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Microeconomics > Booklet 1 > Flashcards

Booklet 1 Flashcards

1
Q

What term describes the allocation of resources that maximises consumer welfare - associated with a price equal to marginal cost?

A

Allocative efficiency.

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2
Q

What is the phrase describing the problem of unlimited human wants and limited resources with competing uses, making those resources scarce.

A

The basic economic problem

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3
Q

What factor of production is a man-made aid to production?

A

(Physical) Capital

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4
Q

What phrase means “All other things being equal”?

A

Ceteris Paribus

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5
Q

What are goods purchased by households that can be used more than once called?

A

Consumer durable goods

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6
Q

What are good purchased by households that can only be used once called?

A

Consumer non-durable goods

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7
Q

What is the phrase used to describe how a rational agent will weight costs and benefits of a decision and only follow a course of action where the benefits are at least equal to the costs?

A

The cost-benefit principle

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8
Q

What is breaking down a process into constituent parts and allowing workers to specialise on one or more of these parts to increase productivity called?

A

The division of labour

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9
Q

What is becoming more (productively) efficient over time, usually as a result of investment called?

A

Dynamic efficiency

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10
Q

What term is usually defined as the allocation of scarce resources?

A

Economics

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11
Q

What is bringing together the other three factors of production to decide what to produce and how, in doing so taking a (financial) risk called?

A

Enterprise

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12
Q

What means that something is deemed fair and requires a value judgement on the part of the observer? Not to be confused with equality.

A

Equitable

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13
Q

What is an economic system in which resource allocation is left to market forces?

A

Free-market economy

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14
Q

What is the human input into the production process, done by workers, whether mental, physical or managerial?

A

Labour

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15
Q

What is any natural resource found on, in or under the land?

A

Land

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16
Q

What is an economic system in which resource allocation is done partly by the government and partly by the interaction of market forces?

A

Mixed economy

17
Q

What is a statement based on a value judgment or opinion?

A

A normative statment

18
Q

What is the benefit forgone from the next best alternative called?

A

Opportunity cost

19
Q

What is a situation where nobody can be made any better off without somebody else being made worse off?

A

Pareto optimum

20
Q

What is an economic system in which the government is responsible for resource allocation rather than market forces?

A

Planned economy

21
Q

What is an objective statement that is capable of being tested/verified called?

A

A positive statement

22
Q

What is the conversion of factor inputs into outputs called?

A

Production

23
Q

What is a graphical representation of all of the maximum combinations of two outputs that an economy can produce, given it’s initial factor endowment, current productivity can the current state of technology?

A

A production possibility frontier

24
Q

What is the amount of output produced per unit of an input (such as labour)?

A

Productivity

25
Q

What is producing at lowest possible average cost (requires technical efficiency) called?

A

Productive efficiency

26
Q

Who is someone who acts rationally to maximise their own welfare?

A

A rational utility-maximiser

27
Q

What means that there is not enough of a resource to satisfy all of the competing demands for it’s use?

A

Scarcity

28
Q

What is buying the time or skill of another called?

A

Services

29
Q

What is the use of scientific methods to study social phenomena called?

A

Social science

30
Q

What is focusing on one area of production called?

A

Specialisation

31
Q

What is being (allocatively or productively) efficient at a given moment in time called?

A

Static efficiency

32
Q

What is producing the maximum possible amount of output from a given level of inputs (or producing a given level of output from the least possible inputs) called?

A

Technical efficiency.

33
Q

What is a situation where an improvement in one variable leads to a deterioration of another?

A

A trade-off

34
Q

What is the benefit gained from the consumption of a good or service called?

A

Utility

35
Q

What is the difference between technical efficiency and the performance of a firm that has little incentive to reduce unit costs in pursuit of profit, usually because they have price-setting ability?

A

X-inefficiency

36
Q

Why might people not always maximise their utility?

A

Gut decisions and habit
Mental health
Long run Vs Short run
Moral, political or religious viewpoints
Lack of information
Other people’s utility and altruism
Other people’s utility and altruism

Microeconomics (7 decks)

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