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Study sets matching "managerial econ"

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Study sets matching "managerial econ"

32 terms
Managerial Economics
economic theory of the consumer
theory of consumer behavior
consumer behavior
market basket (or bundle)
consumers choose the best bundle of goods that they can afford
description of how consumers allocate their incomes among dif…
a. consumer preference ... b. budget constraints ... c. consumer ch…
list with specific quantities of one or more goods
economic theory of the consumer
consumers choose the best bundle of goods that they can afford
theory of consumer behavior
description of how consumers allocate their incomes among dif…
33 terms
Managerial Economics - Chapter 11
Welfare Economics
Social Welfare
Consumer Surplus
Producer Surplus
Study of how the allocation of economic resources affects the…
Material well-being of society
Net benefit by consumers from consumption
Net benefit by producers from production
Welfare Economics
Study of how the allocation of economic resources affects the…
Social Welfare
Material well-being of society
37 terms
Managerial Economics - Chap 14
Game Theory
Zero-sum Game
Positive-sum Game
Negative-sum Game
General framework to help decision making when payoffs depend…
One player's gain is another player's loss
Game with the potential for mutual gain
Game with the potential for mutual loss
Game Theory
General framework to help decision making when payoffs depend…
Zero-sum Game
One player's gain is another player's loss
15 terms
Managerial Economics - Chapter 12
Monopoly
Price Makers
Monopoly Underproduction
Deadweight Loss From a Monopoly Problem
A market structure characterized by a single seller of a high…
Buyers and sellers whose large transactions affect market pri…
Tendency for monopoly firms to restrict output to increase pr…
Decline in social welfare due to the drop in mutually benefic…
Monopoly
A market structure characterized by a single seller of a high…
Price Makers
Buyers and sellers whose large transactions affect market pri…
24 terms
Managerial Economics - Chapter 13
Monopolistic Competition
Oligopoly
High-Price/Low-Output Equilibrium
Low-Price/High-Output Equilibrium
A market structure characterized by a large number of sellers…
A market structure characterized by few sellers and interdepe…
In monopolistic competition, where differentiated products al…
In monopolistic competition, where entry of identical product…
Monopolistic Competition
A market structure characterized by a large number of sellers…
Oligopoly
A market structure characterized by few sellers and interdepe…
16 terms
Managerial Economics - Chapter 10
Market
Market Structure
Potential Entrant
Product Differentiation
Firms and individuals willing and able to buy or sell a given…
The competitive environment
Person or firm posing a sufficiently credible threat of marke…
Real or perceived differences in the quality of goods and ser…
Market
Firms and individuals willing and able to buy or sell a given…
Market Structure
The competitive environment
30 terms
Managerial Economics - Chapter 8
Historical Cost
Current Cost
Replacement Cost
Opportunity Cost
Actual cash outlay
Amount paid under prevailing market conditions
The cost of duplicating productive capability using current t…
Foregone value associated with current rather than next-best…
Historical Cost
Actual cash outlay
Current Cost
Amount paid under prevailing market conditions
20 terms
Managerial Economics - Chapter 1
Theory of the Firm
Expected Value Maximization
Value of the Firm
Present Value
Basic model of business
Optimization of profits in light of uncertainty and the time…
Present value of the firm's expected future net cash flows
Worth in current dollars
Theory of the Firm
Basic model of business
Expected Value Maximization
Optimization of profits in light of uncertainty and the time…
22 terms
Managerial Economics - Chapter 2
Optimal Decision
Total Revenue
Dependent Variable
Independent Variable
Choice alternative that produces a result most consistent wit…
A function of output
Y variable determined by X values
X variable determined separately from the Y variable
Optimal Decision
Choice alternative that produces a result most consistent wit…
Total Revenue
A function of output
19 terms
Managerial Economics - Chap 15
Competitive Market Pricing Rule-of-Thumb
Imperfectly Competitive Pricing Rule-o…
Markup on Cost
Profit Margin
In competitive markets, set P=MR=MC for maximum profits
When P=f(Q), set P=MC/[1+(1/Ep)]
The difference between price and cost, measured relative to c…
The difference between the price and cost of a product
Competitive Market Pricing Rule-of-Thumb
In competitive markets, set P=MR=MC for maximum profits
Imperfectly Competitive Pricing Rule-o…
When P=f(Q), set P=MC/[1+(1/Ep)]
