Wealth from Assets (Ch2)

 The value of an asset: How An individual's value for a good or a service is measured as the
amount of money he or she is willing to pay for it
 Wealth is created when assets are moved from lower to higher valued uses (From 1% annum
bank interest to 10% interest from investment)
 Capitalism creates wealth by letting people follow their self-interest
 Voluntary transactions: buyer's surplus, seller's surplus
 There are two side from the transaction
 Buyer Surplus
o Positive difference between how much the buyer is willing to pay and how much
he actually pays for it
o His actual payment must be lower than the amount is willing to pay
 Seller Surplus
o Positive difference between the amount that he is willing to receive and the
actual payment
o Actual payment that he will receive than the lowest amount he is willing to
accept
o There wealth created from those voluntary transaction

 Property right and contracts

 Property right
o Title to ownership
o Transfer Certificate of Title
o Condominium Certificate Title
o ORCR (evidences on property right)
 Property contracts
o Protect business venture agreements between individuals
o Dead of sales