Long-Run Average Total Cost

Economics: The study of choice under conditions of scarcity. (Scarcity: When something is insufficient).

Opportunity Cost: What is given up when taking action or making a choice. The choice is only one, can’t be multiple ones. (Explicit Cost + Implicit Cost)

Explicit Cost: The dollars sacrificed and actually paid out for the choice made.

Implicit Cost: The Value of something sacrificed (time, money unearned, etc.) when no direct payment is made.

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Resources: The things that we use to make goods and services that help us achieve our goals.

• Labor: The time humans spend producing goods and services.
• Capital: Any long-lasting tool that is itself produce and helps us make other goods and services.

*Physical Capital: Consisting in physical goods, merchandise, equipment and factories. Make other goods.

*Human Capital: The skill and knowledge workers possessed.

*Capital Stock: Physical + Human Capital (Total amount of capital available at any point in time).

• Land: The physical space where productions takes place and its natural resources.
• Entrepreneurship: The ability and willingness to combine the other resources into a productive enterprise.

Microeconomics: The study of the behavior of individual households, firms, government and the choices they make.

Macroeconomics: The study of the behavior of the overall economy.

Models in Economics: The way the study of economy reliance on and those models are an abstract representation of reality but not reality itself that help us understand how the economy operates. Models are simplifications and should be as simple as possible and include only the necessary but sufficient details for what it was made for, some models are incompatible to different purpose.

• Simplifying assumptions: Any assumptions that simplified the model without affecting any of its important conclusions.
• Critical assumptions: Any assumptions that affects the conclusions of a model in an important way. Always more than one exist in a model.

Cause: To study or resolved an issue with economics situations and how the economy operates. Effect: Present an idea of the results or outcome of the situation or issue itself.

Supply and Demand is an economical model designed to explain how prices are determined in certain types or markets.

Market: Is a group of buyers and sellers with potential to trade with each other. Economy is a collection of markets. A market can be defined broadly or narrowly, depending on the purpose of study.

Aggregation: The process of combining distinct thing in a single whole. (To study a market)