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Microeconomics
Chapter 1
| Question | Answer |
|---|---|
| What are valuable resources? | - Labor - Land - Capital - Entrepreneurship ( What and how to produce goods and services) |
| Why do economist disagree? | - Normative issues - Freedom vs. Fairness - The validity of their economic statement |
| What is the fallacy of composition? | Summing up all parts ( aggregation), what is true for one individual is not true for all |
| What is correlation and causation? | Two events usually occur together but they do not always cause eachother |
| What is the Ceteris Paribus Assumption? | Let everything be equal to isolate the variable |
| What is economics? | - Central ideas of economist theory - All resources are scare and take up opportunity cost |
| What is microeconomics? | Making decisions for companies ( goods and services) |
| What is macroeconomics? | |
| What is the rule of rational choice? | Pursue an activity of greater marginal benefit than marginal cost |
| What is net benefit? | The difference between marginal benefits and marginal costs. |
| What is a positive incentive? | Encourages consumption and production and decreases cost of increase benefit |
| What is a negative incentive? | Discourages consumption or production, increases cost or reduces benefits. |
| What is a market failure? | - Fails to allocate resources efficiently - Shortage or surplus - Lack of competition ( Market power) - Government intervenes |
Created by:
Marlenathibeault
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