Explicit cost Implicit cost Accounting profit Economic profit Capital Implicit cost of capital Principle of “either- Marginal analysis Marginal cost Increasing marginal cost Marginal cost curve Constant marginal cost Decreasing marginal cost Marginal benefit Decreasing marginal benefit Marginal benefit curve Optimal quantity Profit- Sunk cost Rational Bounded rationality Risk aversion Irrational Mental accounting Loss aversion Status quo bias Utility Util Marginal utility Marginal utility curve Principle of diminishing marginal utility Budget constraint Consumption possibilities Budget line Optimal consumption bundle Marginal utility per dollar Optimal consumption rule | the tendency to avoid making a decision. (of a consumer) a measure of the satisfaction derived from consumption of goods and services. each additional unit costs more to produce than the previous one. the additional utility from spending one more dollar on a good or service. a cost that has already been incurred and is nonrecoverable. a cost that does not require the outlay of money; it is measured by the value, in dollar terms, of forgone benefits. describes a decision maker who chooses an option that leaves him or her worse off than choosing another available option. a basis for decision making that leads to a choice that is close to but not exactly the one that leads to the best possible economic outcome; the “good enough” method of decision making. the opportunity cost of the capital used by a business; that is, the income that could have been realized had the capital been used in the next best alternative way. the total value of assets owned by an individual or firm— the proposition that in a profit- when a consumer maximizes utility, the marginal utility per dollar spent must be the same for all goods and services in the consumption bundle. each additional unit of an activity yields less benefit than the previous unit. the quantity that generates the highest possible total net gain. a graphical representation showing how the benefit from producing one more unit depends on the quantity that has already been produced. a unit of utility. the habit of mentally assigning dollars to different accounts so that some dollars are worth more than others. each additional unit costs the same to produce as the previous one. the proposition that each successive unit of a good or service consumed adds less to total utility than does the previous unit. the cost of a consumer’s consumption bundle cannot exceed the consumer’s income. a business’s revenue minus the opportunity cost of resources; usually less than the accounting profit. the change in total utility generated by consuming one additional unit of a good or service. the set of all consumption bundles that are affordable, given a consumer’s income and prevailing prices. a cost that involves actually laying out money. the principle that, in a decision between two activities, the one with the positive economic profit should be chosen. the willingness to sacrifice some economic payoff in order to avoid a potential loss. describes a decision maker who chooses the available option that leads to the outcome he or she most prefers. each additional unit costs less to produce than the previous one. oversensitivity to loss, leading to unwillingness to recognize a loss and move on. the additional benefit derived from producing one more unit of a good or service. the additional cost incurred by producing one more unit of a good or service. a business’s revenue minus the explicit cost and depreciation. the consumption bundle that maximizes the consumer’s total utility given his or her budget constraint. a graphical representation showing how marginal utility depends on the quantity of a good or service consumed. a graphical representation showing how the cost of producing one more unit depends on the quantity that has already been produced. comparison of the benefit of doing a little bit more of some activity with the cost of doing a little bit more of that activity. all the consumption bundles available to a consumer who spends all of his or her income. |
Explicit cost
Implicit cost
Accounting profit
Economic profit
Capital
Implicit cost of capital
Principle of “either-
Marginal analysis
Marginal cost
Increasing marginal cost
Marginal cost curve
Constant marginal cost
Decreasing marginal cost
Marginal benefit
Decreasing marginal benefit
Marginal benefit curve
Optimal quantity
Profit-
Sunk cost
Rational
Bounded rationality
Risk aversion
Irrational
Mental accounting
Loss aversion
Status quo bias
Utility
Util
Marginal utility
Marginal utility curve
Principle of diminishing marginal utility
Budget constraint
Consumption possibilities
Budget line
Optimal consumption bundle
Marginal utility per dollar
Optimal consumption rule