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Micro Ch 1
Stack based on Chapter 1 of Principles of Microeconomics 3e
| Term | Definition |
|---|---|
| circular flow diagram | a diagram that views the economy as consisting of households and firms interacting in a goods and services market and a labor market |
| economics | the study of how humans make choices under conditions of scarcity |
| macroeconomics | the branch of economics that focuses on broad issues such as growth, unemployment, inflation, and trade balance |
| market | interaction between potential buyers and sellers; a combination of demand and supply |
| market economy | an economy where economic decisions are decentralized, private individuals own resources, and businesses supply goods and services based on demand |
| microeconomics | the branch of economics that focuses on actions of particular agents within the economy, like households, workers, and business firms |
| scarcity | when human wants for goods and services exceed the available supply |
| theory | a representation of an object or situation that is simplified while including enough of the key features to help us understand the object or situation |
| production possibilities frontier (PPF) | a diagram that shows the productively efficient combinations of two products that an economy can produce given the resources it has available |
| opportunity cost | measures cost by what we give up/forfeit in exchange; opportunity cost measures the value of the forgone alternative |
| comparative advantage | when a country can produce a good at a lower cost in terms of other goods; or, when a country has a lower opportunity cost of production |
Created by:
CheriseSLCC
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