the probable effects o certain actions
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economic principle
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economic principles are
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generalizations relating to economic behavior or to the economy itself
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ceteris paribus
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other things equal assumption- factors other than those being considered do not change.
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the part of economics concerned with decision making by individual customers, workers, households, and business firms.
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microeconomics
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examines the performance and behavior of the economy as a whole
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macroeconomics
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collection of specific economic units treated as if they were one unit
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aggregate
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focuses of facts and cause and effect relationships
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positive economics (avoids value judgements and tries to establish scientific statements about economic behavior)
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need to make choices because economic wants exceed economic means
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economizing problem
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we all have a ___ amount of income
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finite
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most people have virtually ____ wants
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unlimited
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all natural resources used in the production process and means so much more to the economist than to most people
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land
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physical actions and mental activities that people contribute to the production of goods and services
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labor
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spending that pays for the production and accumulation of capital goods
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investment
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human resources distinct from labor
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entrepreneurial ability
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lists the different combinations of two products that can be produced with a specific set of resources, assuming full employment
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production possibilities
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the curve on a production possibilities chart is a ___ because it shows the limit of attainable outputs
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constraint
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as the production of a particular good increases, the opportunity cost of producing an addition unit rises
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law of increasing opportunity costs
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MB=MC
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optimal amount
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the greater abundance of resources will result in a ___ potential output of one or both products at each alternative
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greater
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larger total output
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economic growth
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increases in supplies of resources, improvements in resource quality, technological advances.
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economic growth's results
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allow a nation to get more of a desired good at less sacrifice of some other good
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international specialization and trade