13 terms
Managerial Economics - Chapter 5
Elasticity
Endogenous Variables
Exogenous Variables
Point Elasticity
Percentage change in a dependent variable resulting from a 1-…
Factors controlled by the firm
Factors outside the control of the firm
Elasticity at a given point on a function
Elasticity
Percentage change in a dependent variable resulting from a 1-…
Endogenous Variables
Factors controlled by the firm
18 terms
Managerial Economics - Chapter 4
Demand
Direct Demand
Utility
Derived Demand
Total quantity customers are willing and able to purchase und…
Demand for consumption products
Value
Demand for inputs used in production
Demand
Total quantity customers are willing and able to purchase und…
Direct Demand
Demand for consumption products
26 terms
Managerial Economic
Economics
Managerial Economics
Microeconomics
Macroeconomics
The science of making decisions in the presence of scarce res…
The study of how to direct scarce resources in the way that m…
looks at the individual markets that make up the market syste…
Considers with the aggregate performance of all market in the…
Economics
The science of making decisions in the presence of scarce res…
Managerial Economics
The study of how to direct scarce resources in the way that m…
30 terms
Managerial Economics
Autocorrelation
Cartel
Coase Theorem
Complementary Good
Situation where time series data is influenced by its own his…
Collusive arrangement in oligopolistic markets. Producers agr…
In the presence of cost externalities, government interventio…
Product that is consumed in conjunction with another (e.g., i…
Autocorrelation
Situation where time series data is influenced by its own his…
Cartel
Collusive arrangement in oligopolistic markets. Producers agr…
92 terms
Managerial Economics
Economics:
Pillars of economic wisdom:
Economic value added =
The two steps of problems solving are:
the study of human behavior; trying to solve information and…
1. We are self-interested... 2. We respond to incentives... 3. TANS…
Net operating profit after taxes - (capital * cost of capital)
(1) Figure out why mistakes are being made, and then (2) figu…
Economics:
the study of human behavior; trying to solve information and…
Pillars of economic wisdom:
1. We are self-interested... 2. We respond to incentives... 3. TANS…
39 terms
Managerial economics
optimal input mix questions
compute and interpret Marginal Product…
input prices/output prices
compute and interpret MRTS
->
x: look at q= equation and for every coefficient that include…
these numbers are given in the question
divide MPx and MPy ... interpret: give up one ___ to gain ___... *w…
optimal input mix questions
->
compute and interpret Marginal Product…
x: look at q= equation and for every coefficient that include…
27 terms
Managerial Economics-Chapter 6
What type of firm is one that is alrea…
Which of the following generally accom…
What are the two types of barriers to…
What type of entry exists if structura…
a. Market leader... b. Entrant... c. Incumbent *... d. Market follower…
a. Precipitous growth *... b. Lower marginal costs than incumben…
a. Legal and Strategic... b. Price and Size... c. Structural and St…
a. Deterred Entry... b. Judo Entry... c. Stealth Entry... d. Accommoda…
What type of firm is one that is alrea…
a. Market leader... b. Entrant... c. Incumbent *... d. Market follower…
Which of the following generally accom…
a. Precipitous growth *... b. Lower marginal costs than incumben…
44 terms
managerial economics
profit =
short run means....
long run means....
MP = 0 results in what?
R - C
Capital is fixed. 1 input is fixed
K + L are variable inputs
product maximization
profit =
R - C
short run means....
Capital is fixed. 1 input is fixed
52 terms
Managerial economics
What is the optimal method for procuri…
A Lerner index of 0 suggests
Monopolistic competition is characteri…
What is the optimal method for procuri…
Contract
perfect competition
differentiated products
Spot exchange
What is the optimal method for procuri…
Contract
A Lerner index of 0 suggests
perfect competition
67 terms
managerial economics
K with bar on top
Short Run
Long Run
Diminishing Marginal Product
Fixed Capital (In a production function)
at least one input is fixed; different lengths of time, depen…
no fixed inputs
when an input increases, output increases at a decreasing rat…
K with bar on top
Fixed Capital (In a production function)
Short Run
at least one input is fixed; different lengths of time, depen…
129 terms
Managerial Economics
What generates a new production functi…
What is the goal of a firm?
What is the equation for profit?
TR = ?
Improvement in technology/training enhancing productivity
Profit maximisation
Profit = TR - TC
P x Q
What generates a new production functi…
Improvement in technology/training enhancing productivity
What is the goal of a firm?
