question
Perfect competition
answer
-many buyers and sellers of a homogenous product
-no individual can affect the market price
-no individual can affect the market price
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Monopoly
answer
-one seller of the product and that seller can set both quantity and price
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Monopolistic Competition
answer
-many sellers of similar but differentiated products
-producers have some control over own product's price but are aware of competition
-producers have some control over own product's price but are aware of competition
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Management
answer
process of successfully pursuing the businesses's desired results/goals with the resources available
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Manager
answer
person charged with the responsibility of planning, directing, and organizing the activities of a business to accomplish the goals set by the owners
question
Marketing Management
answer
-involves understanding customer needs and positioning products
-Involves transporting products from production or processing location to the consumers
-Involves transporting products from production or processing location to the consumers
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Financial Management
answer
-involves collecting and analyzing the data needed to inform decisions to increase or maintain profits
-borrowing and investing
-borrowing and investing
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Operations/ Logistics Management
answer
-focus for operation on production
-storing and transporting
-storing and transporting
question
Human Resources Management
answer
-hiring decisions as well as personnel administration
-decisions on how to organize the firm as well as on the types and quantity of labor and management
-decisions on how to organize the firm as well as on the types and quantity of labor and management
question
Big Data
answer
-the ability to capture and use massive volumes of info
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Vertical Integration
answer
occurs if buyer supplies some of inputs and management
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Comparative advantage
answer
those that can be produced most efficiently with given resources
question
Steps in decision making
answer
1. identify and define the problem/opportunity
2.identify alternative solutions
3.collect data and info
4. analyze the alternatives and choose
5. implement the decision
6. monitor and evaluate results
7. accept responsibility for the decision
2.identify alternative solutions
3.collect data and info
4. analyze the alternatives and choose
5. implement the decision
6. monitor and evaluate results
7. accept responsibility for the decision
question
Strategic management
answer
consists of charting the overall long-term course of the business
question
Tactical management
answer
taking short-run actions that keep the business moving along that course until the destination is reached
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Goals should be
answer
-written
-specific
-measurable
-time-able
-specific
-measurable
-time-able
question
Internal Environment
answer
-plans and policies
-human resources
-financial resources
-fixed assets
-human resources
-financial resources
-fixed assets
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External Environment
answer
-Micro: customers, competitors, suppliers
-Macro:demographics, politics, economy, culture, tech
-Macro:demographics, politics, economy, culture, tech
question
SWOT analysis
answer
-strengths
-weaknesses
-opportunities
-threats
-weaknesses
-opportunities
-threats
question
Production function
answer
-systematic way of showing the relation between different amounts of a resource or input that can be used to produce a product and the corresponding output
-AKA responce/yield curve
-AKA responce/yield curve
question
Total Physical Product (TPP)
answer
-amount of production expected from using each input level
-In output does not start at 0, TPP is change in output
-In output does not start at 0, TPP is change in output
question
Average Physical Product
answer
-average amount of output produced per unit of input used
-TPP/input level
-TPP/input level
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Marginal
answer
-incremental changes that occur at the edge or t the "margin"
-think of the word "extra" can be + or -
-think of the word "extra" can be + or -
question
Marginal Physical Product (MPP)
answer
-additional TPP produced by using an additional unit of input
-change in TPP/ change in input
-change in TPP/ change in input
question
Stage 1
answer
APP increasing
-MPP>APP
-TPP increasing
-MPP>APP
-TPP increasing
question
Stage 2
answer
-APP decreasing
-MPP<APP
-TPP increasing
-all valid production functions will have this stage
-MPP<APP
-TPP increasing
-all valid production functions will have this stage
question
Stage 3
answer
TPP decreasing
-MPP<0
-MPP<0
question
Total Cost
answer
-Variable cost (VC) + FC
question
Total Revenue (TR)
answer
multiply the output level by the output price per unit
question
The profit-maximizing level
answer
-be found by examining marginal changes in costs and revenues
question
Marginal revenue (MR)
answer
-change in TR/ change in output
-IF the output price is constant, MR is just the output price
-the change in total revenue from selling one more unit of output
-IF the output price is constant, MR is just the output price
-the change in total revenue from selling one more unit of output
question
Marginal cost (MC)
answer
-change in cost/ change in output
-the additional cost of producing that additional unit of output
-the additional cost of producing that additional unit of output
question
The decision rule, MR=MC
answer
-leads to the profit-maximizing point
-use closest point w/o letting MR fall below MC
-use closest point w/o letting MR fall below MC
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Marginal Value Product (MVP)
answer
-the change in revenue associated with increasing input use by one unit
question
Marginal Input Cost (MIC)
answer
-the cost of buying one more unit of input
question
MVP=MIC
answer
-if can't get =, get as close as possible w/o letting MVP fall below MIC
question
Equal Marginal Principle
answer
-a limited input should be allocated among competing uses in such a way that the marginal value products of the last unit used on each alternative are equal
question
Input Substitution Ratio
answer
-amount of input replaced/ amount of the input added
-change replaced/change added
-change replaced/change added
question
Input Price Ration
answer
-price added/price replaced
question
Isoquant
answer
a curve that shows the combination of 2 inputs that produces the same amount of output
question
Isocost Line
answer
the combination of inputs that cost the same amount to purchase
question
Competitive relationship
answer
output of one enterprise cannot be increased unless output of the other decreases
question
Supplementary
answer
more output from one enterprise can be added without a change in the level of the other enterprise
question
Complementary
answer
as output of one enterprise increases, output of the other increases also
question
Output Substitution Ratio
answer
quantity of output lost/quantity of output gained
question
Output Profit Ratio
answer
profit of output gained/ profit of output lost
question
Fixed Costs
answer
-cost that must be paid even if a business produces no output that year (rent, taxes, insurance, etc)
question
Opportunity Cost
answer
the income that could have been earned by selling or renting the input to someone else
question
Opportunity cost of operator's labor
answer
what the operator could earn for that labor is best alternative use
question
Opportunity cost of operator's management
answer
difficult to estimate
question
Short Run
answer
the period of time during which the quantity of one or more production inputs is fixed and cannot be changed
-fixed costs are only in the short run
-fixed costs are only in the short run
question
Long Run
answer
the period of time in which the amount of all inputs can be changed
question
Total Fixed Cost (TFC)
answer
the sum of all fixed costs
question
Average Fixed Cost (AFC)
answer
=TFC/ output
question
Total Variable Cost (TVC)
answer
the total of all variable costs
question
Average Variable Cost (AVC)
answer
TVC/ output
question
Total Cost (TC)
answer
TFC+TVC
question
Average Total Cost (ATC)
answer
TC/ output
question
Marginal Cost (MC)
answer
change in TC/ change in output
question
If price > ATC?
answer
produce and make a profit
question
If ATC>Price>AVC?
answer
produce and minimize losses
question
If AVC>Price
answer
do not produce, limit loss to fixed costs
question
Zero profit price
answer
smallest value in the ATC
question
Shut down price
answer
smallest value of AVC
question
Control
answer
the "feedback" function of management
question
When input is free....
answer
the producer will maximize production
question
That type of enterprises are the most common type of enterprise relationship
answer
competitive
question
What is a non-cash fixed cost?
answer
Depreciation
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