ECON CH1.txt

Managerial economics is the application of microeconomic 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.

Resources owned and used by a firm.

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

Monetary opportunity costs of using market-supplied resources.

Nonmonetary opportunity costs of using owner-supplied resources.

Money provided to businesses by the owners.

The difference between total revenue and total economic cost

Economic Profit = Total Revenue - Explicit Costs - Implicit Costs

The difference between total revenue and explicit costs.

Accounting Profit = Total Revenue - Explicit Costs

The price for which the firm can be sold, which equals the present value of future profits.

An increase in the discount rate to compensate investors for uncertainty about future profits.

The conflict that arises when the goals of management (agent) do not match the goals of hte owner (principle)

Exists when either part to an agreement has an incentive not to abide by all provisions of the agreement and one part cannot cost effectively monitor the agreement

A firm that cannot set the price of the product it sells, since price is determined strictly by the market forces of demand and supply

A firm that can raise its price without losing all of its sales

A firm's ability to raiser prices without losing all sales

Any arrangement through which buyers an dsellers exchange anything of value

Costs of making a trnsaction happen, other than the price of good or service itself

A set of market characteristics that determines the economic environment in which a firm operates

Economic integration of markets located in nations around the world