Micro Economics

Rational Choices

A choice that uses the available resources to best achieve the objective of the person making the choice. We make rational choices by comparing costs and benefits

Incentive

A reward or a penalty—a "carrot" or a "stick"—that encourages or discourages an action ( or An incentive is something that induces a person to act, such as the prospect of a punishment or a reward).

Economic Principle

A very well-tested and widely accepted theory is referred to as an economic law or an economic principle —a statement about economic behavior or the economy that enables prediction of the probable effects of certain actions.

Capital

All manufactured aids used in producing consumer goods and services. Included are all factory, storage, transportation, and distribution facilities, as well as tools and machinery.

Factors of Production

Are the productive resources used to produce goods and services.

Law of Increasing Opportunity Costs

As the production of a particular good increases, the opportunity cost of producing an additional unit rises

Normative Economics

Deals with value judgements. These statements are a matter of opinion and cannot be proven by reference to facts.

Slope

Equals the change in the value of the variable measured on the y-axis divided by the change the value of the variable measured on the x-axis. Slope = y ÷ x ( (delta)is a Greek letter stands for change in a variable).

Positive Economics

Focuses on facts and cause-and-effect relationships.

Utility or Benefit

Gain Measured by What You Are Willing to Give Up OR The gain or pleasure that something brings.

Entrepreneurial Ability

It is supplied by entrepreneurs, who perform several critically important economic functions.

Opportunity Cost

The best thing that you must give up to get something—the highest-valued alternative forgone (or whatever must be given)up to obtain some item.

Production Possibilities Model (or Production Possibilities Frontier (PPF)

The boundary between the combinations of goods and services that can be produced and the combinations that cannot be produced, given the available factors of production and the state of technology.

Social Interests

The choices that are best for society as a whole.

Self-Interests

The choices that are best for the individual who makes them.

Scarcity

The condition that arises because the available resources are insufficient to satisfy wants( or scarcity is the limited nature of society's resources).

Marginal Costs

The cost of a one-unit increase in an activity.

Economizing Problem

The need to make choices because economic wants exceed economic means.

Goods and Services

The objects and actions that people value and produce to satisfy human wants.

Economics

The social science that studies the choices that we make as we cope with scarcity and the incentives that influence and reconcile our choices ( or it is the study of how society manages its scarce resources ).

Macroeconomics

The study of the aggregate (or total) effects on the national economy and the global economy of the choices that individuals, businesses, and governments make

Microeconomics

The study of the choices that individuals and businesses make and the way these choices interact and are influenced by governments.

Cost

What You Must Give Up ( or THE COST OF SOMETHING. IS WHAT YOU GIVE UP TO GET IT)

Marginal Benefit

What you gain when you get one more unit of something.