Profit maximisation
194 terms
Managerial Economics
Familiar concepts that are used in man…
Key decisions in multi-national produc…
Profitability levels, Time of entry, D…
Define problem, Determine objectives,…
Demand & Cost - Monopoly & Competition - Resource allocation…
Profit maximizing price, Production level with respect to dem…
Considerations for Market entry problem
6 steps of decision making
Familiar concepts that are used in man…
Demand & Cost - Monopoly & Competition - Resource allocation…
Key decisions in multi-national produc…
Profit maximizing price, Production level with respect to dem…
67 terms
managerial economics
economics
management
managerial economics
micro
study of behavior of human beings in producing, distributing…
discpline of organizing and allocating a firm's scarce resour…
use of economic analysis to make business decisions involving…
study of individual market, pricing of specific outputs and i…
economics
study of behavior of human beings in producing, distributing…
management
discpline of organizing and allocating a firm's scarce resour…
9 terms
Managerial Economics
Oligopoly
Contingent Optimality
Game Theory
Repeated Games
Few Producers... Potential for Rivalry or collision... Interdepende…
No one best thing to do in the market
Contingent Optimality... Use pay off matrix to summarize outcome…
requires trust and reciprocity
Oligopoly
Few Producers... Potential for Rivalry or collision... Interdepende…
Contingent Optimality
No one best thing to do in the market
29 terms
Managerial Economics
If the Government institutes a specifi…
Economist tend to judge a model based on
If the price of automobiles were to de…
Suppose the demand curve for a good sh…
the producer simply passes the entire tax on the consumer
the accuracy of its predictions
shift leftward
an increase in quantity supplied
If the Government institutes a specifi…
the producer simply passes the entire tax on the consumer
Economist tend to judge a model based on
the accuracy of its predictions
13 terms
Managerial Economics
Producer Surplus
Competitive Market Equilibrium
Managerial Economics
Economic Profits
The amount producers receive in excess of the amount necessar…
Equilibrium in a competitive market is determined by the inte…
The study of how to direct scarce resources in the way that m…
The difference between total revenue and total opportunity cost
Producer Surplus
The amount producers receive in excess of the amount necessar…
Competitive Market Equilibrium
Equilibrium in a competitive market is determined by the inte…
Managerial Economics
Change into a demand function: P= 4100…
Use Qsupply and Qdemand equations to f…
Analysis for point price elasticity
If absolute value of price elasticity…
Q=20,500,000 - 500P
Qsupply = Qdemand, solve for P and put P back into equations…
demand for ____ falls/rises by __% when price for ____ increa…
Elastic good
Change into a demand function: P= 4100…
Q=20,500,000 - 500P
Use Qsupply and Qdemand equations to f…
Qsupply = Qdemand, solve for P and put P back into equations…
32 terms
Managerial Economics
short run
long run
long run
increasing marginal return
period of time where at least one input is fixed
when the firm can vary all of inputs of production
"planning phase"
In this region, each additional unit of labor is associated w…
short run
period of time where at least one input is fixed
long run
when the firm can vary all of inputs of production
11 terms
Managerial Economics
What are Corporate Control Mechanisms?
What are markets, and what do they do…
Price taker
Price setter
1. Requires managers to hold a stipulated amount of the firm'…
A market is any arrangement through which buyers and sellers…
cannot set the price of its product; price is determined by s…
can set the price of its product; may have a monopoly on the…
What are Corporate Control Mechanisms?
1. Requires managers to hold a stipulated amount of the firm'…
What are markets, and what do they do…
A market is any arrangement through which buyers and sellers…
10 terms
Managerial Economics
Positive Economics
Normative Economics
Accounting Profit
Economic Profit
Fact
Opinion
Revenue-costs
Revenue-costs (Market value profit) - opportunity costs
Positive Economics
Fact
Normative Economics
Opinion
31 terms
Managerial economics
Business firm
Rate of change
Total cost
Total revenue
Is a private economic organization that buys and uses product…
change of y/ change of x
Labor cost +capital cost + raw material cost
Selling price * number of items sold (chairs)
Business firm
Is a private economic organization that buys and uses product…
Rate of change
change of y/ change of x
13 terms
Managerial Economics
Constant Cost Industry
Constant Returns to Scale
Profit
Allocative efficiency
Industry whose long-run supply curve is horizontal
Situation in which output doubles when all inputs are doubled
Difference between total revenue and total cost
is a state of the economy in which production represents cons…
Constant Cost Industry
Industry whose long-run supply curve is horizontal
Constant Returns to Scale
Situation in which output doubles when all inputs are doubled
14 terms
Managerial Economics
If the price elasticity of demand for…
Elasticity of demand is closely relate…
Suppose the price of potato chips decr…
For a horizontal demand curve,
a. 0.4 percent decrease in the quantity demanded.... b. 2.5 perc…
a. steeper the demand curve will be.... b. flatter the demand cu…
a. 2.00.... b. 1.55.... c. 1.00.... d. 0.64.
