Managerial Economics Summery -
2025 TEW & ERB 2025 Managerial
Economics
When it comes to determining where resources are
most highly valued by society, profits play the role of
a - ANSWER-signal
t/F: managerial economics includes analysis of
household decision making - ANSWER-true
,by pursuing self interest (maximizing profits), a firm
tends to - ANSWER-meet the needs of society
a manager - ANSWER-directs resources to achieve a
stated goal
economics - ANSWER-the science of making
decisions in the face of scarce resources
resource - ANSWER-anything used to produce a
good or service
not having appropriate technology or rising input
prices is an example of a _____ - ANSWER-constraint
accounting profits - ANSWER-total amount made
minus the cost of production
,economic profits - ANSWER-total revenue -
opportunity cost
opportunity cost - ANSWER-explicit (accounting)
cost and the implicit cost of giving up the best
alternative use of the resource
opportunity cost is generally _______ than accounting
costs - ANSWER-higher
what are the 5 forces of framework and industry
profit - ANSWER-1. entry
2. power of input suppliers
3. power of buyers
4. industry rivalry
5. substitutes and compliments
time value of money - ANSWER-it is better to have
$1 today than $1 in the future; opportunity cost is
, the interest that could have been earned on the
dollar in present day
present value - ANSWER-the amout that would have
to be invested today at the prevailing interest rate to
generate the given future value
present value = - ANSWER-future value /
(1+interest)^years
net present value - ANSWER-present value of the
income stream minus the current costs
if the net present value is positive, then the project is
____ - ANSWER-profitable
profit maximization - ANSWER-maximizing profits
means maximizing the value of the firm, which is the
present value of the current and future profits
2025 TEW & ERB 2025 Managerial
Economics
When it comes to determining where resources are
most highly valued by society, profits play the role of
a - ANSWER-signal
t/F: managerial economics includes analysis of
household decision making - ANSWER-true
,by pursuing self interest (maximizing profits), a firm
tends to - ANSWER-meet the needs of society
a manager - ANSWER-directs resources to achieve a
stated goal
economics - ANSWER-the science of making
decisions in the face of scarce resources
resource - ANSWER-anything used to produce a
good or service
not having appropriate technology or rising input
prices is an example of a _____ - ANSWER-constraint
accounting profits - ANSWER-total amount made
minus the cost of production
,economic profits - ANSWER-total revenue -
opportunity cost
opportunity cost - ANSWER-explicit (accounting)
cost and the implicit cost of giving up the best
alternative use of the resource
opportunity cost is generally _______ than accounting
costs - ANSWER-higher
what are the 5 forces of framework and industry
profit - ANSWER-1. entry
2. power of input suppliers
3. power of buyers
4. industry rivalry
5. substitutes and compliments
time value of money - ANSWER-it is better to have
$1 today than $1 in the future; opportunity cost is
, the interest that could have been earned on the
dollar in present day
present value - ANSWER-the amout that would have
to be invested today at the prevailing interest rate to
generate the given future value
present value = - ANSWER-future value /
(1+interest)^years
net present value - ANSWER-present value of the
income stream minus the current costs
if the net present value is positive, then the project is
____ - ANSWER-profitable
profit maximization - ANSWER-maximizing profits
means maximizing the value of the firm, which is the
present value of the current and future profits
