Lecture 1: Supply and Demand Flashcards
What do individuals and firms do in constrained optimization exercises?
Try to make themselves better off based on scarce resources.
“If you do something, you could have been doing something else instead” is an example of ______ ___
Opportunity cost.
Which MIT professor “began” the field of microeconomics?
Paul Samuelson
What “thing” attempts a description between two or more variables?
A model
As prices go up, demand ______
Decreases
As prices go up, do firms wants to produce less, or more?
More
The demand curve is ____ sloping
Downward
The supply curve is ____ sloping
Upward
What do we call the point at which the demand and supply curves meet?
The equilibrium
What are firms and customers willing to make at the equilibrium?
A transaction
True or false: A normative analysis is an analysis of the way things are
False
An analysis of the way things should be is called a ____ analysis
Normative
An analysis of the way things are is called a _____ analysis
Positive
Is economics a right-wing or a left-wing science?
Right-wing
When we say that “consumers and firms, acting in their own self-interest, will end up doing what is best for society”, how are we defining “best for society?
Maximum surplus
