AA 4306 Lecture Notes - Lecture 1: Monopsony, Subprime Mortgage Crisis, Agency Cost
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Business economics (101)
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Document Summary
There is no set deiniion however it revolves around the basis of as a society we encounter :- Choice - this is what we can choose. Regional agents in economics are constrained by available resources: Consumers maximising uility subject to budget constraints. Firms maximising proit subject to operaional constraints. Governments maximising welfare subject to resource constraints. Each of these sectors will have to make choices at the margin based on these constraints. In addiion they will probably end up trading one thing for another: Governments more incomes means less wealth in society. These decisions will be made with reference to opportunity cost value destroying acivity which can show accouning proit. This illustrates fundamental trade-ofs in economics and looks like this: If you were to want more of one product, you would have to reduce some of the other product. If price is cut, there will be an increased quanity demanded. A more proitable industry will atract entry.
