| A | B |
|---|
| Accounting Cost | It's the simple monetary cost of a good or service, also called explicit cost or "out-of-pocket" expense because its money that comes right out of the pocket |
| Opportunity Cost | It's the value of the next best alternative to a given activity, good or service-exp. Opportunity of going to a party is (opportunity) costing you study time instead. |
| Total Economic Cost | Is the sum of both accounting and opportunity cost |
| Transaction Cost | The economic exchanges and deals cost |
| The Four Assumptions of Economics | Peope are rational;people are greedy;people act in their own self interest; and the resourses are scarce(consequence of greed) |
| The Four basic factors of production | Land, capital,labor and entrepeneurship |
| Land | Consist of all natural resources such as forest land, water, minerals-anything known as raw goods or primary commodities |
| Capital | Includes all goods and even processes that are used to make other goods or services. It has two forms, physical and human capital |
| Labor | Consist of human resources, those working with physical labor or with intelligence or skills |
| Entrepreneurship | Its a type of human resource, it combines the factors of production and it involves risk taking |
| Profit | Payment for entrepreneurship |
| Wages | Payment for labor |
| Rent | Payment for land |
| Physical Capital | machines, technology |
| Human capital | People with training, intelligence or education |
