Introduction to Managerial Economics Flashcards
1
Q
Basic Principles of Effective Management
A
- Identify goals and constraints
- Recognize the nature and importance of profits
- Understand Incentives
- Understand Markets
- Recognize the time value of money
- Use of marginal analysis
2
Q
Manager
A
-a person responsible for controlling and administering to achieve a stated goal.
3
Q
Economics
A
- a science of making decision in the presence of scarce resources.
4
Q
Resources
A
- anything used to produce goods or services
5
Q
Managerial Economics
A
- study of how to direct scarce resources in the way the most efficiently achieves a managerial goal.
6
Q
Goals
A
- something that a management hoped to achieve.
7
Q
Constraints
A
Limitation
8
Q
Profit
A
= Company’s Revenue - Expenses
9
Q
Accounting Profit
A
- total money taken in from sales minus the cost of producing the goods or services
AP= Total Revenue - Total Expenses
10
Q
Economic Profit
A
- difference between the total revenue and the total opportunity cost of producing goods or services
EP= Total Income - Total Expenses - Opportunity Lost Cost
11
Q
Opportunity Cost
A
- cost of the explicit and implicit resources that are foregone when decision is made.
12
Q
Explicit Cost
A
- out-of-pocket- costs of a firm.
13
Q
Implicit Cost
A
- opportunity cost of resources already owned by the firm and used in business.
14
Q
Incentive
A
- anything that motivates a person to do something.
15
Q
Economic Incentives
A
- financial motivations for people to take certain actions.
