Brainscape's Knowledge GenomeTM

Browse over 1 million classes created by top students, professors, publishers, and experts.


See full index

Economics 1 - Microeconomics > PLR Microeconomics > Flashcards

PLR Microeconomics Flashcards

1
Q

What is microeconomics

A

The study of the behaviour of individuals or groups within an economy, typically within a market context

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

What is the basic economic problem

A

How to allocate scarce resources between competing uses in conditions in which there are limited resources and unlimited wants and needs.

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

What are economic goods

A

Goods which are scarce because their use has an opportunity cost

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

What are free goods

A

Goods which are unlimited in supply, they have no opportunity cost

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

What is opportunity cost (trade offs)

A

The cost of giving up the next best alternative

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

What is the PPF Curve

A

A curve that shows the maximum potential level of output of one good given a level of output for all other goods in the economy

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

What is division of labour

A

production is broken down in different tasks, Specialisation by workers e.g., (Designed by Apple in California, assembled in china, e.g., design, hardware, software, marketing etc)

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

What is a market

A

a voluntary meeting of buyers and sellers with the exchange of goods and services taking place

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

What is meant by utility

A

The satisfaction derived from consuming a good or service

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

What is welfare

A

The well-being of an economic agent or group of economic agents

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

What is ceteris paribus

A

The assumption that all other variables remain the same

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

What is a normative statement

A

a statement that includes a value judgement, normative statements cant be scientifically tested as everyone has different opinions. (includes ought, should, better worse)

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

what is a command or planned economy

A

An economic system where government allocate economic resources to firms and other productive enterprises (gov almost owns everything)(socialist/communist)

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

What is a free-market economy

A

An economic system which resolves the basic economic problem through the price mechanism (good and services are purchased through supply and demand)

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

What is a mixed economy

A

An economy where both the free-market mechanism and the government planning process allocate resources.

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

What is demand/ effective demand

A

the quantity of a good or service that consumers are willing and able to buy at given prices in a given period of time

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

What is consumer surplus

A

The difference between how much buyers are prepared to pay for a good and what they actually pay

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

what is producer surplus

A

the difference between how much sellers are prepared to sell a good for and how much supply they actually have

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

what is supply

A

the quantity of goods that suppliers are willing and able to sell at any given price over a period of time

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

What is excess demand

A

when the demand is greater than the supply

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

What is excess supply

A

when the supply is greater than the demand

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

what is Joint Supply

A

when one good is produced, another good is also produced from the same raw materials perhaps as a by product e.g., lamb and wool

23
Q

what is joint demand

A

Joint demand = complementary goods

e.g., printer and printer ink

24
Q

what is composite demand

A

demand for a good which has more than one use (an increase in demand for one use of the good reduces the supply for another use of the good) e.g., milk can be used to make cheese, yogurt, butter etc.

25
Q

what is derived demand

A

Demand for a good or factor of production used in making another good, e.g., increase in demand for fencing will lead to an increased derived demand for wood

26
Q

What is a substitute

A

A good which can replace another good to satisfy a want

27
Q

what is an inferior good

A

a good where demand falls as income increases and vice versa (has a negative yed) e.g., when income increases demand for public transport decreases and demand for private transport increases.

28
Q

what is a normal good

A

a good where demand increases as income increases and demand decreases as income falls

29
Q

what is market failure

A

occurs when the price mechanism causes inefficient allocation of resources, either completely failing to provide a good or service or providing the wrong quantity

30
Q

what is a subsidy

A

a grant provided by the government, to encourage suppliers to increase production of a good or service, leading to a fall in its price

31
Q

what is a positive externality

A

when the production/ consumption of a good causes a benefit to the third party

32
Q

what is a negative externality

A

external cost that occurs when the production/ consumption of a good causes a cost to the third party

33
Q

what is a free rider

A

someone who benefits without paying due to non-excludability (e.g., fare dodging for train rides, open access wifi, playing football in a park for free even though they didn’t pay for it)

34
Q

what is complete market failure

A

happens where, unless the good/service is provided outside the mechanism, there wouldn’t be a market for it, there is a missing market (e.g., a country’s military services)
This means that the government need to intervene to provide it

35
Q

what is partial market failure

A

happens when the private sector may partially provide it at the wrong price or quantity, there is a missing market. (e.g., Private healthcare vs NHS)

36
Q

what is a missing market

A

a situation which there is no market because the functions of prices have broken down e.g., when goods are provided too cheaply or in a monopoly the good may be too expensive.

37
Q

what is a private good

A

a good that is excludable and rival, (the consumption by one person results in the good not being available for consumption by another) e.g., a chocolate bar

38
Q

what is a (pure) public good

A

a good that is non-excludable and non-rival (the consumption by one person does not reduce the amount available for another, all individuals benefit of suffer whether they wish to or not)

e.g., streetlights, tv programmes, roads, firework displays etc.

39
Q

what is a quasi-public good (non-pure public good)

A

a good which is not fully non-rival and/ or where it is possible to exclude people from consuming the product (e.g., congestion tolls, roads are free to use, but congestion tolls exclude some people who (don’t) have to pay, congestion creates rivalry as there’s limited no. of people who can benefit from the road at any one time)

40
Q

what is a merit good

A

a good with positive externalities (people underestimate their benefits e.g., education, healthcare, libraries etc)

41
Q

what is a demerit good

A

a good which has negative externalities (people underestimate their costs, e.g., cigarettes, alcohol, drugs etc,)

42
Q

what is symmetric information

A

where buyers and sellers have the access to the same information

43
Q

what is asymmetric information

A

where buyers and sellers have access to different amounts of information

44
Q

what is government failure

A

this occurs if government intervention leads to a net welfare loss

45
Q

what is rational behaviour

A

is when individuals make decisions that will provide them with highest amount of personal utility e.g., picking a movie to watch

46
Q

what is inter-temporal choice/ choice over time

A

economic term to describe how current decisions affect what options become available in the future (either getting or job or going to university - choice between income now and income in the future)

47
Q

what is a capital good

A

goods/ fixed assets which are used in the production of other goods e.g., tools, machinery, vehicles

48
Q

what is a consumer good

A

good that are bought directly by consumers e.g., clothes, food

49
Q

what is a durable consumer good

A

goods that last a long time e.g., fridge, bike, microwave

50
Q

what is a non-durable consumer good

A

good that last a short time e.g., food

51
Q

what moves the ppf curve

A

improved technology, increased resources e.g., no. of workers which increases total possible output of the economy increases (economic growth),

52
Q

what are the condition of supply

A 
costs of production
improvements in technology 
climate/weather 
indirect taxes e.g., VAT, exercise duties 
subsidies
53
Q

what is government intervention

A

is a regulatory action taken by governments that interfere with decisions made by individuals, groups and organisation about social and economic matters.

Economics 1 - Microeconomics (10 decks)

Brainscape helps you reach your goals faster, through stronger study habits.
© 2024 Bold Learning Solutions. Terms and Conditions