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20 Cards in this Set
- Front
- Back
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Economics
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-study of how limited resources is used to satisfy unlimited human wants
-study of how individuals and societies choose to use scarce resources that nature and previous generations have provided |
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Resources
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-Land
-Labor -Capital -Entrepreneurship |
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Land
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all gifts of nature, such as; water, air, minerals, sunshine, plant and tree growth, as well as the land itself which is applied to the production process
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Labor
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the efforts, skills, and knowledge of people which are applied to the production process
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Capital
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Real Capital(Physical Capital)-Tools, buildings, machinery things which have been produced which are used in further production
Financial Capital- Assets and money which are used in the production process Human Capital-Education and training applied to labor in the production process |
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Engineering economic analysis procedure
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1)Problem recognition, formulation, and evaluation
2)Development of the feasible alternatives 3)Development of the cash flows for each alternative 4)Selection of a criterion 5)Analysis and comparison of the alternatives 6)Selection of the preferred alternative. |
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Entrenpreneurship
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-Human resource that organizes the other resources to produce goods and services
-Humans that come up with new ideas about how to produce; bear monetary, professional and reputation risk. |
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How the Federal reserve affects interst rates
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By buying bonds
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Sunk cost and Oppurtunity Costs
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Sunk cost- onte that has occurred in the past and has no relevance to estimates of future costs and revenues related to an alternative course of action
Opportunity cost- the cost of the best rejected out of rejected |
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Implicit Costs
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-Imported costs; salary, interest, or rent foregone; also includes any other personality attainable assets foregone by selecting a current alternative approach
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Explicit costs
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-Dollars used to buy production factors and pay interest
Also included -Depreciation- value lost in buildings and equipment because of: age, wear, obsolescense -Sunk Costs- unrecoverable costs on equipment and / or processes; zero oppurtunity costs |
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Fixed Costs
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those unaffected by changes in activity leverl over a feasible range of operations for the capacities or Capabilities available
typical fixed costs: insurance, taxes on facilities, general management and administrative salaries, liscence fee, and interest cost on borrowed capital. When large changes in usage of resources occur, or wen plant expansion or shutdown is involved fixed costs will be affected. |
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Variable costs
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those with an operation that vary in total with the quantity of output or other measures of activity level.
example of variable costs include: cost of material and labor used in product or service b/c they carry in total w/# of output units weven though cots/unit remain the same. |
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Prime Costs
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a common method of allocating overhead cots among products, services and activities in proportion the sum of direct labor and material cost
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Depreciation
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the most common example of book cost; depreciation is what is charged for the use of assests, such as plant and equipment; depreciation doesn't cause cash flow
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Total Revenue
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TR= Price x Quantity
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Average Total Cost (ATC)
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Total cost divided by total output
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Marginal Cost
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-Incremental costs
-increase in total cost from the las unit produced -change in TC/change in TP= change in TC/MP |
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The Index
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-A dimensionless number that shows how prices / costs vary with time -- a measurement of inflation or deflation
-Changes usually occur as a result of: `technological advances `availability (scarcity) of labor and materials `changes in consumer buying patterns -It establishes a reference from some base time period (i.e., a base year) -When compared to a current-year index measures the amount (%) change from the base period |
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Consumer Price Index (CPI)
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An inflationary indicator that measure the change in the cots of a fixed market of products and services, including housing, electricty, food, and transportation
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