Micro test 1

  1. Endogenous variable
    Theory exists to explain the variables
  2. Exogenous variable
    Givens, not a result in the theory
  3. Opportunity Cost
    The best alternative taht we forgo, or give up, when we make a choice or a decision.
  4. Positive economics
    An apporoch that attempts to understand behavior and the oporation of systems withour making judegments. decscribes what exists and how it works.
  5. Normative economics
    An approach to economics that anylyes outcomes of economic behavior, evaluates them as good or bad and may perscirbe courses of action. AKA policy economics.
  6. Detrerminants of demand
    • Change in income
    • Change in Tastes
    • Change in prices of related goods
    • Change in buyers
    • Expected future change in price
  7. Normal Good
    Income goes up, Demand goes up
  8. Inferior goods
    Income goes up, demand goes down
  9. Substitutes
    Price of one substitute increase then the demand for the other substitute increases.
  10. Complements
    Price of one complement increases then the demand for the other complement decrease
  11. Determinants of Supply
    • Input price
    • Change in number of sellers
    • Technology
  12. Law of Supply
    An increase in market price will lead to an increase in quantity supplied and visa versa.
  13. Law of demand
    As prices rise, quantity demanded decreases and visa versa.
Card Set
Micro test 1
Micro test 1