Microeconomics Definition

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Marginal analysis
the comparison of marginal (extra or additional) benefits and marginal costs, usually for decision making
Utility
the satisfaction obtained from consuming a good or service
Principle
a very well-tested and widely accepted theory is referred to as a law or principle.
Models
simplified representations of how something works, such as a market or segment of the economy
Scientific method
the systematic pursuit of knowledge by observing facts and formulating and testing hypotheses to obtain theories, principles, and laws
Principles
statements about economic behavior or the economy that enable prediction of the probable effects of certain actions.
other-things-equal assumption
ceteris paribus, the assumption that factors other than those being considered do not change.
Microeconomics
the part of economics concerned with individual units such as a consumer, a household, a firm, an industry, or a worker
Aggregate
a collection of specific economic units treated as if they were one unit
Macroeconomics
the part of economics concerned with the economy as a whole or major components of the economy
Economic problem
the need for individuals and society to make choices because wants exceed means
Budget line
a line that shows various combinations of two products a consumer can purchase what a specific money income, given the products’ prices
Scarcity
the condition in which human wants are always greater than the available supply of goods and services available
Law of demand
the higher the price of a good, the smaller is the quantity demanded; and , the lower the price of a good, the greater is the quantity demanded, CETERIS PARIBUS
Individual demand
the quantity of the product which an individual will buy at a specific price
Law of supply
the higher the price of a good, the greater is the quantity supplied; and the lower the price of a good, the smaller is the quantity supplied CETERIS PARIBUS
Individual supply
the quantity of the product an individual firm will supply at that price
Categories: Macroeconomics