question
ECONOMICS
answer
a social science, which studies human
behaviour in relation to optimizing allocation of
available resources to achieve the given goals.
behaviour in relation to optimizing allocation of
available resources to achieve the given goals.
question
ECONOMICS
answer
the science of choice in the face of
unlimited ends and scarce resources which have
alternative uses.
unlimited ends and scarce resources which have
alternative uses.
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ADAM SMITH
answer
Scottish economist who wrote the Wealth of Nations a precursor to modern Capitalism.
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SCARCITY
answer
A situation in which unlimited wants exceed the limited resources available to fulfill those wants
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RESOURCES
answer
all things used in producing goods and services
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FACTORS OF PRODUCTION
answer
land, labor, capital, entrepreneurship
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LAND
answer
all natural resources used to produce goods and services
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LABOR
answer
Human effort directed toward producing goods and services
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CAPITAL
answer
the things we use to make things
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ENTREPRENEURSHIP
answer
Investing time, natural resources, labor and capital
are all risks associated with production
are all risks associated with production
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TRADE-OFFS
answer
These decisions involve picking one thing
over all the other possibilities
over all the other possibilities
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OPPORTUNITY COST
answer
Cost of the next best alternative use of money, time, or resources when one choice is made rather than another
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PRODUCTION POSSIBILITY CURVE
answer
a graph that shows alternative ways to use an economy's productive resources
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PRODUCTION POSSIBILITY FRONTIER
answer
a graph that shows the combinations of output that the economy can possibly produce given the available factors of production and the available production technology
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CAPITAL GOODS
answer
Buildings, machines, technology, and tools needed to produce goods and services.
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CONSUMER GOODS
answer
final products that
are purchased directly by the consumer
are purchased directly by the consumer
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OPPORTUNITY COST OF PRODUCING
answer
the best alternative
investment opportunity that the firm foregoes to
produce a good or service
investment opportunity that the firm foregoes to
produce a good or service
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EXPLICIT COSTS
answer
a cost that involves spending money
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IMPLICIT COSTS
answer
input costs that do not require an outlay of money by the firm
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COST OF OWNERS RESOURCES
answer
The income that the owner could have earned in the best alternative job
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NORMAL PROFIT
answer
the payment made by a firm to obtain and retain entrepreneurial ability; the minimum income entrepreneurial ability must receive to induce it to perform entrepreneurial functions for a firm
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ECONOMIC DECISION MAKING
answer
the process of choosing which needs and wants will be satisfied
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MARGINAL ANALYSIS
answer
analysis that involves comparing marginal benefits and marginal costs
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MARGINAL BENEFIT
answer
the additional benefit to a consumer from consuming one more unit of a good or service
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MARGINAL COSTS
answer
the cost added by producing one extra item of a product.
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MARGINAL BENEFIT
answer
Change in total benefits arising from a change in
the control variable, Q:
MB = xB / xQ
the control variable, Q:
MB = xB / xQ
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SLOPE
answer
The steepness of a line on a graph
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UTILITY
answer
satisfaction derived from
consuming any good or service
consuming any good or service
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MICRO ECONOMICS
answer
the study of how households and firms make decisions and how they interact in markets
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MACRO ECONOMICS
answer
branch of economics that
examines the economic behavior of aggregates—
income, output, employment, and so on—on a
national scale.
examines the economic behavior of aggregates—
income, output, employment, and so on—on a
national scale.
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CETERIS PARIBUS
answer
a Latin phrase that means "all other things held constant"
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VARIABLE
answer
Something whose value or magnitude (often Q or $ in Econ) may change (or vary); usually denoted by the letter 'labels' such as Y, X, TR, TC
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PARAMETER
answer
A characteristic or constant factor, limit
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GENERAL EQUATION
answer
A mathematical expression that suggests the value of one variable relates to or depends on the value of another variable (or set of variables) without showing the precise nature of that
relationship [e.g. y = f(x)].
relationship [e.g. y = f(x)].
question
SPECIFIC EQUATION
answer
A mathematical expression that shows precisely how the value
of one variable is related to the value of another variable (or set
of variables) [e.g. y = 10 + 2x].
of one variable is related to the value of another variable (or set
of variables) [e.g. y = 10 + 2x].
question
INVERSE EQUATION
answer
A mathematical expression is rewritten so that the variable previously on the right-hand side of the equal sign now becomes the variable solved for on the left-hand side of the equal sign [e.g. y = 2x and x = 1/2 y are each an inverse equation of the other].
question
CONSTANT
answer
Y = a0; Horizontal straight line with slope =
0
0
question
LINEAR
answer
Y = a0 + a1x (or y = mx + b); Straight line with slope = a1 (or = m)
question
QUADRATIC
answer
Y=a0+a1x+a2x2; Parabola (u-shaped curve) with
either minimum or maximum value
either minimum or maximum value
question
CUBIC
answer
Y=a0+a1x+a2x2+a3x3 ; Curved line (e.g. slope changes from getting flatter to steeper
question
HYPERBOLA
answer
Y=a0x-n; Curved line (u-shaped) bowed
towards origin
towards origin
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OPTIMIZATION
answer
a decision maker wishes to either MAXimize or
MINimize a goal (i.e. objective function)
MINimize a goal (i.e. objective function)
question
MANAGERIAL ECONOMICS
answer
can be defined as the study of economic
theories, logic and tools of economic analysis that are used in the
process of business decision- making.
theories, logic and tools of economic analysis that are used in the
process of business decision- making.
question
MANAGEMENT
answer
the discipline of organizing and allocating a firm's
scarce resources to achieve its desired objectives. Involves the
ability to organize and administer various tasks in pursuit of
certain objectives.
scarce resources to achieve its desired objectives. Involves the
ability to organize and administer various tasks in pursuit of
certain objectives.
question
MANAGER
answer
A person who directs resources to achieve a stated goal.
question
DOUGLAS
answer
"Managerial economics is .. the application of economic principles and methodologies to the decision-making process within the
firm or organization."
firm or organization."
question
PAPPAS AND HIRSCHEY
answer
"Managerial economics applies economic theory
and methods to business and administrative decision-making."
and methods to business and administrative decision-making."
