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fall semester 2024 > microeconomics exam one > Flashcards

microeconomics exam one Flashcards

lessons one-three in microeconomics

1
Q

what is economics?

A

a social science that studies production and trade observing individual values and social order

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2
Q

what is spontaneous order?

A

order that is the product of human action, not human desire

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3
Q

what is positive analysis?

A

analysis that attempts to describe the way things are in reality

reality vs. subjective value

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4
Q

what is normative analysis?

A

analysis that describes a value judgement

reality vs. subjective value

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5
Q

what is a theory?

A

an abstract explanation to some phenomenon

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6
Q

what is society?

A

a group of people who have moral, political or economic relationships with each other

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7
Q

what is social system?

A

a set of rules that determine the physical force in human relationships

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8
Q

what is market economy?

A

a social system in which resources are privately owned and controlled

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9
Q

what is command economy?

A

a social system in which resources are collectively owned and controlled (typically through the government)

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10
Q

what is property right?

A

a moral and legal right to control a resource, and exclude others from it.

based on the concept of consent (self ownership)

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11
Q

what is a mixed economy?

A

a social system in which some resources are privately owned and controlled, and some are owned or controlled by the government

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12
Q

what are the four starting points of economics?

A
  1. scarcity
  2. unlimited desires
  3. methodological individualism
  4. rational choice
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13
Q

what is scarcity?

four starting points of economics

A

the concept that the amount of goods available is not sufficient to satisfy all human desires

(there will always be scarcity. must use basic tradeoff)

make choices

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14
Q

what is unlimited desires?

four starting points of economics

A

the concept that no matter what ones current circumstances, it is always possible to imagine and achieve a more desirable state of affairs

(concept of want and need on a spectrum and can differ)

human potential

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15
Q

what is methodological individualism?

four starting points of economics

A

the principle that the individual human being is the basic unit of research in social studies

(to be more precise)

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16
Q

what is rational choice?

four starting points of economics

A

the principle in which people pursue their own values

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17
Q

what is price system?

A

a network of interrelated prices of goods and services

price system is the conductor of the economy, which is the symphony

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18
Q

what is the exchange of equivalents theory?

A

the theory that people exchange one good for another when both parties value the goods equally

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19
Q

what is the just price theory?

A

the theory that there is a single just price at which each good should be sold

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20
Q

some mercantalists believe:

A
  • social order requires government planning
  • money constitues real wealth for a nation
  • exchange is a zero-sum game
  • there is a “public interest” seperate from the interest of actual individualists

key points that mercantalism is revolved around

21
Q

what is nominal value of money?

A

face value of a certain amount of money

22
Q

what is real value of money?

A

the goods and sevices that can be purchased with a certian amonut of money

23
Q

what is a zero-sum game?

A

a situation in which for one party to gain, the other must lose

ie. poker, tennis, trade

24
Q

what is mutally beneficial exchange?

A

an exchange that benefits both parties

supermarket (both are doing a service to one another)

25
Q

some of the main ideas of “the classical thought of economic thought” are

A
  • people are self-interested
    -individuality promotes spontaneous order

adam smith explains that in a market system, to get what you want :

there are people that pursue self interest

26
Q

what is the invisible hand metaphor?

A

adam smiths metaphor for the power of individual self interest to create spontaneous order

27
Q

what is utility?

A

usefullness in satisfying human desires

28
Q

what is the subjective theory of price?

A

the theory that the price of a good is determined by utility

29
Q

what is the water-diamonds paradox?

A

the observation that water is very useful but has a low price, while a diamond may not be very useful but has a high price

price cannot be determined by its utility use

30
Q

what is labor theory value?

A

the theory that the price of a good is determined by its cost of production or the amount of labor used to produce it.

the more expensive something is to make, the higher the price

vice versa

31
Q

what are some of the problems with labor theory value?

A
  • how do you measure labor
  • labor has a price
  • it is a theory of intrinsic value
  • it ignores the context of change
32
Q

what is intrinsic value theory?

A

the theory that the value of an object is inherent to the object itself

33
Q

what is the iron law of wages?

A

the theory that the price of labor is determined by the cost of human substinence and reproduction

34
Q

what is marginal revolution?

A

the discovery of the theory of marginal utility

35
Q

what is a good?

A

a useful thing that is subject for human control

36
Q

requirements to be a good:

A
  1. a human need must exist
  2. the object must have properties that allow it to satisfy that need
  3. humans must know of this causal connection
  4. humans must have sufficient control over the object to make use of it
37
Q

what is an order number?

A

where something falls in the production line

(where in the process is something made

38
Q

what is a consumer good?

(first order good)

A

a good that serves our desires directly

39
Q

what is a producer good?

(higher order good)

A

a good that is used in the production of another good

40
Q

what is the structure of production?

A

the set of steps in which producer goodsare used to produce a consumer good

41
Q

what is marginal unit?

A

the next unit gained or given up

42
Q

what is marginal utility?

A

an additional utility that a person gets from having one more unit of a good, or loses from having one less unit of a group

how much happier someone would be, moving on and on

43
Q

what is the theory of marginal utility?

A

the theory that the price of a good is determined by its marginal utility

44
Q

what is ordinal ranking?

A

a list in order of preference

prioritize desires, where is the margins?

45
Q

what is opportunity cost?

A

the best alternative being given up when making a choice

46
Q

what is dimishing marginal utility?

A

as a person acquires more units of a good, the satisfaction they derive from each new unit is lower than the previous.

as you get more, they get less valuable

47
Q

what is increasing marginal opportunity cost?

A

as a person gives up more units of a good, the satisfaction they give up with each new unit is higher than the previous

as you get less, they get more valuable

48
Q

what is the range of indeterminacy?

A

the range of potential prices

what will satisfy both parties?

49
Q

what is marketing clearing price?

A

a price at which anyone who wants to buy or sell can find a willing trade partner

fall semester 2024 (5 decks)

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