Intro to Microeconomics Exam 1-Questions and Answers Graded A+

Intro to Microeconomics Exam 1-Questions and Answers Graded A+ 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