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ABSOLUTE ADVANTAGE: The general ability to produced more goods using fewer resources. This idea of absolute advantage is important for trading that occurs between both people and nations. A nation can get an absolute advantage from an advanced level of technology or higher quality resources. For a person, an absolute advantage can result from natural abilities or the acquisition of human capital (education, training, or experience).
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Lesson 13: The Firm | Unit 2: Objectives
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Page: 11 of 24
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In this unit, you should have learned about:- Why business firms, like consumers, are primarily motivated to stay alive.
- Three different types of profit -- economic, accounting, and normal.
- Why business firms are guided by profit maximization much like consumers are guided by utility maximization.
- How and why real world firms are likely to pursue sales maximization, owner utility, employee utility, or social responsibility.
- Natural selection as the proposition indicating that firms which maximize profit, whether intentional or not, are the ones that tend to remain in business.
- Why natural selection justifies the assumption of profit maximization.
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AUTONOMOUS INVESTMENT Business investment expenditures that do not depend on income or production (especially national income or even gross domestic product). That is, changes in income do not generate changes in investment. Autonomous investment is best thought of as investment that the business sector undertakes regardless of the state of the economy. It is measured by the intercept term of the investment line. The alternative to autonomous investment is induced investment, which does depend on income.
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BROWN PRAGMATOX
[What's This?]
Today, you are likely to spend a great deal of time at an auction hoping to buy either a key chain with a built-in flashlight and panic button or a green and yellow striped sweater vest. Be on the lookout for poorly written technical manuals.
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This isn't me! What am I?
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Ragnar Frisch and Jan Tinbergen were the 1st Nobel Prize winners in Economics in 1969.
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"Defeat is simply a signal to press onward. " -- Helen Keller, author, lecturer
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NNP
Net National Product
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