9.30.10 Econ

9.30.10 Econ - Economic point of view takes into account...

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Notes 9/30/10 Cost Consumer surplus is the surplus is the difference between the actual price and the consumer demand price Economics is predicated on the notion that one considers the cost and benefit Rational self interest can form an assessment of the benefit of some action relative to the cost. If we can evaluate that benefits exceed the cost, inherent in that is a concept of what the costs are Total revenue = price * quantity Total cost Profit = Total Revenue – Total Cost Explicit Cost (contractual cost) vs Implicit Cost (imputed or non-contractual cost
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Unformatted text preview: Economic point of view takes into account implicit costs as well as explicit Business point of view takes into account only takes into account explicit cost Opportunity forgone (income forgone) is the opportunity cost of the money you could have been making instead of carrying out a certain activity (for example getting an MBA degree) Ex. Sleep High income people have a higher cost of sleep. Why do high income sleep less? The cost of sleep is high for...
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