Econ

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• #tags column:4
• Default What is Microeconomics ? "
• studying the behaviour of individual
• economic units including consumers, workers, investors,
• " EC113
• Default What does the study of microeconomics entail ? "
• The study of scarcity and choice, also how individuals/firms make decisions and respond to incentives, given limited
• " EC113
• Default What is macroeconomics ? "broader study of the aggregation of markets and economic quantities, e.g inflation, unemployment.
• " EC113
• Default What is Market Economy ? "
• An economic system where prices, operating through
• the forces of supply and demand, determine the
• distribution of resources, production, & investment decisions.
• " EC113
• Default What is the alternative to a market economy ? "
• Centrally planned or command
• economy, where production, investment and distribution
• decisions are determined by a central planner or decision-
• makers appointed by the government.
• " EC113
• Default What is the economy made up of ? Individuals/Households ---- Firms ------ Government EC113
• Default What does the cost benefit approach entail ? B(x) > C(x), do x EC113
• Default What is a constrained optimisation problem ? "Making choices subject to constraint (cost - given up) for example;Consumers (have limited income to spend on some goods and services / save for the future) constraint: WageWorkers (trade off between work and leisure , work and education, employment)Firms face limits on the kinds of products that they can
• produce, and the resources available to produce them." EC113
• Default What is opportunity cost ? The value of what will be sacrificed to do the other activity. EC113
• Default What is the reservation price of an activity ? Price where you'll be indeferent between doing activity x and doing activity y. Indeferrence indicates firm behaviour. EC113
• Default What is a sunk/retrospective cost ? "
• A cost that has already been incurred and
• cannot be recovered. Sunk costs should be ignored when making decisions
• " EC113
• Default What is marginal benefit ? The increase in total benefit from carrying out one additional unit of a good/activity. EC113
• Default What is marginal cost ? The increase in total cost from doing an additional activity/ producing good. EC113
• Default What is average benefit/cost ? The total benefit/total cost of undertaking n units of an activity, divided by n EC113
• Default Where does the marginal cost equal marginal benefit ? The optimal point (MC)x = (MB)x EC113
• Default What is the theory of consumer choice ? Individuals want to maximise satisfaction or utility, which allows us to explain how people choose what to buy.  EC113
• Default Micro involves positive and normative analysis, what is positive analysis ? Statements of fact. Tends to be objective and can be tested e.g raising min wage will increase in unemployment. EC113
• Default What is normative analysis in micro ? How things ought to be. Tends to be subjective and can't be tested bc it involves value judgement e.g increase min wage to reduce poverty EC113
• Default What does a market consist of ? "