notebook definitions (page 1 - 12)

Economics 200 with Kirk at University of Washington - Seattle Campus

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By: Alyssa Hunt
Textbook:

Study Guide for Mankiw's Principles of Microeconomics, 4th

Study Guide for Mankiw's Principles of Microeconomics, 5th
Created: 2009-02-20
Size: 19 flashcards
Views: 12

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economics

the study of the allocation of scarce resources among unlimited wants

positive statement

what is
you can prove whether it is true or not

normative statement

what ought to be
can't prove it to be true

microeconomics

the study of how individuals and firms make decisions and how they interact in markets

macroeconomics

the study of economy-wide phenomena

role of assumptions

easier to begin and easier to understand the world
remove the assumptions as we build more robust models

production possibilities frontier

represents all the combination of products a firm can produce

marginal value

the extra benefit an individual places on consuming an additional unit of a good

total value

the amount an individual would be willing to pay to have all on a given quantity of a good rather than none at all

total expenditure

the price x quantity

consumer surplus

the consumer's gain from the exchange
willing to pay - what they paid
TV - TE

marginal cost

what one must give up to get an additional unit of a good
similar to opportunity cost

law of demand

as the price of a good decrease, the quantity demanded increases, ceteris parabis

a change in demand

a shift of the entire demand curve

a change in quantity demanded

a movement along a demand curve

normal good

if income increases, demand increases
ex: tvs

inferior goods

as income increases, demand decreases
ex: top ramen

complements

goods consumed with each other
ex: peanut butter and jelly

substitutes

consume one or the other
ex: coke and pepsi