Intro to Microeconomics Exam 1
Microeconomics - Answer-Individual, Businesses and the role of Government in decision making
Opportunity Cost - Answer-the most desirable alternative given up as the result of a decision; moving
along PPF line
- Increase opportunity cost = steeper line
Marginal Analysis - Answer-Comparing Benefits and Costs
Optimization - Answer-making the best feasible choice possible with given information
Equilibrium - Answer-when everyone is optimizing; no
one would be better off with a different choice
Empiricism - Answer-using data to figure out answers to interesting questions
Utility - Answer-what makes you happy, that you're willing to spend money on (extra shit)
Scarcity - Answer-every time you make a decision, you are giving up something else (money for goods)
Profit - Answer-gain for business
Rational Self Interest and Incentives - Answer-You have criteria when deciding, can be assumed, best
decision to make you happiest as possible
, Model - Answer-a simplified representation of a real situation that is used to better understand real-life
situations.
Production Possibilities Frontier (PPF) - Answer-is a diagram that shows the combinations of two goods
that are possible for a society to produce using all available resources:
Land, Labor, Economic Capital , Entrepreneur
Money - Answer-a medium of exchange
Land - Answer-- need a physical place to build, also resources like oil, trees, etc.
- Compensated by: Rent
Labor - Answer-- someone has to produce it (go to work)
- Compensated by: Wages
Economic Capital - Answer-- is a product or good that is used to produce other goods. (software,
machines, trucks)
- Compensated by: Interest
Entrepreneur - Answer-- The individual(s) that collect the other portions and organize how this will lead
to a produce. They are the risk takers because they cannot guarantee that people will buy it, which will
lead to no profit
- Compensated by: Profits
PFF curve - Answer-has quantity vs. quantity
Microeconomics - Answer-Individual, Businesses and the role of Government in decision making
Opportunity Cost - Answer-the most desirable alternative given up as the result of a decision; moving
along PPF line
- Increase opportunity cost = steeper line
Marginal Analysis - Answer-Comparing Benefits and Costs
Optimization - Answer-making the best feasible choice possible with given information
Equilibrium - Answer-when everyone is optimizing; no
one would be better off with a different choice
Empiricism - Answer-using data to figure out answers to interesting questions
Utility - Answer-what makes you happy, that you're willing to spend money on (extra shit)
Scarcity - Answer-every time you make a decision, you are giving up something else (money for goods)
Profit - Answer-gain for business
Rational Self Interest and Incentives - Answer-You have criteria when deciding, can be assumed, best
decision to make you happiest as possible
, Model - Answer-a simplified representation of a real situation that is used to better understand real-life
situations.
Production Possibilities Frontier (PPF) - Answer-is a diagram that shows the combinations of two goods
that are possible for a society to produce using all available resources:
Land, Labor, Economic Capital , Entrepreneur
Money - Answer-a medium of exchange
Land - Answer-- need a physical place to build, also resources like oil, trees, etc.
- Compensated by: Rent
Labor - Answer-- someone has to produce it (go to work)
- Compensated by: Wages
Economic Capital - Answer-- is a product or good that is used to produce other goods. (software,
machines, trucks)
- Compensated by: Interest
Entrepreneur - Answer-- The individual(s) that collect the other portions and organize how this will lead
to a produce. They are the risk takers because they cannot guarantee that people will buy it, which will
lead to no profit
- Compensated by: Profits
PFF curve - Answer-has quantity vs. quantity
