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.

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

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One of the explanations for the law of demand and the downward sloping demand curve. Says that the more of any particular product consumers have, the less each additional unit is worth to them. In other words, the less scarce a particular product, the lower its value in the market. An example might be the iPhone, which when it came out was very scarce (in high demand but limited supply). Apple charged very high prices for the first iPhones. But as the product has become more widely available, each additional iPhone Apple makes is harder and harder to sell. It therefore must come out with new versions of the iPhone every year that are different from previous versions to keep demand strong.

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When the quantity supplied of a good is greater than the quantity demanded. Also called “excess supply”. A surplus will occur if the price in a market is greater than the equilibrium price, for example, due to a government price floor.

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(Welfare loss): The loss of total societal welfare (consumer and produce surplus) that occurs when a market is producing at a level of output that is not socially optimal (where MSB=MSC). May arise from a market failure or from a government intervention in an already efficient market.

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This is the amount of output produced and consumed in a market determined by the supply and demand. As supply and demand change, the quantity in the market changes as well.

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The payment to labor in the resource market. Wages are the “price of labor

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When the free market fails to achieve a socially optimal allocation of resources towards the production of a particular good or service.

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The benefits enjoyed by the individual consumers of a particular good. Does not take into account any external benefits or costs arising from a goods consumption.

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The period of time over which all resources (land, labor and capital) can be added or subtracted to the production of a good. “The variable-plant period”

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Goods that consumers demand more of as their incomes rise and less of as their incomes fall. For example restaurant meals.

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