Flashcards in Lecture 2 Deck (19)
What is the principle of voluntary exchange
The idea that no one enters into a transaction without in making them better off in some way
What are examples of principle of voluntary exchange
Does bill gates mow his own yard?
What is Microeconmics?
The study of the economic on a smaller micro scale
Looking at individual markets
Looking at something like ie coffee industry in New Mexico
What is the technically definition of utility?
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
Everyone gets benefit from consuming a good but the exact amount for each person is unknown. Is this true?
What is marginal utility?
What is gained from adding on one small piece of extra utility
What is opportunity cost?
What is given up for what is wanted
What's the objective of a firm?
To Maximize profit
What is profit?
Financial benefit that is realized when the revenue gained outweighs the business cost
What is accounting profit
Revenue less the explicit monetary paints for things used in the produced process
What is economic cost
The amount of profit made above and beyond the next alternative
How to firms make profit?
Convert inputs into produce
What is the factors of producetio?
Five groups of production
What is an economic model?
An abstraction from reality that allow us to focus on what really matters
What is a variable?
A measure of something that can take on different values
What is a relationship?
A connection association or involvement
I.e when price goes up quantity demanded goes down
What is an assumption
A proposition that is taken for granted