Microeconomics Flashcards – The Economics Classroom

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.

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)
Price
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This is the amount paid for a good determined by the supply and demand for the good in the market. Price rises and falls as demand and supply rise and fall.

Price
Inferior Goods
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Goods that consumers demand less of as their incomes rise and more of as their incomes fall. For example fast food meals.

Inferior Goods
Income
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The money earned by households for providing their resources (land, labor and capital) to firms in the resource market. Incomes include wages, interest, rent and profit.

Income
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)
Social science
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One of the fields of study that examine humans’ social interactions and institutions. Includes economics, sociology, psychology, archaeology, political science, linguistics, etc

Social science
Incentive
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Refers to the motivation an individual has to undertake a particular action.

Incentive
Private sector
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Refers to the activities undertaken by the private households and firms in an economy. “Private sector spending” includes household consumption and investment by private, non-government-owned firms.

Private sector
Public good
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Goods or services which are non-excludable by the producers and non-rivalrous in consumption. Because of these characteristics, private sector firms have little or no incentive to produce them, since they would be impossible to sell. Therefore, government must provide public goods. Examples include street lamps, sidewalks and national defense.

Public good
Economic good
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Something that is demanded and limited in quantity, thus scarce.

Economic good

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