Shared Flashcard Set

Details

ECON Lindsay, Dale
ECON 301
20
Economics
Undergraduate 4
02/14/2012

Additional Economics Flashcards

 


 

Cards

Term
Managerial Economics
Definition
The study of how to direct scarce resources in the way that most efficiently achieves a managerial goal.
Term
Accounting Profits
Definition
Total revenue minus total cost
Term
Economic Profit
Definition
Total revenue minus total opportunity cost.
Term
Accounting Costs
Definition
The explicit costs of the resources needed to produce produce goods or services.
Reported on the firm’s income statement.
Term
Opportunity costs
Definition
The cost of the explicit and implicit resources that are foregone when a decision is made.
Term
Profits as a signal
Definition
Profits signal to resource holders where resources are most highly valued by society.
Resources will flow into industries that are most highly valued by society.
Term
Consumer-Producer Rivalry
Definition
Consumers attempt to locate low prices, while producers attempt to charge high prices.
Term
Consumer-Consumer Rivalry
Definition
Scarcity of goods reduces the negotiating power of consumers as they compete for the right to those goods.
Term
Producer-Producer Rivalry
Definition
Scarcity of consumers causes producers to compete with one another for the right to service customers
Term
The Role of Government
Definition
Disciplines the market process.
Term
Future Value of a sum (one time payment)
Example: Deposit $256 at an 8% interest rate, how much can you withdraw in 1 year, 2 years, 16 years
Definition
FV1 = 256+256(0.08) = $276.48

FV2 = 256+256(0.08)+256(0.08)+256(.08).08
= 256+20.48+20.48+1.64 = $298.60
= 256(1+.08)2 = $298.60

FV16 = 256(1+.08)16 = $877.04
Term
Present value of a lump sum

Example: Expect to receive $100 in EIGHT years. If can invest at 10%, what is it worth today?
Definition
PV = 100/((1+.1)^8) = 46.65
Term
Marginal Benefit
Definition
Change in total benefits arising from a change in the control variable, Q
Term
Marginal Cost
Definition
Change in total costs arising from a change in the control variable, Q:
Term
Marginal Principal
Definition
To maximize net benefits, the managerial control variable should be increased up to the point where MB = MC.
MB > MC means the last unit of the control variable increased benefits more than it increased costs.
MB < MC means the last unit of the control variable increased costs more than it increased benefits.
Term
As more firms exit an industry
Definition
economic profits increase
Term
To maximize profits, a firm should increase production of a good until...
Definition
marginal revenue = marginal cost
Term
Under producer-producer rivalry, individual firms want to sell the product at the maximum price consumers will pay, but are unable to do this because of:
Definition
competition among sellers.
Term
If marginal benefits is less than marginal costs, it is profitable to:
Definition
decrease Q
Term
In a competitive market, the market demand is Qd = 80 - 8P and the market supply is
Qs = 20 + 2P. A price ceiling of $2 will result in a
Definition
A. shortage of 40 units.
Supporting users have an ad free experience!