MBA 701 Module 3 ACTUAL UPDATED QUESTIONS AND CORRECT ANSWERS
Marginal Revenue is the change in Total Revenue resulting from a change in output
Marginal Cost is the change in Total Cost resulting from a change in output.
Profit Maximization is where the marginal cost intersects with marginal revenue
MC = MR
What is economics the study how individuals, institutions, commercial enterprises, countries, and
governments allocate scarce resources amongst competing uses.
What is scarcity? The output of goods and services is limited because the supply of productive
inputs and other resources needed for their production is finite.
What is opportunity cost? The highest-valued alternative foregone whenever a choice is made.
Includes both explicit and implicit costs.
What is managerial economics? The application of economic principles to topics of concern to managers.
What is strategic behavior? An analysis of decisions made by an individual or group affect, and are affected
by, the decisions of other individuals or groups, is central to the study of
managerial economics.
What is profit? How is it calculated? When Total Revenue is > Total Cost
How is total revenue (TR) calculated? TC = P * Q
Why are profits important in market economies? Profit is the engine of maximum production and the efficient allocation of scarce
productive resources.
What are explicit costs? Direct payments made to productive resources. AKA accounting costs and out of
pocket expenses, examples include wages paid to workers and raw materials.
How do explicit costs differ from implicit costs? Explicit costs are direct costs while implicit costs are indirect costs and represent
the value of resources used in the production process for which no direct
payment is made.
How do accounting costs differ from economic costs? Accounting costs are the explicit costs while economic costs is the sum of the
total explicit costs and the total implicit costs.
Marginal Revenue is the change in Total Revenue resulting from a change in output
Marginal Cost is the change in Total Cost resulting from a change in output.
Profit Maximization is where the marginal cost intersects with marginal revenue
MC = MR
What is economics the study how individuals, institutions, commercial enterprises, countries, and
governments allocate scarce resources amongst competing uses.
What is scarcity? The output of goods and services is limited because the supply of productive
inputs and other resources needed for their production is finite.
What is opportunity cost? The highest-valued alternative foregone whenever a choice is made.
Includes both explicit and implicit costs.
What is managerial economics? The application of economic principles to topics of concern to managers.
What is strategic behavior? An analysis of decisions made by an individual or group affect, and are affected
by, the decisions of other individuals or groups, is central to the study of
managerial economics.
What is profit? How is it calculated? When Total Revenue is > Total Cost
How is total revenue (TR) calculated? TC = P * Q
Why are profits important in market economies? Profit is the engine of maximum production and the efficient allocation of scarce
productive resources.
What are explicit costs? Direct payments made to productive resources. AKA accounting costs and out of
pocket expenses, examples include wages paid to workers and raw materials.
How do explicit costs differ from implicit costs? Explicit costs are direct costs while implicit costs are indirect costs and represent
the value of resources used in the production process for which no direct
payment is made.
How do accounting costs differ from economic costs? Accounting costs are the explicit costs while economic costs is the sum of the
total explicit costs and the total implicit costs.
