Brainscape's Knowledge GenomeTM


Top Flashcards (Certified)
All Flashcards

🎶📒MicroEconomics > 1. Microeconomics 1 > Flashcards

1. Microeconomics 1 Flashcards

(57 cards)

Start Studying
1
Q

Allocative efficiency

A

The allocation of Resources that maximises consumer welfare- associated with price= marginal cost

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
2
Q

Basic economic problem

A

Unlimited human wants and limited resources with competing uses (scarcity)

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
3
Q

Capital

A

Man made aids to production

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
4
Q

Ceteris paribus

A

All other things being equal

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
5
Q

Consumer durable goods

A

Tangible goods, use more than once

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
6
Q

Consumer non durable goods

A

Tangible goods used once by households

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
7
Q

Cost benefit principle

A

A rational agent will weigh up the costs and benefits of a decision, will act when benefits are at least equal to the costs.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
8
Q

Division of labour

A

Breaking down the production process into smaller parts- specialisation- increase productivity.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
9
Q

Dynamic efficiency

A

Becoming more productively efficient overtime- usually as a result of investment.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
10
Q

Economics

A

Usually defined as the allocation of scarce resources

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
11
Q

Enterprise

A

Individual risks combining the other 3 Factors of production. Deciding what, how, who.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
12
Q

Equitable

A

Fair
Requires a value judgement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
13
Q

Free market economy

A

Resource allocation is left to market forces
Most willing and able to buy receive

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
14
Q

Labour

A

Physical/ mental effort from workers

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
15
Q

Land

A

All naturally occurring resources in, on, under ground

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
16
Q

Mixed economy

A

Economic system- resource allocation partly by government and market forces

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
17
Q

Normative statement

A

A statement based on a value judgement / opinion

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
18
Q

Opportunity cost

A

Benefit foregone from the next best alternative, include a trade off

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
19
Q

Pareto optimum

A

A situation where nobody can be made better off without someone else being made worse off.

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
20
Q

Planned economy

A

Government allocates resources rather than market forces

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
21
Q

Positive statement

A

An objective statement
Factually verifiable
hypothesis- can be tested

(Don’t need to be true)

Normative- value judgement

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
22
Q

Production

A

Factor inputs to outputs

How well did you know this?
1
Not at all
2
3
4
5
Perfectly
23
Q

PPF

Study These Flashcards
A

Illustrated graphically the productive capacity of the economy. Shows all possible combinations of 2 outputs an economy can produce, given its initial factor endowment, current productivity and technology.

24
Q

Productivity

Study These Flashcards
A

Output produced per unit of input

25
Productive efficiency
Producing at the lowest possible average costs- requires technical efficiency
26
Rational utility maximiser
Someone who acts rationally to maximise their own welfare
27
Scarcity
Not enough to satisfy everyone’s wants and needs
28
Services
Buying someone’s time and skill
29
Social science
Scientific methods to study social phenomena
30
Static efficiency
Being (productive/ allocative) Efficient at at a given moment in time
31
Technical efficiency
Producing Maximum output from given levels of inputs
32
Trade off
Improvement in one variable leads to a deterioration in another
33
Utility
Benefit gained from the consumption of a good or service
34
X-inefficiency
Difference between technical efficiency and the performance of a firm that has little incentive to reduce unit costs and pursue profit, usually because they have price-setting ability
35
It’s hard to experiment because it is often not practical or ethical
Economists can’t have the same level of control as a natural scientist has under laboratory conditions Must assume ceteris paribus Can gather data- may not be perfect- may be from a different country & is certainly from a different time period Use data to produce economic models- can be refined and the predictions will be more accurate
36
Reasons people don’t maximise their utility
*lack of info/ unreliable info *habit/gut decisions *mental health/ stress *addictions- drug/alcohol *moral/political/religious viewpoints *substance abuse *prioritising short run benefits over long term costs *other people’s utility & altruism
37
Economics acts as a discipline to understand how markets & economies operate and to inform public policy- how the gov should act to improve welfare of citizens- make value judgements
38
Factors of production
Land Labour Capital Enterprise
39
The purpose of economic activity is
To produce goods and services to satisfy human wants and needs
40
The key economic decisions are:
*What to produce *How to produce *Who for/ who benefits
41
4 outputs :
*Capital goods (man made aids to production) *Non durable consumer goods *Durable consumer goods *Services (buy someone’s time and skill)
42
All points on the off
Productively efficient Using all factors of production fully Only way to produce more of 1 is less of another
43
Productively inefficient
Productively inefficient inside the ppf Under/ unemployed resources Increase production of one good without reducing the other
44
Outside the PPF
Beyond the maximum the economy can produce even when the factors of production are fully employed Impossible in the current time period May be possible in the future if their is an increase in factor endowment or improved productivity or technology
45
Straight line PPF
factors of production have the same marginal rate of technical substitutability The opportunity cost doesn’t change/ is constant Curve is because in the production of most goods- some labour/capital is better suited to the production of one good and therefore using more of it to produce the other good yields less output Opportunity cost changes along the curve so it’s curved
46
The flatter the part of the curve the greater the opportunity cost of producing the good on the vertical axis
Steep curve the opportunity cost of producing the good on the horizontal axis higher
47
If the productive capacity of an economy changes
The PPF will shift
48
Productivity
Output produced for given levels of inputs Total output per time period ➗ number of units of factor of production
49
Labour productivity (Remember units)
Total output ➗ man hours
50
100 workers 8 hour shift 100,000 boxes
Output= 100,000 Man hours= 100 x 8 100,000➗800= 125 boxes PER MAN PER HOUR
51
Labour productivity :
Training, specialisation, supervision trained- skill level improved- more output/more valuable- increasing productivity
52
Total factor productivity:
Average productivity of all physical factors of production Total output➗total input
53
Advantages of higher productivity:
*lower average costs- may result in lower consumer prices *improved competitiveness in international markets *higher profits- can be reinvested *higher real wages- wage often rises- Firms more willing and able- retain productive staff *economic growth
54
How can a firm be technically but not productively efficient?
TE is absence of waste Productive= max output for given input expensive oranges expensive labour Need to be TE to be PE
55
A movement within a PPF to on a PPF generally represents a Pareto improvement
(Nobody can be made any better off without someone else being made worse off)
56
Issues with specialisation:
Occupational immobility of labour- workers lack transferable skills- can lead to unemployment Boredom
57
One reason why specialisation can raise labour productivity is because :
Division of labour makes it cost efficient to provide workers with specialist equipment

🎶📒MicroEconomics (7 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2025 Bold Learning Solutions. Terms and Conditions