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manager
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A person who directs resources to achieve a stated goal.
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Economics
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The science of making decisions in the presence of scarce resources.
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managerial economics
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The study of how to direct scarce resources in the way that most efficiently achieves a managerial goal.
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economic profits
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The difference between total revenue and total opportunity cost.
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opportunity cost
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The cost of the explicit and implicit resources that are forgone when a decision is made.
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incentives
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Affect how resources are used and how hard workers work.
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consumer-producer rivalry
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Occurs because of the competing interests of consumers and producers.
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consumer-consumer rivalry
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Reduces the negotiating power of consumers in the marketplace.
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producer-producer rivalry
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Functions only when multiple sellers of a product compete in the marketplace.
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present value
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The amount that would have to be invested today at the prevailing interest rate to generate the given future value.
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net present value
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The present value of the income stream generated by a product minus the current cost of the project.
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value of a firm
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Takes into account the long-term impact of managerial decisions on profits.
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managerial analysis
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States that optimal managerial decisions involve comparing the marginal (or incremental) benefits of a decision with the marginal (or incremental) costs.
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marginal benefit
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The change in total benefits arising form a change in the managerial control variable, Q.
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marginal cost
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The change in total costs arising from a change in the managerial control variable, Q.
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incremental revenues
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The additional revenues that stem from a yes-or-no decision.
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incremental costs
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The additional costs that stem from a yes-or-no decision.
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