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33 terms

Microeconomics Exam 1

STUDY
PLAY
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