Concepts and Definitions

Page created: 14th January 2018, 1:37 pm
Term: Comparative Advantage Definition: Lorem's ipsum dolor sit amet, consectetur adipiscing elit, sed do eiusmod tempor incididunt ut labore et dolore magna aliqua. Ut enim ad minim veniam, quis nostrud exercitation ullamco laboris nisi ut aliquip ex ea commodo consequat. Duis aute irure dolor in reprehenderit in voluptate velit esse cillum dolore eu fugiat nulla pariatur. Excepteur sint occaecat cupidatat non proident, sunt in culpa qui officia deserunt mollit anim id est laborum.
Term: Capital Goods Definition: YabbaDabbaDoo

Crusoe Economics

Term: Crusoe Economics Definition:

Robinson Crusoe economy, or Robinson Crusoe economics

is an imaginary construction of an isolated individual and of a planned economy without market exchange.[1]

The model is named after the fictional character Robinson Crusoe who was shipwrecked on an (apparently) deserted island in Daniel Defoe’s famous novel.

Usefulness of the model

Over the years, many critics have derided this so-called "Robinson Crusoe” economics. Obviously, an isolated person is not an accurate description of a modern economy. Rather, before we can analyze an economy composed of billions of interacting people, we should start with just one person and make sure we understand what makes him tick.

Economics has a lot to say even about cases where a single, isolated person takes actions to improve his or her situation. Even an isolated person behaves "economically" because he takes what nature has given him and exchanges the status quo for an environment that he hopes will be more pleasant.[2]
Source Reference: Robinson Crusoe economy - Mises Wiki, the global repository of classical-liberal thought

Term: Division of Labour Definition: The division of labour is the separation of tasks in any system so that participants may specialize. Individuals, organizations, and nations are endowed with or acquire specialized capabilities and either form combinations or trade to take advantage of the capabilities of others in addition to their own. Specialized capabilities may include equipment or natural resources in addition to skills and training and complex combinations of such assets are often important, as when multiple items of specialized equipment and skilled operators are used to produce a single product. The division of labour is the motive for trade and the source of economic interdependence. Source Reference: Division of labour - Wikipedia

Def Entrepreneur

Term: Entrepreneur Definition: An entrepreneur is a person who organizes a venture to benefit from an opportunity, rather than working as an employee. Entrepreneurs play a key role in any economy. These are the people who have the skills and initiative necessary to anticipate current and future needs and bring good new ideas to market. Entrepreneurs who prove to be successful in taking on the risks of a startup are rewarded with profits, fame and continued growth opportunities. Those who fail suffer losses and become less important in the markets. Many fail, lose money, and close the business. The entrepreneur assumes all the risks and rewards of the venture and is usually the sole proprietary, a partner or the owner of the majority of shares in an incorporated venture. As the main decision maker the entrepreneur monitors and controls the business activities. Source Reference: Entrepreneur - Simple English Wikipedia, the free encyclopedia

Term: First Order Goods Definition: YabbaDabbaDoo
Term: Higher Order Goods Definition: YabbaDabbaDoo
Term: Inflation Definition: YabbaDabbaDoo
Term: Law of Association Definition: YabbaDabbaDoo
Term: margin (noun) Definition:  1 : the part of a page or sheet outside the main body of printed or written matter
 2 : the outside limit and adjoining surface of something : edge
Source Reference: Margin | Definition of Margin by Merriam-Webster Note: Mises: "Acting man is not in a position in which he must choose between all the gold and all the iron. He chooses at a definite time and place under definite conditions between a strictly limited quantity of gold and a strictly limited quantity of iron."

Term: Marginal Utility Definition: People make decisions on the margin. No one chooses between "guns" or "butter", but between a definite amount of guns and a definite amount of butter.

As an actor acquires more and more units of a good, he devotes them to successively less and less urgent ends (i.e. ends that are lower on his scale of values). Therefore the marginal utility of a good declines as its supply increases. This is the law of diminishing marginal utility.
Source Reference: Marginal utility - Mises Wiki, the global repository of classical-liberal thought

Defintion: (The) Market

Term: (The) Market Definition: FINISH Not brick and mortar, a process instead. Rothbard: The market, then, is not simply an array, but a highly complex, interacting latticework of exchanges.

Term: Money Definition: YabbaDabbaDoo
Term: Production Goods Definition: YabbaDabbaDoo

Property/Property Rights

Term: Property/Property Rights Definition: Property (or property right) is a general term for the rules that govern people's access to and control of things like land, natural resources, the means of production, manufactured goods, and also (on some accounts) texts, ideas, inventions, and other intellectual products.[1] There is a close connection between property rights and human rights. Ludwig von Mises writes that the program of liberalism "if condensed into a single word, would have to read: property, that is, private ownership of the means of production".[2]

Property rights govern people's access to various things. Disagreements about their use are likely to be serious because resource-use matters to people. They are particularly serious where the objects in question are both scarce and necessary. Any society with an interest in avoiding conflict needs such a system of rules.[1]
Source Reference: Property - Mises Wiki, the global repository of classical-liberal thought

Term: Psychic revenue/profit Definition: Psychic profit and loss is an increase (profit) or decrease (loss) in the acting man's satisfaction or happiness. Psychic profits and losses are sensible, subjective, mental and purely personal. They can be neither measured nor weighed. They can only be felt or sensed. The psychic profit or loss derived from any action can be compared with that of another solely in terms of more or less. Source: Percy L. Greaves, Jr. "Mises Made Easier ", 1974. Source Reference: Search | Mises Institute Note: "The psychic profit or loss derived from any action can be compared with that of another solely in terms of more or less. " This bit is important to note. At this point in the human experience we cannot know how another feels nor do we have a method to measure units of happiness or units of contentment, etc. Therefore we can only rank psychic profit one over another, more or less. Saying to ourselves that we prefer A over B by 20% or 10x more etc. has no meaning nor does comparing against another saying we like something 2/3 more than the other.

Term: Scarcity Definition: YabbaDabbaDoo
Term: Supply Definition:

Term: Value Definition: YabbaDabbaDoo
All Is Not Well In Financial Markets | Mises Wire

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