Definition of Economics: Economics is the study of the choices we make among our many wants and desires given our limited resources.
Microeconomics vs. Macroeconomics:
Microeconomics Analyzes decision making by individual consumers and firms in individual
a) Many Sellers and Buyers in a highly competitive market.
b) Differentiated products, but also very similar.
c) Sales promotion and advertising.
d) Easy entry of new firms in the long run.
Profit = Total Revenue minus Total Cost = TR TC
Explicit Costs: Actual payments (cash/credit) for resources like wages, rent, taxes, interest, etc.
Accountants only look at explicit cost (Accounting Profit = Total Revenue minus Explicit Cos