Podcast
Questions and Answers
What is the primary focus of microeconomics?
What is the primary focus of microeconomics?
What is the term for the value of the next best alternative given up when a choice is made?
What is the term for the value of the next best alternative given up when a choice is made?
What is the term for a sustained increase in the general price level of goods and services in an economy over time?
What is the term for a sustained increase in the general price level of goods and services in an economy over time?
What is the term for the point at which the quantity supplied equals the quantity demanded?
What is the term for the point at which the quantity supplied equals the quantity demanded?
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What is the market structure characterized by many firms producing a homogeneous product?
What is the market structure characterized by many firms producing a homogeneous product?
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What is the term for the government's use of taxation and expenditure to influence the overall level of economic activity?
What is the term for the government's use of taxation and expenditure to influence the overall level of economic activity?
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Which of the following is a key concept in macroeconomics that measures the total value of goods and services produced within a country's borders?
Which of the following is a key concept in macroeconomics that measures the total value of goods and services produced within a country's borders?
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In a perfectly competitive market, what is the characteristic of the products offered by different firms?
In a perfectly competitive market, what is the characteristic of the products offered by different firms?
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What is the term for the study of how households make decisions about what to buy and how much to pay?
What is the term for the study of how households make decisions about what to buy and how much to pay?
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Which of the following is an advantage of international trade?
Which of the following is an advantage of international trade?
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What is the term for the responsiveness of one variable to a change in another variable?
What is the term for the responsiveness of one variable to a change in another variable?
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Which of the following market structures is characterized by a single firm producing a unique product?
Which of the following market structures is characterized by a single firm producing a unique product?
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Study Notes
Microeconomics
- Study of individual economic units such as households, firms, and markets
- Examines how resources are allocated and prices are determined in individual markets
- Key concepts:
- Opportunity cost: the value of the next best alternative given up when a choice is made
- Law of diminishing marginal utility: the additional satisfaction gained from consuming one more unit of a good or service decreases as consumption increases
- Consumer equilibrium: the point at which the marginal utility of a good or service equals the price
Macroeconomics
- Study of the economy as a whole, focusing on aggregate variables such as GDP, inflation, and unemployment
- Examines issues related to economic growth, business cycles, and stabilization policies
- Key concepts:
- Gross Domestic Product (GDP): the total value of goods and services produced within a country's borders
- Inflation: a sustained increase in the general price level of goods and services in an economy over time
- Fiscal policy: government's use of taxation and expenditure to influence the overall level of economic activity
Supply and Demand
- The price and quantity of a good or service are determined by the interaction of supply and demand in a market
- Law of Supply: as the price of a good or service increases, the quantity supplied also increases, ceteris paribus
- Law of Demand: as the price of a good or service decreases, the quantity demanded also increases, ceteris paribus
- Equilibrium: the point at which the quantity supplied equals the quantity demanded
Market Structures
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Perfect Competition:
- Many firms producing a homogeneous product
- Free entry and exit
- Perfect information
- No externalities
-
Monopoly:
- Single firm producing a product
- Barriers to entry
- Firm has market power to influence price
-
Monopolistic Competition:
- Many firms producing differentiated products
- Free entry and exit
- Non-price competition (e.g. advertising)
-
Oligopoly:
- Few firms producing a product
- Interdependent decision-making
- Firms have market power to influence price
International Trade
- Exchange of goods and services between countries
-
Gains from Trade:
- Comparative advantage: countries specialize in producing goods and services in which they have a lower opportunity cost
- Absolute advantage: countries specialize in producing goods and services in which they have a higher productivity
-
Tariffs and Quotas:
- Tariffs: taxes on imported goods
- Quotas: quantitative restrictions on imported goods
- Used to protect domestic industries or raise revenue
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Description
Test your knowledge of microeconomics, including individual economic units, market structures, and international trade. Covers key concepts such as opportunity cost, supply and demand, and gains from trade.
