Lecture 1 Flashcards
1 (19 cards)
What is the primary focus of the introductory module in economic analyses?
Microeconomics
The course addresses neoclassical economics.
What are the building blocks of neoclassical microeconomic theory?
- Demand
- Supply
- Consumer Theory
- Producer Theory
- Market Structures
- Market Failures
What is the definition of Economics according to Robbins (1932)?
The science which studies human behaviour as a relationship between ends and scarce means which have alternative uses.
What key areas do Economists study?
- Production
- Consumption
- Distribution
- Satisfaction of human wants
What is the difference between positive and normative economics?
- Positive: factual statements that can be tested.
- Normative: value-laden statements about what ought to be.
What does microeconomics study?
Individual parts of the economy, focusing on demand and supply of specific goods, services, and resources.
What is macroeconomics concerned with?
The economy as a whole, aggregate demand, and aggregate supply.
List key ideas and concepts in microeconomics.
- Rational choice
- Profit maximization
- Marginal costs and benefits
- Cost minimization
- Utility maximization
- Market failures
What is the law of demand?
When the price of a good increases, the quantity demanded decreases.
What are the two effects explaining the law of demand?
- Income effect
- Substitution effect
What does a demand curve represent?
The relationship between the quantity demanded and the price of a good.
What causes a movement along the demand curve?
Changes in the price of the good.
What causes a shift in the demand curve?
- Changes in income
- Changes in taste
- Price of other goods
- Expectations of future price changes
What are complementary goods?
Goods that are consumed together; a price increase of one leads to a demand decrease for both.
What are substitute goods?
Goods considered alternatives; a price increase of one leads to a demand increase for the other.
What does the supply curve depict?
The quantity of the good supplied by the firm at each price point.
Why does the quantity supplied increase when the price of a good increases?
To increase revenue and potentially profits.
What factors can cause a shift in the supply curve?
- Production costs
- Production and profitability of alternative goods
- Expectations of future price changes
- Unpredictable events
Fill in the blank: The course will cover ______ next week.
Partial equilibrium, price elasticity of demand & supply, income elasticity, cross-price elasticity
