Microeconomics: Key Terms
This flashcard deck provides a concise overview of essential microeconomic terminology and concepts. Perfect for students preparing for exams or needing a quick refresher, it covers fundamental topics from scarcity and opportunity cost to market structures and efficiency. Master these key terms to build a strong foundation in microeconomics.
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What is scarcity?
Limited resources against unlimited wants — the basic economic problem.
What is opportunity cost?
The value of the next best alternative given up.
What does the production possibilities frontier show?
The maximum combinations of two goods an economy can produce with its resources and technology.
What is the law of demand?
All else equal, a higher price lowers quantity demanded.
What is the law of supply?
All else equal, a higher price raises quantity supplied.
What is market equilibrium?
The price where quantity demanded equals quantity supplied.
What does price elasticity of demand measure?
How much quantity demanded responds to a change in price.
What is consumer surplus?
The gap between what buyers are willing to pay and what they actually pay.
What is producer surplus?
The gap between the price sellers receive and the least they would accept.
What is deadweight loss?
Lost total surplus from an inefficient quantity, often caused by taxes or price controls.
What is an externality?
A cost or benefit that falls on a third party outside the transaction.
What two traits define a pure public good?
It is non-rival and non-excludable.
What is a monopoly?
A single seller of a product with no close substitutes.
What is an oligopoly?
A market dominated by a few large, interdependent firms.
What is marginal analysis?
Comparing the additional benefit of an action with its additional cost.