ECON 1312: Introduction to Microeconomics
Lecturer: Dr. Mohammad A. Magableh
Section: 102
Student Name: Rayan Abdulrahman Al Khunani
Student ID: 201100357
Major: Mechanical Engineering
Assignment 1
Chapter 1:
1) Benefit: is an advantage, profit, or something else that has value and useful that people
gain from something. For example, the benefit of drinking milk is that it gives you
healthy bones and teeth.
2)Capital: is one of the factors of production. Also, it is what businesses use to produce
goods and services, such as machines, tools, buildings, and instruments. For example,
the capital of a restaurant is the building of the restaurant, the refrigerators, the grills,
and the ovens.
3)Economic model: is the description of some aspects and sides of the economic world.
The economic model only includes the features that are needed for the purpose at
hand. By comparing the expectations and predictions with the facts the economic
model can be tested, and some times that may require natural experiments, statistical
investigations, and economic experiments.
4)Economics: is a social science that studies people’s choices that they make as they deal
with scarcity, whether they are individuals, governments, businesses, or an entire
society, and the incentives that make them choose these choices rather than other
choices. Moreover, economics can be divided into two main branches,
macroeconomics and microeconomics.
5)Macroeconomics: is the branch of economics that studies the performance, structure,
behavior, and choices of a whole economy, such governments or certain countries.
Macroeconomics also studies things that concern everyone, not an individual, a
market, a product, or a business. For example, microeconomics studies inflation rate
and unemployment in a certain country.
6)Microeconomics: is the branch of economics the studies choices that businesses and
individuals make and how do they affect a certain market, cause a price of a single
product to rise or fall, and increase or decrease the demand on a certain product. For
example, microeconomics studies why people buy more Pepsi than Coca-Cola?
7)Efficiency: is when the available sources are used to produce goods and services at the
lowest price possible, the lowest time possible, and in the maximum quantities
possible that gives benefits as much as possible.
8)Entrepreneurship: is the human resource that manages and organizes labor, land, and
capital.
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9)Factors of production: are the productive resources that produce goods and services,
such as labor, land, entrepreneurship, and capital. Therefore, those factors affect
production.
10) Goods and services: are the items or things that people produce to satisfy the human
needs and wants. For example, laptops, phones, and clothes are considered as goods,
and health services that are provided in hospitals are considered as services.
11) Human capital: is the workforce. In other words, the knowledge and skills that
people get from education, practicing, or experience to produce goods and services.
Also, the quality of labor depends on human capital.
12) Opportunity cost: is how much you are welling to sacrifice or give up a choice or an
alternative to choose the other one. For example, if you decided to buy a new mobile
phone, your opportunity cost is the things that you can’t afford to buy after buying
this new mobile phone.
13) Preferences: is what a person like or dislike, love or hate, and how much does he like
it or dislike like.
14) Profit: is what entrepreneurships gain, and it is a financial gain, which is the
difference between the amount spent buying, producing or operating and the amount
earned.
15) Rational choice: is the choice that compares benefit and cost to achieve the
maximum satisfaction and benefit over cost to the person who made this choice.
16) Rent: is what land gain, and it is a financial gain where the owner let someone uses
his land for a return of payment.
17) Scarcity: is that people can’t satisfy all their needs and wants from goods and
services. In addition, all goods and services are scarce because they are limited and
not enough to satisfy the unlimited wants of people. Therefore, people must make
choices. For example, oil is scarce because it is limited, you can’t have unlimited
amount of oil.
18) Self-interest: are the choices that benefit an individual and it is the best choices for
him.
19) Social-interest: are the choices that benefit the whole society and it is the best
choices for them.
20) Wages: is what labor gain, and it is a financial gain, which is regularly a fixed
payment that labor get for working, and it can be called a salaries.
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Chapter 2:
1)Absolute advantage: is when you produce more than others, and to measure that we
compare productivity.
2)Allocative efficiency: is when we are not able to produce more of a good without
giving up other good that values more.
3)Capital accumulation: is the capital resources growth, and human capital is included.
4)Comparative advantage: when you can produce a good or a service at a lower
opportunity cost than other, and to measure that we compare the opportunity cost.
5)Economic growth: are the predictions and expectations of production possibilities, or
increase in the standard of living. Economic growth is affected by two main factors,
which are technological change and capital accumulation.
6)Firm: is the economic unit, that could be a company or something similar to it, that
uses he factors of production to produce goods and services.
7)Market: is where a seller and a buyer get information and do business together.
8)Money: is anything that can be used to pay with or exchange goods and services, not
just the cash money (currency). For example, I can buy a phone (a good) by giving my
watch (money) to the seller.
9)Production efficiency: is when two good are related together, so that we can’t produce
more of the first without producing less of the second one.
10) Production possibilities frontier: is the boundary between the goods and services
that can be and can’t be produced. To show that, we focus on the two different goods
and hold everything else constant, then we look at a model economy (ceteris paribus)
except the two goods we are focusing on. Therefore, we are not be able to produce
more of the first good unless we give up some the second and vice versa.
11) Property rights: are the arrangements that control the ownership, and use of goods
and services.
12) Technological change: is developing and improving goods and services, and the way
they are produced.
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References:

Parkin, Michael, Economics, 10th edition (2012). Pearson Education Limited.

Powerpoint slides and in class notes.

http://www.whatiseconomics.org/
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