microeconomic introduction Flashcards
A movement along a production possibilities frontier reflects what?
opportunity costs
what is microeconomics?
its human behaviour and how consumers and firms make choices
Decision making might be irrational if what?
if there is too much relevant information
Most goods and services in the UK are allocated by what?
the market
what does a steep ppf curve mean?
the steeper the curve the higher the opportunity cost
A movement along a production possibilities frontier reflects what?
opportunity costs
When counting the costs of your studies you should include what?
the wage you have earned during your studies
whats a market economy?
businesses are privately owned, and they decide what to produce based on the profit motive.
what is a command economy?
a government body controls the factors of production, and determines how much to produce and what price to sell it for.
how do market and command economies differ?
with how they allocate goods and services
what would shift a country’s production possibility frontier
outwards?
an increase in productive resources
What are the determinants of demand?
Advertising
Price of subs/compliments
Income of consumers
Number of people
Trends
What are the determinants of supply?
weather,subsidies,taxes,wages,raw materials, technology
What are the factors of production?
land labour capital enterprise
What is opportunity cost?
the next best opportunity forgone
What does it mean to be rational?
you have full information before making a decision
What is data?
pieces of economic evidence eg price and quantity
what is the optimisation principle?
firms and individuals will look to make the most of what they have eg firms will want to profit maximise given tech and prices
what are constraints stopping you purchasing wants?
Incomes
Technology
Prices
Choices of others (game theory)
what is the equilibria principle?
the idea that economic principles often end up balancing eg prices will change until quantity demanded is equal to quantity supplied
equilibrium provides the greatest efficiency
what is the economic problem
unlimited wants with limited resources
what is game theory?
the outcome of choices made by others in order to maximise the economic benefit
what is equity?
Is where consumption (or income) is distributed in a way that is considered to be fair
what is economic efficiency?
is achieved when no actor in a market can be made better off without making somebody else worse off