a. the slope is undefined, and the price elasticity of demand…
If the price elasticity of demand for…
a. 0.4 percent decrease in the quantity demanded.... b. 2.5 perc…
Elasticity of demand is closely relate…
a. steeper the demand curve will be.... b. flatter the demand cu…
92 terms
Managerial Economics
Economics:
Pillars of economic wisdom:
Economic value added =
The two steps of problems solving are:
the study of human behavior; trying to solve information and…
1. We are self-interested... 2. We respond to incentives... 3. TANS…
Net operating profit after taxes - (capital * cost of capital)
(1) Figure out why mistakes are being made, and then (2) figu…
Economics:
the study of human behavior; trying to solve information and…
Pillars of economic wisdom:
1. We are self-interested... 2. We respond to incentives... 3. TANS…
56 terms
Managerial Economics
What is the scope of Managerial Econom…
What is the simple micro theory of eco…
What is public policy focused on
What is created when firms act in thei…
Reasoning and understanding economics at the firm/farm level
supply and demand
the market
Markets
What is the scope of Managerial Econom…
Reasoning and understanding economics at the firm/farm level
What is the simple micro theory of eco…
supply and demand
140 terms
Managerial Economics Exam 2
production function
production function formula
K
L
function that defines maximum output produced in given set of…
Q = F (K,L)
Capital
Labor
production function
function that defines maximum output produced in given set of…
production function formula
Q = F (K,L)
101 terms
Managerial Economics Exam 1
Manager
Economics
Resources
Managerial Economics
person who directs resources to achieve a stated goal
the science of making decisions in the presence of scarce res…
anything used to produce a good or service
study of how direct scarce resources in the way that most eff…
Manager
person who directs resources to achieve a stated goal
Economics
the science of making decisions in the presence of scarce res…
78 terms
Managerial Economics Final
game theory
simultaneous-move game
sequential-move game
one-shot game
aid to decision making when agents' payoffs, depends on the a…
makes decision without the knowledge of the other players dec…
makes moves after observing the other player's move
make decisions only one
game theory
aid to decision making when agents' payoffs, depends on the a…
simultaneous-move game
makes decision without the knowledge of the other players dec…
54 terms
Managerial Economics Exam 3
improving industry attractiveness
oligopoly
economies of scale
Rent Seeking
reduce number of rivals... restricting entry... cooperation among r…
a few large, influential rivals... high competitive interdepende…
reduction of unit costs with quantity of output due to greate…
incumbents seek to use the force of government to create a ba…
improving industry attractiveness
reduce number of rivals... restricting entry... cooperation among r…
oligopoly
a few large, influential rivals... high competitive interdepende…
57 terms
Managerial Economics Test 4
the degree of uncertainty surrounding…
the expected value of a risky decision…
the probability of success for a new p…
based on historical records, investing…
degree of dispersion of the possible outcomes
the sum of the products of the values of all possible outcome…
1. is the degree of belief by experts that the product will s…
5 percent
the degree of uncertainty surrounding…
degree of dispersion of the possible outcomes
the expected value of a risky decision…
the sum of the products of the values of all possible outcome…
66 terms
Managerial Economics Practice Questions
An individual's value for a good or se…
The biggest advantage of capitalism is
Wealth creating transactions are more…
Government regulation provides incenti…
The amount of money he or she is willing to pay for it
Creates wealth by letting a person follow his or her own self…
With private property rights, With contract enforcement
provides incentives to conduct business in an illegal black m…
An individual's value for a good or se…
The amount of money he or she is willing to pay for it
The biggest advantage of capitalism is
Creates wealth by letting a person follow his or her own self…
56 terms
Managerial Economics Unit II
Price Elasticity of Demand (E)
Elastic
Inelastic
Unitary Elastic
The % change in quantity demanded, divided by the percentage…
Segment of demand for which |E| > 1
Segment of demand for which |E| < 1
Segment of demand for which |E| = 1
Price Elasticity of Demand (E)
The % change in quantity demanded, divided by the percentage…
