Introduction
Study of economics that looks at individuals and markets.
Microeconomics
Value of the next best alternative given up
Opportunity costs
Goods that you tend to buy when you do not have much money
Inferior goods
An increase in demand will cause the demand curve to shift ____.
Right
The slope of a supply curve
Positive or direct
Unlimited wants but limited resources
Scarcity
Looking at the extra or additional amount from one more unit
Marginal Analysis
The intersection of supply and demand
Equilibrium
A decrease in supply will cause prices to ____ and quantity to _____.
Prices increase
Quantity decreases
In order for a shortage to occur, prices are too ___.
Low
Economic statement of what is or what will be.
Positive economic statement
Shows the maximum output of two goods that can be produced given the limited resources available and the best known technology.
Production Possibilities Curve (Frontier)
Results when supply is greater than demand
Surplus
The 4 types of resources
Land
Labor
Capital
Entrepreneurship
An increase in the price of Coke will cause the demand for Pepsi to ____.
Increase
Two requirements for being a rational economist
Know your preferences
Maximize happiness/satisfaction
Respond to incentives
Choose on the margin
Having the lowest opportunity costs gives you this.
Comparative advantage
This change caused by a change in the current price of the good itself.
Quantity demanded or quantity supplied
Expecting future prices to decrease will cause demand to _____ and supply to _____.
Decrease demand
Increase supply
A cost or benefit imposed on people other than the user.
Externality or spillover
The 3 basic economic questions
What to produce
How to produce it
For whom to produce it
The 2 sources that cause economic growth
Changes in resources
Changes in technology
An increase in demand will cause prices to ____ and quantity to _____.
Prices increase; quantity increases
An increase in demand and a decrease in supply will cause prices to _____ and quantity to _____.
Prices increase; quantity unknown
A decrease in demand and a decrease in supply causes prices to _____ and quantity to ______.
Prices unknown
Quantity decreases