MicroEconomics Chapter 1 Roger A. Arnold 10th edition – Flashcards
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Decisions at the Margin
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Decision making characterized by weighing the additional (marginal) benefits of a change against the additional (marginal) costs of a change with respect to current conditions.
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Directly Related
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Two variables are directly related if they change in the same way.
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Disutility
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The dissatisfaction one receives from a bad.
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Economics
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The science of scarcity; the science of how individuals and societies deal with the fact that wants are greater than the limited resources available to satisfy those wants.
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Efficiency
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Exists when marginal benefits equal marginal costs.
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Entrepreneurship
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The talent that some people have for organizing the resources of land, labor, and capital to produce goods, seek new business opportunities, and develop new ways of doing things.
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Exchange (Trade)
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The giving up of one thing for something else.
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Good
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Anything from which individuals receive utility or satisfaction.
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Gross Domestic Product (GDP)
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The value of the entire output produced annually within a country's borders.
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Incentive
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Something that encourages or motivates a person to undertake an action.
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Independent
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Two variables are independent if, as one changes, the other does not.
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Inversely Related
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Two variables are inversely related if they change in opposite ways.
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Labor
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The physical and mental talents people contribute to the production process.
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Land
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All natural resources, such as minerals, forests, water, and unimproved land.
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Macroeconomics
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The branch of economics that deals with human behavior and choices as they relate to highly aggregate markets (e.g., the goods and services market) or the entire economy.
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Marginal Benefits
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Additional benefits; the benefits connected with consuming an additional unit of a good or undertaking one more unit of an activity.
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Marginal Costs
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Additional costs; the costs connected with consuming an additional unit of a good or undertaking one more unit of an activity.
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Microeconomics
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The branch of economics that deals with human behavior and choices as they relate to relatively small units: an individual, a firm, an industry, a single market.
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Normative Economics
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The study of "what should be" in economics.
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Opportunity Cost
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The most highly valued opportunity or alternative forfeited when a choice is made.
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Positive Economics
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The study of "what is" in economics.
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Rationing Device
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A means for deciding who gets what of available resources and goods.
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Scarcity
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The condition in which our wants are greater than the limited resources available to satisfy those wants.
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Slope
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The ratio of the change in the variable on the vertical axis to the change in the variable on the horizontal axis.
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Theory
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An abstract representation of the real world designed with the intent to better understand it.
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Utility
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The satisfaction one receives from a good.
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