17800187
Description
Flashcards by Eduardo Cazares-Ramos, updated more than 1 year ago
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Created by Eduardo Cazares-Ramos
almost 6 years ago
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| Question | Answer |
| Economics | how societies allocate scarce resources among alternative uses |
| Production Possibilities Frontier (PPF) | shows all possible combinations of goods with fixed resources; points outside the curve are unattainable |
| opportunity cost | the value of the next best alternative |
| Smith's Model | |
| David Ricardo (Diminishing Returns) | labor and other costs rise with production levels |
| David Ricardo's Model | |
| Marshall's Model (Supply-Demand Cross) | |
| Marshall's Supply-Demand and the Margin | supply reflects increasing marginal costs and demand reflects decreasing marginal utility |
| Market Equilibrium | demand and supply curve intersect here at the price at which the quantity demanded by a good's buyers precisely equals the quantity of that good supplied by sellers |
| Positive-Normative Distinction | know the difference between theories that seek to explain the world as it is and theories that postulate the way world should be |
| Fundamental Principles of Engineering Economics (4) | 1. A dollar earned today is worth more than a dollar earned in the future 2. The difference between alternatives is all that matters 3. Marginal revenue MUST exceed marginal cost 4. The additional risk is not taken without the expected additional return |
| Cash Flow Diagram | |
| What is the cost of money? | interest |
| Calculating Interest | |
| Simple Interest | charges interest based only on initial (principle) amount F = P+(iP)N |
| Compound Interest | charges interest to initial amount plus any accumulated interest F = P( 1+i)^N |
| Find the future value of a present investment | F = P ( 1 + i)^N |
| Find the present value of a future cash flow | P = F ( 1 + i)^(-N) |
| Economic Equivalence | when 2 cash flows have the same economic effect and can be traded for one another (amounts/timing doesn't matter) |
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