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SALVATORE
answer
"Managerial economics refers to the application of economic
theory and the tools of analysis of decision science to examine how an
organisation can achieve its objectives most effectively."
theory and the tools of analysis of decision science to examine how an
organisation can achieve its objectives most effectively."
question
HOWARD DAVIES AND PUN-LEE LAM
answer
"It is the application of economic analysis to business problems; it has its origin in theoretical microeconomics."
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MAURICE AND THOMAS
answer
"The application of mathematical, statistical and decision science tools to economic models to solve managerial
problems."
problems."
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PROFIT
answer
total revenue minus total cost
question
ECONOMIC PROFIT
answer
total revenue minus total cost, including both explicit and implicit costs
question
ACCOUNTING PROFIT
answer
total revenue minus total explicit cost
question
EQUITY CAPITAL
answer
money that a business gets from its owners in order to operate
question
WHY FIRMS EXIST
answer
Businesses help satisfy consumer wants; contribute to social welfare
question
SOCIAL RESPONSIBILITY OF BUSINESS
answer
Serves customers, Provides employment opportunities, Obeys laws and regulations.
question
MARKETING
answer
Demand, Price Elasticity
question
FINANCE
answer
Capital Budgeting, Break-Even Analysis, Opportunity Cost, Economic Value Added
question
MANAGEMENT SCIENCE
answer
Linear Programming, Regression Analysis,
Forecasting
Forecasting
question
STRATEGY
answer
Types of Competition, Structure-Conduct-Performance Analysis
question
MANAGERIAL ACCOUNTING
answer
Relevant Cost, Break-Even Analysis,
Incremental Cost Analysis, Opportunity Cost
Incremental Cost Analysis, Opportunity Cost
question
RISK
answer
the chance or possibility that actual
future outcomes will differ from those
expected today.
future outcomes will differ from those
expected today.
question
ECONOMICS OF A BUSINESS
answer
refers to the key factors
that affect the ability of a firm to earn an acceptable rate of return on its owners' investment.
that affect the ability of a firm to earn an acceptable rate of return on its owners' investment.
question
INDUSTRIAL ORGANIZATION
answer
It studies how the performance of an industry is related to its structure, that is, to the number and size of firms it contains.
question
INDUSTRIAL ORGANIZATION
answer
study of markets for goods and of the firms which produce them. It is the study of the industry. It is more concerned with why markets are structured the way they are and behave the way they
do.
do.
question
MARKET STRUCTURES
answer
perfect competition, monopolistic competition, oligopoly, monopoly
question
TRUE
answer
(TRUE or FALSE) Opportunity costs should be included.
question
TRUE
answer
(TRUE or FALSE) Sunk costs should NOT be included.
question
MARKET
answer
any arrangement that allows buyers and sellers to exchange things
question
TRANSACTION COSTS
answer
Costs of making a transaction other than the price of the good or service
question
PERFECT COMPETITION
answer
a market structure in which a large number of firms all produce the same product; no barriers to entry.
question
MONOPOLISTIC COMPETITION
answer
a market structure in which many companies sell products that are similar but not identical.
question
OLIGOPOLY
answer
a state of limited competition, in which a market is shared by a small number of producers or sellers. Actions by any one firm will affect the sales and profits of the other firms.
question
PRICE-TAKING FIRM
answer
a firm whose actions have no effect on the market price of the good or service it sells
question
PRICE-SETTING FIRM
answer
A firm that can raise its price without losing all of its sales
question
CONSUMER-PRODUCER RIVALRY
answer
Consumers attempt to locate low prices, while producers attempt to charge high prices
question
CONSUMER-CONSUMER RIVALRY
answer
Scarcity of goods reduces consumers' negotiating power as they compete for the right to those goods.
question
PRODUCER-PRODUCER RIVALRY
answer
Scarcity of consumers causes producers to compete with one another for the right to service customers.
question
THE ROLE OF THE GOVERNMENT
answer
disciplines the market process
question
BASIC CONDITIONS
answer
factors which shape the market of the industry, e.g. demand, supply, political factors
question
STRUCTURE
answer
attributes which give definition to the supply-side of the market, e.g. economies of scale, barriers to entry, industry concentration, product
differentiation, vertical integration.
differentiation, vertical integration.
question
CONDUCT
answer
the behavior of firms in the market, e.g. pricing behavior advertising, innovation.
question
PERFORMANCE
answer
a judgement about the results of market behaviour, e.g. efficiency,
profitability, fairness/income distribution, economic growth.
profitability, fairness/income distribution, economic growth.
question
GLOBALIZATION OF MARKETS
answer
economic integration of markets located in nations around the world
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