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Managerial Economics > Managerial Economics Overview > Flashcards

Managerial Economics Overview Flashcards

1
Q

Applies economic tools and techniques to business decision-making

A

Managerial Economics

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2
Q

The study how to direct scarce resources in the most efficient way to achieve the managerial goal

A

Managerial Economics

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3
Q

Three Basic Economic Questions

A
  1. WHAT commodities should be produced?
  2. HOW should those commodities be produced?
  3. FOR WHOM are those commodities produced?
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4
Q

Three Major Areas of Manager’s Tasks

A
  1. Help develop firm’s goals.
  2. Must develop strategies to achieve the goals.
  3. Must acquire and direct the resources necessary for achieving the goals.
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5
Q

The basic model of business, which means that firms are useful for producing and distributing goods and services.

A

Theory of the Firm

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6
Q

The main goal of the firm.

A

Earning profit

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7
Q

What are included in the recent main goal of the firm?

A

Factor of Uncertainty and Time Value of Money

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8
Q

What is the primary goal of the firm in the more complete model?

A

Long-term expected value maximization

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9
Q

Resources that are owned by other and hired, rented, or leased by the business.

A

Market-supplied resources

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10
Q

Resources that are owned and used by the firm.

A

Owner-supplied resources

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11
Q

Market-Supplied Resources or Owner-Supplied Resources

Labor from workers

A

Market-supplied resources

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12
Q

Market-Supplied Resources or Owner-Supplied Resources

Raw materials from suppliers

A

Market-supplied resources

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13
Q

Market-Supplied Resources or Owner-Supplied Resources

Capital equipment rented or leased

A

Market-supplied resources

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14
Q

Market-Supplied Resources or Owner-Supplied Resources

Money provided by the owners

A

Owner-supplied resources

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15
Q

Market-Supplied Resources or Owner-Supplied Resources

Capital owned by the firm

A

Owner-supplied resources

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16
Q

Market-Supplied Resources or Owner-Supplied Resources

Time and labor services provided by the owners

A

Owner-supplied resources

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17
Q

Market-Supplied Resources or Owner-Supplied Resources

Land and buildings owned by the firm

A

Owner-supplied resources

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18
Q

These are what the business pays for the use of these resources.

A

Monetary Costs of market-supplied resources

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19
Q

Other term for monetary costs of market-supplied resources

A

Explicit Costs

20
Q

Other term for opportunity costs of owner-supplied resources

A

Implicit Costs

21
Q

What is involved if the owner-supplied resources does not require the firm to pay money?

A

Opportunity Costs of owner-supplied resources

22
Q

It is defined as the residual of sales revenue minus the explicit costs of doing business.

A

Business Profit/Accounting Profit

23
Q

It only considers the explicit costs.

A

Business Profit/Accounting Profit

24
Q

Accounting Profit Equation

A

AP = Revenues - Explicit Costs

25
Q

It is the excess of revenue over costs, compensating inputs provided by the owner.

A

Economic Profit

26
Q

It is the business profit minus the implicit costs of capital and any of the owner-provided inputs.

A

Economic Profit

27
Q

Economists include opportunity cost in the costs of doing business.

A

Economic Profit

28
Q

It considers both explicit and implicit costs.

A

Economic Profit

29
Q

Economic Profit Equation

A

EP = Revenues - Explicit Costs - Implicit Costs

30
Q

States that market are sometimes in disequilibrium because of unanticipated changes in demand or cost conditions.

A

Frictional Profit Theory

31
Q

Explains that some firms have above-normal profits because they are protected from competition by high barriers to entry.

A

Monopoly Profit Theory

32
Q

Describes above-normal profits that arise following successful invention or modernization.

A

Innovation Profit Theory

33
Q

States that firms will have above-normal rates of return if they achieve extraordinary success in meeting customer needs and maintaining efficient operations.

A

Compensatory Profit Theory

34
Q

Market structure with the highest degree of competition.

A

Perfect Competition

35
Q

It has a large number of firms producing identical products.

A

Perfect Competition

36
Q

Managers must determine what quantity of output to produce given the price.

A

Perfect Competition

37
Q

Price is determined by supply and demand in the market, and the individual firm has no input on that price.

A

Perfect Competition

38
Q

Kinds of firms that can choose both the profit-maximizing quantity and price.

A

Monopolistic Competition

39
Q

Don’t have to consider direct competition.

A

Monopoly

40
Q

Has a large number of firms but the goods produced by the firms isn’t identical.

A

Monopolistic Competition

41
Q

Because of differences between goods, customers develop preferences for one firm’s product over another firm’s product.

A

Monopolistic Competition

42
Q

Characterized by a small number of large firms where rivals are easily identified.

A

Oligopoly

43
Q

Close interaction leads to mutual interdependence.

A

Oligopoly

44
Q

Decision making means that firms should consider how their rivals respond to their actions.

A

Oligopoly

45
Q

Single firm producing a commodity that has no close substitutes.

A

Monopoly

46
Q

If the consumers believe that the price is too high, they will not buy the product.

A

Monopoly

Managerial Economics (15 decks)

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