of other goods and services. -When most Americans use the word capital , they are thinking about money that they could invest in stocks, bonds, real estate, or businesses to produce future wealth. Putting it All Together: Entrepreneurship - Innovator: Entrepreneurs think of ways to turn new inventions, technologies, or techniques into goods or services that people will want. - Strategist: Entrepreneurs supply the vision and make the key decisions that set the course for new business enterprises. - Risk taker: Entrepreneurs take on the risks of starting new businesses. They invest their time, energy, and abilities—not to mention their own and often other people's money—not knowing whether they will succeed or fail. - Spark plug: Entrepreneurs supply the energy, drive, and enthusiasm needed to turn ideas into realities. -Entrepreneurship is a specialized and highly valued form of human capital. It involves the combining of land, labor, and capital in new ways to produce goods and services. Working Smarter boost productivity - productivity: a measure of the efficiency with which goods and services are produced, stated as a ratio of output per unit of input -But by using these inputs more efficiently, we can increase the productivity of our economy. Productivity is a measure of the output of an economy per unit of input. -productivity = output/input - The first is by getting more output from the same inputs. -The second way to raise productivity is by getting the same output from fewer inputs. IV. What Do We Give Up When We Make A Choice - Some decisions in life are easy. -Other decisions are agonizing. -But there was another reason this decision was so tough .
Maximizing Utility: What We Want When We Choose - utility: the pleasure, satisfaction, or benefit a person receives from consuming a product or service or from taking an action -The way economists see the world, people seek to make themselves as well off as possible by maximizing the utility of their decisions. - They usually define utility as the satisfaction or pleasure one gains from consuming a product or service or from taking an action. Tradeoffs: What We Give Up When We Choose - As the scarcity-forces-tradeoffs principle reminds us, every decision we make—even one as simple as deciding to read this book—involves giving up one thing for another. -Like individuals, businesses face tradeoffs as they try to maximize the utility of their land, labor, and capital. -Societies face tradeoffs as well. Opportunity Cost: The Best Thing We Give Up to get What We Want - opportunity cost: Understanding the opportunity costs of the choices you face every day can help you make better decisions - The opportunity cost of any action is the value of the next best alternative that you could have chosen instead Making “How Much” Decisions at the Margin - marginal utility: the extra satisfaction or pleasure achieved from an increase of one additional unit of a good or service - negative utility: a lack of pleasure or satisfaction from consuming a product or service or taking an action; the opposite of utility -law of diminishing marginal utility: the general observation that as the quantity of a good or service consumed increases, the benefits for the consumer of each additional unit decrease - Marginal utility
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