AGMT GEGE

• Utility- amount of satisfaction derived from the consumption of a commodity
• Cardinal utility- assumes that we can assign values for utility
• ·         Ordinal utility- does not assign values, instead works with a ranking of preferences
• Total Utility (TU)- the overall level of satisfaction derived from consuming a good or service
• Consumer Equilibrium- assumed that any amount of goods and services are always available for consumption
• Marginal Utility (MU)- additional satisfaction that an individual derives from consuming an additional unit of a good or service
• Marginal Utility per peso- additional utility derived from spending the next peso on the good
• Firm- is an entity concerned with the purchase and employment of resources in the production of various goods and services
• Production Function- refers to the physical relationship between the inputs or resources of a firm and their output of goods and services at a given period of time (ceteris paribus)
• Inputs- are resources that contribute in the production of a commodity
•    Fixed inputs- resources used at a constant amount in the production of a commodity
• Variable Inputs- resources that change in quantity depending on the level of output being produced
• Total Product (Q)- refers to the total amount of output produced in physical units (may refer to, kilograms of sugar, sacks of rice)
• Law of Diminishing Returns

  -       states that as the use of an input increases (with other inputs fixed), a point will eventually be reached at which the resulting additions to output decrease
• Marginal Product (MP)- refers to the rate of change in output as an input is changed by one unit, holding all other inputs constant
• Average Product (AP)

  -       Is a concept commonly associated with efficiency
•    Opportunity Cost Principle- economic cost of an input used in a production process is the value of output sacrificed elsewhere
• Opportunity cost of an input- is value of foregone income in best alternative employment
•       Explicit Cost- costs paid in cash
• Implicit Cost- imputed cost of self-owned or self-employed resources based on their opportunity costsV
• Total Fixed Cost (TFC)

  -       more commonly referred to as sunk cost or overhead cost
• Total Variable Cost (TVC)

  -       Refers to the cost that changes as the amount of output produced is changed
• Total Cost (TC)

  -       The sum of total fixed cost and total variable cost
• LAC curve (Long-run Average Cost)

  -       Is an envelope curve of the short-run average cost curves
• Market Economy

  -       Is a system where buyers and seller exchange goods or services
• Market System

  -       A market for commodities- rice, milk, water, coffee, clothes, and many others
• a.    Monopoly- one firm
• a.    Oligopoly- two or more, but few firms
• a.    Monopolistic competition- many firms selling differentiated products
• Imperfect Competition

  -       Is a market situation where individual firms have a measure of control over the price of the commodity in an industry
• Imperfect Market

  -       Is a situation where individual firms have some measure of control or discretion over the price of the commodity in an industry
• Barriers to Entry- natural or artificial constraints that prevent other firms from entering the industry
• Lump sum tax

  -       Is a fixed amount of tax levied on a producer
• Lump sum tax

  -       Is a fixed amount of tax levied on a producer
• Price Regulation- a set price imposed by the government to enhance the welfare of the consumers, a regulatory body can impose a price equal to MC
• NIA- is the measurement of indicators of national output/income; e.g. GDP, GNP
• Transfer payments

  -       Are transactions wherein one party is not obliged to deliver a good or service in return for the payment
• Exports- sales of domestically produced goods to other countries
• Imports- goods bought from other countries
• Final goods- ready for consumption; goods and services that are not purchased for the purpose of producing other goods and services or for resale (Rice (final) and palay or unhusked rice (intermediate product)