Flashcards: Microeconomic Decision-Making Fundamentals — 22 cards

Microeconomic reasoning — definition?

Decision-making based on costs, benefits, constraints.

Opportunity cost — role?

Value of next best alternative foregone.

Rationality — assumption?

Agents make consistent, goal-oriented choices.

Marginal reasoning — focus?

Incremental benefits or costs of one more unit.

Economic constraints — examples?

Budget, time, resources limit choices.

Principles of decision-making — key?

Consider opportunity costs, optimize marginally, within constraints.

Agents — types?

Consumers and producers.

Objectives of consumers — aim?

Maximize utility.

Objectives of producers — aim?

Maximize profit.

Goods and services — characteristics?

Attributes, availability, and substitutability affect decisions.

Market interactions — mechanism?

Decisions of agents influence prices and quantities.

Agents — decision focus?

Maximize utility or profit within constraints.

Microeconomic methodology — steps?

Enumerate choices, gather info, rank, select best.

Decision principles — include?

Opportunity cost, marginal analysis, rationality.

Opportunity cost — significance?

Guides optimal resource allocation.

Rational decision-making — process?

Optimize objectives given constraints.

Marginal analysis — application?

Deciding to consume or produce one more unit.

Agents and objectives — relationship?

Agents pursue utility or profit maximization.

Goods/services — impact on market?

Their attributes influence demand, supply, and choices.

Market interactions — result?

Prices and quantities adjust to agent decisions.

Optimization methods — purpose?

Identify best choice under constraints.

Feasible choices — process?

List, eliminate infeasible options, rank, choose.