HBX Economics for Managers
1. A measure of the direct cost incured in partaking in a specific business
endeavor; cost reported in a company's financial statements that serve to give
an accurate description of where the firm's money is being spent.: Accounting
Costs
2. A measure of the responsiveness of a consumer demand for one product
or service to change in advertising expenditures for that product or service;
mathematically calculated as the percentage change in quantity demanded for
product X, divided by the percentage change in advertising devoted to product
X.: Advertising Elasticity of Demand (AED)
3. A process of buying/selling products and services in which items are bid
on and then sold to the ultimate buyer at a price determined by the bids
gathered.: Auction
4. The revenues received per unit sold; mathematically, the total revenues for a
business, divided by the total volume of goods sold; average revenue is equal
to price unless there is a price discrimination.: Average Revenue
5. The costs incurred in producing a product per unit of the product sold;
mathematically, the total costs for a business, divided by the total volume of
units produced.: Average Total Cost (ATC)
6. Obstacles that prevent a firm from entering a specific market; barriers to
entry can exist naturally within markets for specific products or services, can
be created by the government, or be created by firms already in that market
to keep out competition.: Barriers to Entry
7. The offer to purchase a good or service at a particular price submitted by a
potential buyer in an auction.: Bid
8. The pairing of different goods to be sold together; price bundling is a form
of price discrimination.: Bundling
9. Factors of production, such as machinery, equipment, factories, IT, money,
etc. owned by a business; capital (which does not include land) is distinct from
labor services.: Capital
10. The relative presence of firms in a market for a product or service; the more
competition this is in a market, the more likely that price in the market will be
low (close to firms' marginal cost of production).: Competition
11. A firm's ability to earn profits by creating value in a unique way; a firm can
gain advantage over it's competitors by offering lower prices (via lower costs
of production) or providing customers with differentiated products or services
that justify higher prices.: Competitive Advantage
12. A product or service that can increase willingness to pay for another
product or service; mathematically, the combined WTP for two products that
are complements is higher than the sum of the WTP for each individual
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, HBX Economics for Managers
product. (i.e. you'd be willing to pay more for both PB and J together than
seperately).: Complement
13. The tenancy to look for, notice and favor information that confirms one's
pre-conceived notions or beliefs, while also discounting information that
goes again one's beliefs; helps explain why investor can be overconfident,
politicians might cherry-pick pieces of evidence to support their own stances,
or scientists may come to wrong conclusions by only searching for evidence
that supports their hypothesis: Confirmation Bias
14. A form of market research based on the principle that a product can be
broken down into a set of consumer-relevant attributes; a specialized survey
design, which determines consumers' preferences for individual features of a
product by first ranking the importance of features and then assigning values
to each product attribute based on those features.: Conjoint Analysis
15. The value captured by consumers in a market transaction; mathematically,
the difference between consumer willingness to pay and price added to all
consumers who get to transact the market.: Consumer Surplus
16. A method of setting prices in which a company bases its prices on its cost
of production (e.g. the price is set equal to cost plus a mark-up) rather than
willingness to pay.: Cost-Plus Pricing
17. A measure of the responsiveness of demand for one product to a change in
price of another product; mathematically calculated as the percentage change
in quantity demanded for product X, divided by the percentage change in price
for product Y. CPEs can be useful in identifying substitutes or complements
to a product.: Cross-Price Elasticity of Demand (CPED)
18. The total lost value of trades that didn't occur in a market, but would have
occurred if the market was at it's equilibrium point.: Dead-weight loss (DWL)
19. Refers to the quantity of goods or services desired at any given price.: De-
mand
20. The graphical representation of a buyer's WTP for various quantities of a
product or service: Demand Curve, Individual
21. The graphical representation of the WTP of all buyers for various quantities
of a product or service. The market demand curve is the horizontal sum of
each individual's demand curve at a given price.: Demand Curve, Market
22. An economic relationship stating that a consumer's WTP for a product
should decrease for additional units for a product (i.e. the tenth milkshake will
not taste as good as the first).: Diminishing Marginal Returns
23. The total cost of an activity, taking into account the direct or explicint costs
of the activity as well as the opportunity costs.: Economic Cost
