Chapter 1
This analysis answers the question, "What is?" or "What will be?"
What is positive analysis
A small one unit change in value.
What is marginal change?
An economy in which a government bureaucracy decides how much of each good to produce, how to produce the good, and who gets the good.
What is a centrally planned economy?
What happens to price when supply exceeds demand?
What is the price decreases?
Economic cost is the sum of explicit cost and implicit cost. Accounting cost only includes this cost.
What is explicit cost?
The Latin expression meaning that other variables are held fixed.
What is ceteris paribus?
What you sacrafice to get something.
What is opportunity cost?
The amount of a product that consuers are willing and able to buy.
What is quantity demanded?
The supply curve slopes this way because as Price increases, supply increases.
What is upward?
These are the four market structures.
What are Perfect Competition, Monopolistic Competition, Oligopoly and Monopoly?
The study of the nation's economy as a whole.
What is macroeconomics?
Economists use this to explore the choices people make and the consequences of those choices.
What is an economic model?
A good for which an increase in income decreases demand.
What is an inferior good?
Substitutions, individual budget consumption, the amount of time passed and necessity vs luxury are the 4 major determinates of this.
What is elasticity?
A firm should shut down if this happens.
What is if total revenue is less than variable cost?
or
What is if price is less than average variable cost?
This analysis answers the question "What ought to be?"
What is normative analysis?
The ability of one person or nation to produce a good at a lower opportunity cost than another person or nation.
What is comparative advantage?
A situation in which the quantity demaneded equals the quantity supplies at the prevailing market price.
What is market equilibrium?
If the price of boats increases and total revenue increases, that means boats are this.
What is inelastic?
This market structure has a unique product and large barriers to entry, such as patents or network externalities.
What is a monopoly?
The study of the choices made by households, firms, and government and how these choices affect the markets for goods and services.
What is microeconomics?
The ability of one person or nation to produce a product at a lower resource cost than another person or nation.
What is absolute advantage?
Adding employees to increase production will eventually lead to output increasing at a decreasing rate.
What is the principle of diminishing returns?
You know a product is elastic when total revenue increases and the price does this.
What is decreases?
This is the practice of selling a good at different prices to different consumers.
What is price discimination?