BECON CH1.txt

Managerial economics focuses on the application of microeconomic (study of individual segments of economy) theory to business problems.

What a firm's owners give up to use resources to produce goods or services.

Resources owned by others and hired, rented, or leased in resource markets. Ex: labor services, raw materials, and capital equipment

Resources owned and used by a firm. Ex. money provided, time of owner provided, and any land, buildings or capital equipment owned and used by firm.

Sum of opportunity costs of market-supplied resources plus opportunity costs of owner supplied resources

Monetary opportunity costs of using market-supplied resources.

or the amount of money sacrificed by firm owners to get market-supplied resources

Nonmonetary opportunity costs of using owner-supplied resources.The best return the owners of the firm could have received had they taken their own resource to market instead of using it themselves

1. Equity Capital -the opportunity cost of cash provided to a firm by its owners