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1. A measure of the direct cost incured in partaking in a specific business
endeavor; cost reported in a company's financial statements that serve to give
an accurate description of where the firm's money is being spent.: Accounting
Costs
2. A measure of the responsiveness of a consumer demand for one product
or service to change in advertising expenditures for that product or service;
mathematically calculated as the percentage change in quantity demanded for
product X, divided by the percentage change in advertising devoted to product
X.: Advertising Elasticity of Demand (AED)
3. A process of buying/selling products and services in which items are bid
on and then sold to the ultimate buyer at a price determined by the bids
gathered.: Auction
4. The revenues received per unit sold; mathematically, the total revenues for a
business, divided by the total volume of goods sold; average revenue is equal
to price unless there is a price discrimination.: Average Revenue
5. The costs incurred in producing a product per unit of the product sold;
mathematically, the total costs for a business, divided by the total volume of
units produced.: Average Total Cost (ATC)
6. Obstacles that prevent a firm from entering a specific market; barriers to
entry can exist naturally within markets for specific products or services, can
be created by the government, or be created by firms already in that market
to keep out competition.: Barriers to Entry
7. The offer to purchase a good or service at a particular price submitted by a
potential buyer in an auction.: Bid
8. The pairing of different goods to be sold together; price bundling is a form
of price discrimination.: Bundling
9. Factors of production, such as machinery, equipment, factories, IT, money,
etc. owned by a business; capital (which does not include land) is distinct from
labor services.: Capital
10. The relative presence of firms in a market for a product or service; the more
competition this is in a market, the more likely that price in the market will be
low (close to firms' marginal cost of production).: Competition
11. A firm's ability to earn profits by creating value in a unique way; a firm can
gain advantage over it's competitors by offering lower prices (via lower costs
of production) or providing customers with differentiated products or services
that justify higher prices.: Competitive Advantage
12. A product or service that can increase willingness to pay for another
product or service; mathematically, the combined WTP for two products that
are complements is higher than the sum of the WTP for each individual
1/8
, HBX Economics for Managers
product. (i.e. you'd be willing to pay more for both PB and J together than
seperately).: Complement
13. The tenancy to look for, notice and favor information that confirms one's
pre-conceived notions or beliefs, while also discounting information that
goes again one's beliefs; helps explain why investor can be overconfident,
politicians might cherry-pick pieces of evidence to support their own stances,
or scientists may come to wrong conclusions by only searching for evidence
that supports their hypothesis: Confirmation Bias
14. A form of market research based on the principle that a product can be
broken down into a set of consumer-relevant attributes; a specialized survey
design, which determines consumers' preferences for individual features of a
product by first ranking the importance of features and then assigning values
to each product attribute based on those features.: Conjoint Analysis
15. The value captured by consumers in a market transaction; mathematically,
the difference between consumer willingness to pay and price added to all
consumers who get to transact the market.: Consumer Surplus
16. A method of setting prices in which a company bases its prices on its cost
of production (e.g. the price is set equal to cost plus a mark-up) rather than
willingness to pay.: Cost-Plus Pricing
17. A measure of the responsiveness of demand for one product to a change in
price of another product; mathematically calculated as the percentage change
in quantity demanded for product X, divided by the percentage change in price
for product Y. CPEs can be useful in identifying substitutes or complements
to a product.: Cross-Price Elasticity of Demand (CPED)
18. The total lost value of trades that didn't occur in a market, but would have
occurred if the market was at it's equilibrium point.: Dead-weight loss (DWL)
19. Refers to the quantity of goods or services desired at any given price.: De-
mand
20. The graphical representation of a buyer's WTP for various quantities of a
product or service: Demand Curve, Individual
21. The graphical representation of the WTP of all buyers for various quantities
of a product or service. The market demand curve is the horizontal sum of
each individual's demand curve at a given price.: Demand Curve, Market
22. An economic relationship stating that a consumer's WTP for a product
should decrease for additional units for a product (i.e. the tenth milkshake will
not taste as good as the first).: Diminishing Marginal Returns
23. The total cost of an activity, taking into account the direct or explicint costs
of the activity as well as the opportunity costs.: Economic Cost
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