Basic Microeconomics: Chapter 1 & 2 Flashcards
It is defined as the study of the proper allocation and efficient utilization of
scarce productive resources to produce commodities for the maximum satisfaction of
unlimited wants and needs.
Economics
It deals with the behaviour of individual components such as
household, firm, and individual owner of production.
Microeconomics
It focuses on the behaviour of a
particular unit of the economy such as consumers, producers, and specific markets.
Microeconomics
It deals with the behaviour of economy as a whole with the view of
understanding the interaction between economic aggregates such as unemployment,
inflation and national income.
Macroeconomics
The initial discussions begin with how
growth and output are measured and how multipliers work. Labor, employment, and
inflation are included for long-term effects, as well as monetary, fiscal and trade policies.
Macroeconomics
You will often encounter terms like consumer’s behaviour, production
theory, cost and profit, and the market structures.
Microeconomics
it is a preposition about certain related variables that scientifically
explain a certain phenomenon.
Economic Theory
It tries to explain economic phenomena, to interpret why
and how the economy behaves and what is the best to solution-how to influence or to solve
these economic phenomena.
Economic Theory
It is essentially a simplified framework for describing the working of
the economy.
Economic Model
It is used to illustrate, demonstrate, and represent a theory or parts of it.
Economic Model
It
simplifies an explanation or description of a certain phenomenon, often employing graphs,
diagrams, or mathematical formulae.
Economic Model
It is a curve which shows various combinations of the
amounts of two goods which can be produces within the giver resources and technology/ a
graphical representation showing all the possible options of output for two products that
can be produced using all factors of production, where the given resources are fully and
efficiently utilized per unit time.
Production Possibility Frontier (PPF), Production Possibility Curve (PPC), or a
Production Possibility Boundary (PPB)
It pictures the economy as consisting of two groups-
households and firms-that interact in two market; goods and services market in which firms sell and households buy and the labor market in households sell labor to business firms or
other employees.
Circular Flow Diagram
Economic models can be presented in three forms, what are those?
The tabular, graphical and
mathematical or econometric.
This is economic model presented in table. Table has column and
rows forming a cell.
Tabular Model
In economics, tabular form of model is also known as, what?
Schedule
This is economic model presented using graph.
Graphical
There are several
types of graphs as discussed in your statistics class however in the field of economics the
most common form of graphical model is the line graph and it is called as, what?
Curve
This model is in the form of an equation.
When we say equation, it is a combination of numbers (coefficient or constant),
letters (variables) and an equal sign (=).
Mathematical or econometric model.
Mathematical and econometric model is commonly called as what?
Function
These are set of conditions
that need to satisfy to make the model valid.
Assumptions
What are the three assumptions that need to satisfy to make a model valid?
Ceteris paribus assumption; optimization assumption; Positive versus Normative Economic Statement.
It is a Latin word which means holding other variable
constant. In some books, it is also defined as remaining other things the same.
Ceteris paribus assumption
Ceteris paribus means, what?
holding other variable
constant
This
assumption is a nature of all economic models.
Ceteris paribus assumption
Every economic model goal is to optimize something.
Here, we either maximize or minimize something.
Optimization assumption.
This relates to what is.
Positive economics
It is an economic analysis that explains what happens in the economy and why, without
making any recommendations to economic policy, or in simple idea, it deals with how should
be verified by facts.
Positive Economics
It concerns itself with what should be.
Normative Economics
It is an
economic statement that makes recommendation to economic policy. This economic
statement is employed to make value judgments about the economy and suggests solutions
to economic problems. Instead of restricting its involvement on facts, it extends to the
specific actions that we should do to address the issues that depend on our values.
Normative Economics
Economic models can be used in three levels, what are those?
Descriptive Analytics, Predictive Analytics; Prescriptive Analytics
This step covers the description of economic model. We
commonly put emphasize on the highest and lowest point of the curves or schedule, the
relationship exist between the two or more variables, the slope and coefficient of the model.
Descriptive Analytics.
This step covers the forecasting of possible outcomes after
describing the economic model. Based on the relationship establish, we can identify the
possible effect of independent variable to dependent variable once change.
Predictive Analytics.
This step is the process of making recommendations and
suggestions to attain the main goals of economic model which is to optimize.
Prescriptive Analytics.
It is a depiction of how money and products are exchanged within an
economy.
Circular Flow Diagram
This might be used by a business to show how a specific series
of exchanges of goods, services and payments make up the building blocks of a given
economic system of interest.
Circular Flow Diagram
A basic model used in economics to show how an
economy functions.
Circular flow diagram
They consume the goods offered by the firms.
Household
It represents consumers
Household