Elastic
Segment of demand for which |E| > 1
24 terms
Managerial Economics (Old Tests)
Firm R buys a painting for 5,000 in 20…
Among all the combinations of goods at…
If a man prefers Bud to Schlitz and Sc…
If the prices of both goods increase b…
FV=P(1+r)^n... 5,000(1.05)^4
C. Equates the marg utilities per dollar of each good
Miller=Bud>Schlitz>Pabst ... He must prefer Miller to Pabst
a. It will shift parallel to the left because now the goods a…
Firm R buys a painting for 5,000 in 20…
FV=P(1+r)^n... 5,000(1.05)^4
Among all the combinations of goods at…
C. Equates the marg utilities per dollar of each good
19 terms
Managerial Economics: Chpt. 3
Demand
Change in demand
Change in supply
Change in the qty demanded
Quantities of a good or service that people are ready to buy…
The result of a change in one or more of the nonprice determi…
The result of a change in one or more of the nonprice determi…
The result of a change in the price of a good or service, gra…
Demand
Quantities of a good or service that people are ready to buy…
Change in demand
The result of a change in one or more of the nonprice determi…
9 terms
Managerial Economics: Chpt. 1
Command Process
Economic decisions for the firm-what
Economic decisions for the firm-how
Economic decisions for the firm-for wh…
The use of central planning and the directives of government…
What goods and services should be produced? The product decis…
How should these goods and services be produced? The hiring,…
For whom should these goods and services be produced? The mar…
Command Process
The use of central planning and the directives of government…
Economic decisions for the firm-what
What goods and services should be produced? The product decis…
16 terms
Managerial Economics.Chapter 7: Pricing
What is the most common pricing object…
What are the most common types of pric…
Describe "Cost-Plus Pricing."
Cost-Plus Pricing hypo:... business uses…
To achieve a target rate of return on invested capital (profi…
**Cost-Plus pricing... **Target Return on Investment pricing... **P…
• Set price based on average total cost plus a markup (profit…
P=ATC/[1+(1/Ep)]... By substitution... P=120/[1+1/-2)]... P=120/1-0.5]…
What is the most common pricing object…
To achieve a target rate of return on invested capital (profi…
What are the most common types of pric…
**Cost-Plus pricing... **Target Return on Investment pricing... **P…
87 terms
New Managerial Economics Final
Oligopoly
The four-firm concentration ratio
The higher the concentration ratio
An effective monopoly is said to exist…
a market dominated by a small number of firms, whose actions,…
the percentage of sales accounted for by the top four firms i…
the greater is the degree of market dominance by a small numb…
the single-firm concentration ratio is above 90%, CR1 > 90
Oligopoly
a market dominated by a small number of firms, whose actions,…
The four-firm concentration ratio
the percentage of sales accounted for by the top four firms i…
53 terms
Managerial Economics Chapter 9
The Cournot theory of oligopoly assume…
Which of the following is true?
In a Sweezy Oligopoly, a decrease in a…
The Bertrand model of oligopoly reveal…
keep their output constant.
None of the answers is correct.
None of the answers is correct.
perfectly competitive prices can arise in markets with only a…
The Cournot theory of oligopoly assume…
keep their output constant.
Which of the following is true?
None of the answers is correct.
148 terms
Managerial Economics Midterm - for Review
Theory of the Firm
Expected Value Maximization
Value of the Firm
Accounting profit
Basic model of business
Optimization of profits in light of uncertainty and the time…
PV of the firm's expected future net cash flows.
Residual of sales revenue minus the explicit accounting costs…
Theory of the Firm
Basic model of business
Expected Value Maximization
Optimization of profits in light of uncertainty and the time…
78 terms
Managerial Economics Final Exam
Strategy (definition)
Examples of Corporate Strategies
External Factors Influencing a Company…
Internal Factors Influencing a Company…
A game plan for getting a corporation where it wants to be. S…
1. Southwest - low cost, no seat assignment, 2 free checked b…
1. Industry and competitive conditions... 2. Buyer preferences... 3…
1. Resource strengths and weaknesses... 2. Competitive capabilit…
Strategy (definition)
A game plan for getting a corporation where it wants to be. S…
Examples of Corporate Strategies
1. Southwest - low cost, no seat assignment, 2 free checked b…
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