Download Micro Review Sheet: Final | ECON 1100 - Principles of Microeconomics and more Quizzes Microeconomics in PDF only on Docsity! TERM 1 Economics DEFINITION 1 Economics is the social science that analyzes the production, distribution, and consumption of goods and services. TERM 2 Scarcity DEFINITION 2 Scarcity is the fundamental economic problem of having seemingly unlimited human needs and wants, in a world of limited resources. -means that society faces tradeoffs when making choices about how to use resource TERM 3 Circular flow model DEFINITION 3 In economics, the terms circular flow of income or circular flow refer to a simple economic model which describes the reciprocal circulation of income between producers and consumers. TERM 4 Production possibilities frontier DEFINITION 4 In economics, a production-possibility frontier (PPF), sometimes called a production-possibility curve or product transformation curve, is a graph that shows the different rates of production of two goods and/or services that an economy can produce efficiently during a specified period of time with a limited quantity of productive resources, or factors of production. TERM 5 Points of Frontier DEFINITION 5 Points inside= inefficient Points on the frontier= efficient Points outside- unattainable TERM 6 Economic Growth DEFINITION 6 shown as an outward shift in the production possibilities curve. In the Production possibilities model, economic growth requires 1. an increase in the resources available for production 2. an increase in the technology used in production Labor 1.an increase in the country's population Other 1. an increase in the capital stock TERM 7 Micro and Macroeconomics DEFINITION 7 Microeconomics: studies the decision of individuals, households, and firms. It focuses on the interaction of buyers and sellers in specific markets and the production decisions of firms. Macroeconomics: studies economics aggregates, such as the national unemployment rate, the rate of inflation, and the economy's growth rate, as well as macro policies designed to promote employment, price stability, and a healthy rate of economic growth. TERM 8 Ceteris paribus assumption DEFINITION 8 is used to isolate the relationship between two variables by holding other influences on the relationship constant. TERM 9 Opportunity cost DEFINITION 9 Opportunity cost is the cost related to the next-best choice available to someone who has picked among several mutually exclusive choices. TERM 10 Comparative advantage DEFINITION 10 In economics, the law of comparative advantage refers to the ability of a party (an individual, a firm, or a country) to produce a particular good or service at a lower opportunity cost than another party.
