Term
|
Definition
| Where needs or wants exceed means, therefore people have to make a choice. Can't read a book and watch TV, can only do one. |
|
|
Term
|
Definition
| Things that are given up, or forgone, are the costs of a decision. |
|
|
Term
| Production Possibilities Curve (PPC) |
|
Definition
| Illustrates the idea of scarcity. The combinations along the line are the maximum that can be producted with the given resources; there is no way, with the current resources, to produce any combination outside of the curve. |
|
|
Term
|
Definition
Ability to beat competition: the ability of a provider of goods or services to conduct business more profitably or efficiently than any competitor.
Able to produce more of a good than a competitor. |
|
|
Term
|
Definition
More efficient production: a higher relative efficiency in the production of a particular good in one country or company as opposed to another.
Example. Only giving up 1/2 unit of tech for 1 unit of agriculture, vs a country that has to give up 1 unit of tech for 1 unit of agriculture. |
|
|
Term
|
Definition
| Each country can get more units by specializing and trading than by being self-sufficient. |
|
|
Term
|
Definition
| Sales to other countries. |
|
|
Term
|
Definition
| Purchases from other countries. |
|
|
Term
|
Definition
| A measure of how well a system (Price, First-come-first-served, Government, Random) satisfies the wans and needs of individual human beings. |
|
|
Term
|
Definition
| An efficient allocation of resources where no other available allocation that makes someone better off without making another person worse off exists. |
|
|
Term
|
Definition
When all costs and benefits are not included in a transaction, then the decisions buyers and sellers make is based on incomplete information and the resulting price/quantities bought and sold are not efficient.
Consequence of production ignored in pricing: a factor such as environmental damage that results from the way something is produced but is not taken into account in establishing the market price of the goods or materials concerned.
Can be Negative (imposing costs on others, fixed by taxes) or Positive (grant benefits to others, fixed by governement subsidies).
Often refered to as a "Market Failure" |
|
|
Term
|
Definition
| An externality that does not take into account all costs and benefits and therefore is not efficient. |
|
|
Term
|
Definition
| Type of Market Failure where people can consume a product without having to pay for it. No one would have an incentive to purchase the good. |
|
|
Term
|
Definition
| Include the costs of bargaining and negotiating. |
|
|
Term
|
Definition
| More efficient for the firm to carry out transactions between suppliers and producers internally rather than externally. |
|
|
Term
|
Definition
| More efficient to include parallel activities within the firm than to use the market. |
|
|
Term
|
Definition
| Identical goods selling in different markets will naturally have the same price. |
|
|
Term
|
Definition
| Income, prices of related goods, and tastes or preferences. |
|
|
Term
| Demand vs Quantity Demanded |
|
Definition
Quantity Demanded = The amount of a product that people are willing and able to purchase at a specific price.
Demand = The amount that people would be willing and able to purchase at every possible price. |
|
|
Term
|
Definition
| Prices of resources used to produce the good or service, technological changes enabling more to be produced with the same amoung of resources, expectations of producers, and number of sellers affect supply. |
|
|
Term
| Supply vs Quantity Supplied |
|
Definition
Quantity Supplied = The amount of a product that sellers are willing and able to offer for sale at a specific price.
Supply = The amount that sellers would be willing and able to sell at every possible price. |
|
|
Term
|
Definition
| simultaneous buying and selling: the simultaneous buying and selling of the same negotiable financial instruments or commodities in different markets in order to make an immediate profit without risk |
|
|
Term
|
Definition
| To create an output that is more valueable than the cost of the inputs used to produce the output. |
|
|
Term
| Four Factors of Production |
|
Definition
| Capital, Land (natural resources), Labor. The fourth isn't really a fourth, but some dude think "human capital" is one as well. It's not accepted though. |
|
|
Term
|
Definition
| All natural resources, raw materials, land, and sea. |
|
|
Term
|
Definition
| All natural resources, raw materials, land, and sea. |
|
|
Term
|
Definition
| Skilled and unskilled labor. |
|
|
Term
|
Definition
| Structures, equipment, and inventories. |
|
|
Term
|
Definition
| The excess of revenues over the cost of all resources. |
|
|
Term
|
Definition
The difference between the revenue received from the sale of an output and the opportunity cost of the inputs used.
Economic Profit = Accounting Profit - Capital Costs |
|
|
Term
|
Definition
The value of output less the cost of inputs but not including the opportunity cost of the owner's capital.
Otherwise known as operating profit or net operating profit.
Accounting Profit = Revenue - Cost of land and labor |
|
|
Term
|
Definition
| Firms that subtract value. |
|
|
Term
|
Definition
| A firm that neither adds value nor subtracts it. Revenue is sufficient to pay the cost of all of the inputs it uses, but with nothing left over. |
|
|
Term
|
Definition
| A firm that neither adds value nor subtracts it. Revenue is sufficient to pay the cost of all of the inputs it uses, but with nothing left over. |
|
|
Term
| Capital Asset Pricing Model (CAPM) |
|
Definition
| The model calculates how risky a compay is and devises a risk premium that must be added to teh average cost of equity capital. |
|
|
Term
|
Definition
| Equal to the cost of debt multiplied by the proportion of total capital made up of debt plus the cost of equity multiplied by the proportion of total capital made up of equity. |
|
|
