ECON CH1

question

Manager

answer

-a person who directs resources to achieve a stated goal
-directs efforts
-directs decisions (price, product, quality)
-purchases inputs

question

economics

answer

the science of making decisions in the presence of scare resources
- resources: produce a good or service/ goal
-decisions: scarcity implies trade-offs

question

managerial economics

answer

the study of how direct scarce resources efficiently achieves a managerial goal

question

7 principles of effective Managerial Decision Making

answer

1. identify goals and constrainst
2. recognise the nature and importance of profit
3. understand incentives
4. understand markets
5. recognize time value of money
6. use marginal analysis
7. make data driven decisions

question

constrainst that make it difficult to achieve goal

answer

- available tech
- the price of inputs used in production
-government regulation
-consumer demand

question

accounting profit

answer

Total amount of money taken in from sales (total revenue) minus the dollar cost of
producing goods or services$revenue - $ producing goods/service

question

economic profit

answer

difference between total revenue and total cost
- total cost: explicit cost and implicit cost (opportunity cost)

question

opportunity cost

answer

implicit cost of giving up best alternative

question

role of profit

answer

signal to where resources are most highly valued by society

question

incentives

answer

impact how resources are used and how hard workers work

question

two sides to market transactions

answer

buyers and sellers

question

bargaining positons of consumers and producers

answer

Consumer-producer rivalry
Consumer-consumer rivalry
Producer-producer rivalry.

question

government and the market

answer

govrn. creates regulations which directly influence market transactions

question

Profit maximization

answer

maximizing the value of the firm (present value of current and future profits)

question

marginal benefits

answer

change in total benefits arising from a change in the managerial control variable $benefits change in marginal control variable

question

marginal cost

answer

change in the total cost arising from the change in managerial control variable $cost ^ managerial control variable

question

marginal principle

answer

to maximize net benefit, the manager should increase managerial control variable up to the point where marginal benefits = marginal cost

question

incremental revenues

answer

the additional revenues that stem from a yes or no decision

question

incremental cost

answer

the additional cost that stem from a yes or no decision

question

thumbs up decision

answer

MB > MC

question

thumbs down decision

answer

MB < MC

1 of 21

question

Manager

answer

-a person who directs resources to achieve a stated goal
-directs efforts
-directs decisions (price, product, quality)
-purchases inputs

question

economics

answer

the science of making decisions in the presence of scare resources
- resources: produce a good or service/ goal
-decisions: scarcity implies trade-offs

question

managerial economics

answer

the study of how direct scarce resources efficiently achieves a managerial goal

question

7 principles of effective Managerial Decision Making

answer

question

constrainst that make it difficult to achieve goal

answer

- available tech
- the price of inputs used in production
-government regulation
-consumer demand

question

accounting profit

answer

Total amount of money taken in from sales (total revenue) minus the dollar cost of
producing goods or services$revenue - $ producing goods/service

question

economic profit

answer

difference between total revenue and total cost
- total cost: explicit cost and implicit cost (opportunity cost)

question

opportunity cost

answer

implicit cost of giving up best alternative

question

role of profit

answer

signal to where resources are most highly valued by society

question

incentives

answer

impact how resources are used and how hard workers work

question

two sides to market transactions

answer

buyers and sellers

question

bargaining positons of consumers and producers

answer

Consumer-producer rivalry
Consumer-consumer rivalry
Producer-producer rivalry.

question

government and the market

answer

govrn. creates regulations which directly influence market transactions

question

Profit maximization

answer

maximizing the value of the firm (present value of current and future profits)

question

marginal benefits

answer

change in total benefits arising from a change in the managerial control variable $benefits change in marginal control variable

question

marginal cost

answer

change in the total cost arising from the change in managerial control variable $cost ^ managerial control variable

question

marginal principle

answer

to maximize net benefit, the manager should increase managerial control variable up to the point where marginal benefits = marginal cost

question

incremental revenues

answer

the additional revenues that stem from a yes or no decision

question

incremental cost

answer

the additional cost that stem from a yes or no decision

question

thumbs up decision

answer

MB > MC

question

thumbs down decision

answer

MB < MC

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ECON CH1

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