BEC 3 - Microeconomics Flashcards
What is the study of the allocation of scarce economic resources among alternative uses?
Economics
What is the difference between Micro- Macro- and International Economics?
Micro- Studies the economic activities of distinct decision-making entities, including individuals, households and business firms. Major areas of interest include demand and supply, prices and outputs, and the effects of external forces on the economic activities of these individual decision makers.
Macro- Studies the economic activities and outcomes of a group of entities taken together, typically of an entire nation or major sectors of a national economy. Major areas of interest include aggregate output, aggregate demand and supply, price and employment levels, national income, governmental policies and regulation, and international implications.
International- Studies economic activities that occur between nations and outcomes that result from these activities. Major areas of concern include socio-economic issues, balance of payments, exchange rates and transfer pricing.
What is the concept of ceteris paribus?
Any influence that other variables (other than the one shown on the graph) may have on the dependent variable is assumed to be held constant
When the dependent variable moves in the same direction as the independent variable, the graph would result in a ________ slope.
Positive
When the dependent variable moves in the opposite direction as the independent variable, the graph would result in a ________ slope.
Negative
When one variable does not change as the other variable changes, showing that the variables are not interdependent, the graph would result in a _______ slope.
Zero slope… neutral
What is the basic equation for a straight-line plot on a graph?
U = y + q(x)
U - Unknown value of the variable Y being determined
y - the value of the plotted line where it crosses the Y axis; the intercept - the value of Y where X=0
q - the value by which the value of Y changes as each unit of the X variable changes; expresses the slope of the line being plotted
x - the value (# of units) of the variable X.
Aka: Y = mx + b
What is the role of graphs in economics?
Graphs show the relationship between two variables, usually referred to as the independent and the dependent variables.
What determines “price”?
The supply of and demand for the commodity being priced.
List the characteristics of a free-market economy.
- Interdependent relationship between individuals and business firms;
- Production depends on preferences of individuals with ability to pay for goods and services;
- Production depends on availability of economic resources, level of technology, and how business firms choose to use them;
- Production depends on sale price being at least equal to production cost.
List the types of economic resources.
Acquired from individuals as: 1.Labor: human work, skills, and similar human effort;
- Capital: financial resources (e.g., savings) and man-made resources;
- Natural Resources: land, minerals, timber, water, etc.
Distinguish between a change in quantity demanded and a change in demand.
A change in quantity demanded is movement along a given demand curve as a result of change in price only. A change in demand is a shift in a demand curve as a result of changes in variables other than price.
What are the factors that change market demand?
Size of market;
Income or wealth of market participants;
Preferences of market participants;
Change in prices of other goods and services.
Define demand.
Desire, willingness and ability to acquire a commodity.
What are the variables that change aggregate supply?
Changes in:
Number of providers;
Cost of inputs;
Government taxation or subsidization;
Technological advances.
