# Shared Flashcard Set

## Details

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

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 firmâ€™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) = \$276.48FV2 = 256+256(0.08)+256(0.08)+256(.08).08 = 256+20.48+20.48+1.64 = \$298.60 = 256(1+.08)2 = \$298.60FV16 = 256(1+.08)16 = \$877.04
Term
 Present value of a lump sumExample: 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.
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