Samenvatting Microeconomics: Canadian Edition 3rd Edition

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ISBN-13 9781319120061
103 Flashcards en notities
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Dit is de samenvatting van het boek "Microeconomics: Canadian Edition 3rd Edition". De auteur(s) van het boek is/zijn Paul Krugman. Het ISBN van dit boek is 9781319120061. Deze samenvatting is geschreven door studenten die effectief studeren met de studietool van Study Smart With Chris.

Samenvatting - Microeconomics: Canadian Edition 3rd Edition

  • 9 decision making by individuals and firms

  • Why does a good decision making depend on accurately defining costs and benefits?
    Lets find out
  • What is the difference between Explicit and implicit cost?
    Lets find out
  • What is the difference  between accounting profit and economics profit and which profit is the correct basis for decision making , and why?
    Lets find out
  • Ehat are the three types of economic decisions?
    Lets find out
  • Why doe people behave  in irrational yet predictable ways sometimes?
    Lets find out
  • Why are decisions involving time different and how they should be made
    Lets find out
    (chapter index)
  • 9.1 Costs, Benefits , and Profits

  • Why is it important to think about opportunity cost of an action when making decisions?
    Because the opportunity cost of an action is more than the cost of any outlays of money
  • Why do economists use Explicit and Implicit costs? What relationship do they use it to compare with? That do they mean by those relationships
    • They use these costs  to compare the relationship between opportunity cost and the monetary outlays
    • Meaning the money they forgo, and the time they spend, and the future income that they would gain as a result of decisions.
  • Why do we need to know the cost and benefit concept , what do we asses with that concept
    In order to asses the cost and benefit and make either or decisions
  • 9.1.1 explicit versus implicit costs

  • Why is Explicit cost the most obvious cost?
    Explicit cost is the monetary cost that a person accrues by making a decision
  • What is significant about impilicit costs?
    It is the value or opportunity cost in (dollar terms) of the benefit that are forgone.
  • What does the opportunity cost include? What is its formula, and what other things does it include
    • It states that the cost of a decision isn't just the monetary value to obtain that decision, but also the time and resources used up to fulfill that decision.
    • The opportunity cost is the Explicit cost plus the implicit cost.
    • should include any of my own resources for the activity.
  • To calculate the cost of my resources that i own?
    Calculate the cost of using my own resources by determining what they would have earned in their next best use
  • 9.1.2 Accounting profit versus Economic profit

  • How is the accounting profit calculated?
    • First we calculate the revenue from a particular decision
    • then we look at the revenue from not taking the decision
    • then we calculate any other costs that is incurred due to decision
    • then we subtract the revenue from not taking the decision from the revenue from a particular decision
    • then we subtract the answer to the previous one with the any other costs that is incurred due to decision
    • that is the accounting profit  of a decision
  • Why do we need to calculate economics profit to get the best possible economics outcome? And how is it calculated? Which on is bigger EP or APwhy?
    • The economics profit looks at the implicit  cost in addtion to the explicit so that i gives a more accurate picture of what is being lost.
    • the economic profit will be less that the accounting profit because of the  implicit cost that is subtracted from the revenue from a particular decision
    • economic profit is calculated using the revenue from a particular decision and subtracting it from the (explicit and implicit cost of that decision).
    • accounting profit is larger since it does not include the implicit cost
  • Can we assume that if a decision does not have an explicit cost that it has no opportunity cost when we use our own capital
    No becasue the use of the capital was the opportunity cost even when it was  owned.
  • What does capital mean? And what does it include for individual and for firms?
    • Capital is the total value of the assests of an individual or a firm.
    • An individuals capital consisits of
      • cash in the in banks
      • stocks and bonds
      • ownership value of real estate such as  a house
    • in the case of a business
      • used parts
      • inventory of unsold goods
      • equipment
      • tools
  • What is the difference between financial assets and physical assets? 3 Examples of both?
    • Financial assets are assets obtain in the financial marker such as
      • cash
      • stocks
      • bonds
    • physical assets are  assets that are tangible and workable such as
      • buildings
      • equipment      
      • tools
      • inventory 
  • How do we describe the implicit cost of  the use of capital in a decision made?
    • The income the owner of the capital could have earned if that capital had been employed in the next best alternative use.
    • Interest from the bank
  • According to the net effect of the implicit cost of capital, is there a difference in costs when deploying our capital in alternative uses
    There is no difference whether we deploy our capital in any alternative uses
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Laatst toegevoegde flashcards

How can we define the Present value of X
It can be defined as the amount oof money needed todays in order to recieve X in the future given the intereset rate?
What is the equation that represents the present value of a future benefit?
X*(1+2)=PV
How do we determine how much we need today in order to figure out how much we will get one year from now? How do we define it?
We will need the interest rate,
that is the price charged for borrowin money expressed as the percentage of the amount borrowed
Why use present value, when making decsisions when time is a factor? How about projects that occure over time?
Because it allows yout to convert costs an/or benefits that arrive in the future into a value today.
we can also compare projects that occur overtime by comparing values today?
What is the basic rule in deciding whether or not to undertake a prject?
the basic rule in deciding whether or not to undertake a prject is to compare the benefits of the project with its costs, both the explpicit and the imlpicit
then choose the course for the highest economic profit
whatis increasing returns to scale and what advantages does it have?
Well come back here
Why odes a firm's cost differ in the short run and the long run
Well come back here
What types of costs does a firm face and how does the firm generate its marginal and average cost curves?
Well come back here
Why is the production ofject subject to dimishing returns to inputs?
Well come back here
What is the firms production function?
Well come back here