Microeconomics definitions:
Capital – all man made assets which have been created to help produce
goods
Sustainable resource – resources that can be used now and won’t harm
the future
Opportunity cost – the loss of the next best option you are forced to
sacrifice
Positive statements – those that can be tested to be either true or false
Normal statements – those which contain a value of judgement about
something. Something “should” …
Ceteris paribus rule – that all other things remain the same. We can
explore a relationship while holding all other variables constant
PPF – the maximum combinations of two goods which an economy can
produce if it uses its resources are used fully and efficiently
Pareto efficiency – any point ON the PPF is said to be efficient and the
economy’s resources are being fully employed. Pareto efficiency also
occurs when resources are allocated in such a way that it’s impossible to
make one individual better off without making at least one individual
worse off
Law of increasing cost – successive increases in the production of one
good will lead to an increasing sacrifice of the other good. (the
opportunity increases the more a good is produced)
Marginal cost – the opportunity cost of producing one more unit of a
good/service
Capital goods – a good that is used to produce consumer
goods/services
Consumer goods – a good that provides direct utility to consumers
, Labour specialisation/division of labour – the practise of splitting a job
into discrete tasks and assigning each task to a specific worker. Eg: in a
car factory some workers will specialise in painting, assembling the car
while others may install seats, etc.
Productivity – measure of economic output relative to the amount of
labour involved
International trade – where a country will specialise in a specific industry/
in the production of those commodities that it enjoys special advantages
in. Leads to higher outputs, lower costs, spread of ideas and technology
and increase in competition however it can lead to decrease in demand
domestically and interdependency.
Legal tender – medium of exchange recognized by a legal system to be
valid for meeting a financial obligation
Market – a situation where goods and services are bought and sold.
Utility – the amount of satisfaction obtained from consuming a good or
service. consumers are assumed to make rational decisions in order to
maximise utility per penny
Rational decisions – where consumers allocate their expenditure on
goods and services to maximise utility per penny and producers allocate
their resources to maximise profits
Demand – the want of a good or service plus the ability to pay for it
Marginal utility – the additional satisfaction gained from consuming one
extra unit of a good within a period of time
The law of diminishing marginal utility – describes that as a consumer
consumers more and more units of specific good the utility gained from
successive units will fall
Supply – the quantity of a good or service that firms are willing to sell at
a given price over a given period of time
Equilibrium price – the price where the quantity demanded equals the
quantity supplied for a good or service and there’s no tendency for price
or quantity to change
Capital – all man made assets which have been created to help produce
goods
Sustainable resource – resources that can be used now and won’t harm
the future
Opportunity cost – the loss of the next best option you are forced to
sacrifice
Positive statements – those that can be tested to be either true or false
Normal statements – those which contain a value of judgement about
something. Something “should” …
Ceteris paribus rule – that all other things remain the same. We can
explore a relationship while holding all other variables constant
PPF – the maximum combinations of two goods which an economy can
produce if it uses its resources are used fully and efficiently
Pareto efficiency – any point ON the PPF is said to be efficient and the
economy’s resources are being fully employed. Pareto efficiency also
occurs when resources are allocated in such a way that it’s impossible to
make one individual better off without making at least one individual
worse off
Law of increasing cost – successive increases in the production of one
good will lead to an increasing sacrifice of the other good. (the
opportunity increases the more a good is produced)
Marginal cost – the opportunity cost of producing one more unit of a
good/service
Capital goods – a good that is used to produce consumer
goods/services
Consumer goods – a good that provides direct utility to consumers
, Labour specialisation/division of labour – the practise of splitting a job
into discrete tasks and assigning each task to a specific worker. Eg: in a
car factory some workers will specialise in painting, assembling the car
while others may install seats, etc.
Productivity – measure of economic output relative to the amount of
labour involved
International trade – where a country will specialise in a specific industry/
in the production of those commodities that it enjoys special advantages
in. Leads to higher outputs, lower costs, spread of ideas and technology
and increase in competition however it can lead to decrease in demand
domestically and interdependency.
Legal tender – medium of exchange recognized by a legal system to be
valid for meeting a financial obligation
Market – a situation where goods and services are bought and sold.
Utility – the amount of satisfaction obtained from consuming a good or
service. consumers are assumed to make rational decisions in order to
maximise utility per penny
Rational decisions – where consumers allocate their expenditure on
goods and services to maximise utility per penny and producers allocate
their resources to maximise profits
Demand – the want of a good or service plus the ability to pay for it
Marginal utility – the additional satisfaction gained from consuming one
extra unit of a good within a period of time
The law of diminishing marginal utility – describes that as a consumer
consumers more and more units of specific good the utility gained from
successive units will fall
Supply – the quantity of a good or service that firms are willing to sell at
a given price over a given period of time
Equilibrium price – the price where the quantity demanded equals the
quantity supplied for a good or service and there’s no tendency for price
or quantity to change
