Microeconomics Flashcards

Only 10 flashcards are shown at a time! Once you’ve mastered these 10 Economic terms, click the shuffle button below for 10 new terms. There are approximately 115 flashcards covering Microeconomics.

Marginal
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Means “additional”. An important term in economics, which often focuses on “marginal analysis” meaning we compare the additional cost of an action to the additional benefit it creates.

Marginal
Income Elasticity of Demand (YED)
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A measure of the responsiveness of consumers of a particular good to changes in their income. Calculated as the percentage change in the quantity of a good divided by the percentage change in consumers’ income. Can be negative (inferior goods) or positive (normal goods).

Income Elasticity of Demand (YED)
Barriers to entry
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The factors which make it costly or difficult for a firm to begin producing a particular good. Might include high start-up costs, legal barriers such as patents and government licenses, or ownership of the factors of production.

Barriers to entry
Production possibilities curve
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A graph that shows the various combinations of output that the economy can possibly produce given the available factors of production and the available production technology.

Production possibilities curve
Market system
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Market economic system: A system of resource allocation in which buyers and sellers meet in markets to determine the price and quantity of goods, services and productive resources.

Market system
Wage
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The payment to labor in the resource market. Wages are the “price of labor”

Wage
Positive statement
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A claim which can be proven with facts. For example, “The unemployment rate has risen for two consecutive quarters.”

Positive statement
Marginal Social Benefit (MSB)
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The benefits experienced by the individual consumers of a particular good, plus or minus any social or environmental benefits or costs. MSB can be greater than marginal private benefit (MPB) if there are positive externalities of consumption (e.g. education) or less than MPB if there are negative externatlities of consumption (e.g. smoking).

Marginal Social Benefit (MSB)
Marginal Social Cost (MSC)
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The private costs faced by producers of a particular good plus any external costs placed on third parties, such as environmental or social costs, arising from a good’s production.

Marginal Social Cost (MSC)
Resource market
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The market in a nation’s circular flow in which households provide firms with the factors of production (land, labor and capital) in exchange for money incomes (rent, wages and interest). Firms are the buyers, households are the sellers in the resource market.

Resource market

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