Micro Notes 4+5+6

Question 1

a market characterized by a small number of firms who realize they are interdependent in their pricing and output policies

Answer 1

oligopoly

Question 2

power of bring the only seller

Answer 2

monopoly

Question 3

power of being the only buyer; not a price taker

Answer 3

monopsony

Question 4

anything that affects the outcome of your choices that can be associated with a probability

Answer 4

risk

Question 5

how our experiences impact how we value risk

Answer 5

risk perception

Question 6

individuals dividing up labor within/across trades

Answer 6

specialization

Question 7

increases productivity as individuals are better able to become more dexterous when they focus on one task

Answer 7

division of labor

Question 8

what an individual/nation is absolutely better at

Answer 8

absolute advantage

Question 9

the ability to produce a good at a lower opportunity cost that the person or country one trades with

Answer 9

comparative advantage

Question 10

unfair outcomes due to inequality of the implementation of rules

Answer 10

unjust outcomes

Question 11

fairness of the rules by which the “market game” is played

Answer 11

commutative justice

Question 12

an abstraction that simplifies a scenario

Answer 12

assumptions

Question 13

a condition in which an individual or firm has an unfair advantage (decreases efficiency)

Answer 13

market power

Question 14

limits market power

Answer 14

equal access to information

Question 15

a situation where there is no way to make someone better off without making someone worse off (highest efficiency)

Answer 15

pareto optimality

Question 16

unrealistic assumptions (weak assumptions are more realistic); to relax assumptions we go from strong to weak assumptions

Answer 16

strong assumptions

Question 17

the act of deriving utility (sometimes using things, but only with goods)

Answer 17

consumption

Question 18

a situation where one maximizes utility in the face of scarcity

Answer 18

constrained optimization problem

Question 19

items that function as money but are also valuable themselves

Answer 19

commodity money

Question 20

items not valuable as a commodity but function as money because a government states that they are usable for debts

Answer 20

flat money

Question 21

the quantity supplied at certain prices; different than quantity

Answer 21

supply (s)

Question 22

attitude of those in the market buying

Answer 22

demand (d)

Question 23

business or organization (owned by an individual)

Answer 23

firm

Question 24

the exchange of inputs we produce

Answer 24

factor markets

Question 25

the exchange of goods and services

Answer 25

product markets