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Unformatted text preview: reflects the nominal price of a product adjusted for the changing value of money. Consumer Price Index: New-Old/Old – CPI measures the change in nominal prices. Economist makes three basic assumptions about buyers and sellers: 1) Market participants are presumed to be goal oriented—that is interested in fulfilling their own personal goals. 2) Market participants engage in rational behavior. 3) Market participants confront scarce resources. Explicit Cost: Money used in the pursuit of a goal that could otherwise have been spent on an alternative objective. Implicit Cost: cost associated with the individuals use of his or her own time and other resources in the pursuit of a particular activity versus alternatives. Sunk Cost: Costs that have already been incurred and are beyond recovery. Production Possibility Frontier: A depiction of all the different combinations of goods that a rational actor with certain personal goals can attain with a fixed amount of resources....
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This note was uploaded on 10/23/2009 for the course ECON 420 taught by Professor Staff during the Spring '08 term at University of Wisconsin.
- Spring '08