Microeconomics Exam 1

33 terms by counch 

Ready to study?
Start with Flashcards

Create a new folder

Advertisement Upgrade to remove ads

All human behavior can be interpreted as an outcome of choice
(Becker)
(The Economic Approach to Human Behavior)

Fundamental working hypothesis of microeconomics
(define, who, book)

Becker's enabling precursor
(who, book)

Robbins
(An Essay on the Nature and Significance of Economic Society)

Invisible Hand
(define, who, book)

Economic forces that influence human behavior
(Smith)
(The Wealth of Nation)

Invisible Handshake
(define, who, book)

Social and historical forces that influence human behavior
(Okun)
(Equality and Efficiency)

Invisible Foot
(define, who, book)

Legal and political forces that influence human behavior
(Magee)
(The Invisible Foot and the Waste of Nations)

prospective utility
opportunity cost
prospective gain

Elements of Choice

Elements of Choice
(who, book)

Buchanan
Cost and Choice

Prospective Utility (PU)
(define)

the highest valued alternative

Opportunity Cost (OC)

the highest valued displaced alternative

Prospective Gain (PG)

prospective utility-opportunity cost

Realized Utility (RU)

what you really get

Realized Gain (RG)

realized utility-opportunity cost

Neoclassical Economics

examines equilibrium states

Neoaustrian Economics

examines disequilibrium processes

Entrepreneurship Classic View
(three names)

Say, Shupeter, Knight

Entrepreneurship Contemporary View
(one names)

Kirzner

Say (Entrepreneurship)
(idea, book)

an entrepreneur organizes production (think plant manager)
(Treatise on Political Economy)

Shupeter (Entrepreneurship)
(idea, quote, book)

an entrepreneur innovates (creates change)
gale of creative destruction
(The Theory of Economic Development)

Knight (Entrepreneurship)
(idea, book)

an entrepreneur bears risk
(Risk, Uncertainty, and Profit)

Kirzner (Entrepreneurship)
(idea, book)

An entrepreneur is someone who is alert for opportunities for gain and takes action with respect to them
(think window of opportunity)
(Competition and Entrepreneurship)

consist of buyers and sellers interacting with each other

Market for any good

product, time, place

three things that enable clear thinking about markets

Conventional interpretation of Demand

shows the maximum quantity that buyers are willing and able to buy at all prices

Conventional interpretation of Supply

shows the maximum quantity that sellers are willing and able to sell at all prices

MWTP interpretation of Demand

shows the maximum price that buyers are willing and able to pay at all quantities

MOC interpretation of Supply

shows the minimum price that sellers are willing and able to sell at all quantities

entrepreneurship moves the market towards equilibrium

What effect does entrepreneurship have on the market?

Determinant of Demand

anything that influences buyer choice
price, demand shift factors

income (normal, inferior goods)
prices of other goods (substitutes, compliments)
expectations
preferences
number of buyers

Conventional Demand Shift Factors

Complimentary Goods

an increase in the price of one implies a decrease in the demand for the other

Substitute Goods

an increase in the price of one implies an increase in the demand for the other

Normal Goods

an increase in income implies an increase in demand

Inferior Goods

an increase in disposable income implies a decrease in demand

Please allow access to your computer’s microphone to use Voice Recording.

Having trouble? Click here for help.

We can’t access your microphone!

Click the icon above to update your browser permissions above and try again

Example:

Reload the page to try again!

Reload

Press Cmd-0 to reset your zoom

Press Ctrl-0 to reset your zoom

It looks like your browser might be zoomed in or out. Your browser needs to be zoomed to a normal size to record audio.

Please upgrade Flash or install Chrome
to use Voice Recording.

For more help, see our troubleshooting page.

Your microphone is muted

For help fixing this issue, see this FAQ.

Star this term

You can study starred terms together

NEW! Voice Recording

Create Set