Lecture 2 Flashcards

(19 cards)

1
Q

What is the principle of voluntary exchange

A

The idea that no one enters into a transaction without in making them better off in some way

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2
Q

What are examples of principle of voluntary exchange

A

Does bill gates mow his own yard?

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3
Q

What is Microeconmics?

A

The study of the economic on a smaller micro scale
Looking at individual markets
Looking at something like ie coffee industry in New Mexico

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4
Q

What is the technically definition of utility?

A

The capacity of a commodity or a service to satisfy some human want. The amount of benefit an individual gets from consuming a product or receiving a service

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5
Q

Everyone gets benefit from consuming a good but the exact amount for each person is unknown. Is this true?

A

Yes

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6
Q

What is marginal utility?

A

What is gained from adding on one small piece of extra utility

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7
Q

What is opportunity cost?

A

What is given up for what is wanted

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8
Q

What’s the objective of a firm?

A

To Maximize profit

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9
Q

What is profit?

A

Financial benefit that is realized when the revenue gained outweighs the business cost

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10
Q

What is accounting profit

A

Revenue less the explicit monetary paints for things used in the produced process

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11
Q

What is economic cost

A

The amount of profit made above and beyond the next alternative

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12
Q

How to firms make profit?

A

Convert inputs into produce

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13
Q

What is the factors of producetio?

A

Google me

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14
Q

Five groups of production

A
Natural resources 
Labor
Physical capital 
Human capital 
Entrepreneurship
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15
Q

What is an economic model?

A

An abstraction from reality that allow us to focus on what really matters

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16
Q

What is a variable?

A

A measure of something that can take on different values

17
Q

What is a relationship?

A

A connection association or involvement

I.e when price goes up quantity demanded goes down

18
Q

What is an assumption

A

A proposition that is taken for granted

19
Q

Define creteris paribus?

A

A Latin expression meaning that all other variables are held fixed
Focusing on one thing at a time