Summary
Summary Managerial Economics & Business Strategy
- Course
- Institution
- Book
Chapter 1-The Fundamentals of Managerial Economics MANAGERIAL ECONOMICS AND BUSINESS STRATEGY BOOK - MICHAEL R. BAYE-7e
[Show more]
Connected book
Book Title:
Author(s):
- Edition:
- ISBN:
- Edition:
More summaries for
-
Managerial Economics & Business Strategy Michael Baye 9th Edition- Test Bank
-
chapter 7-nature of industry
-
chapter 6- Organization of the firm
Seller
Follow
alikarimi
Content preview
Key concept and summarizeChapter 1-The Fundamentals of Managerial Economics
Study Outline
I. Introduction
A. The Manager
B. Economics
C. Managerial Economics Defined
II. The Economics of Effective Management
A. Identify Goals and Constraints
B. Recognize the Nature and Importance of Profits
1. Economic versus Accounting Profits
2. The Role of Profits
C. Understand Incentives
D. Understand Markets
1. Consumer-Producer Rivalry
2. Consumer-Consumer Rivalry
3. Producer-Producer Rivalry
4. Government and the Market
E. Recognize the Time Value of Money
1. Present Value Analysis
2. Present Value of Indefinitely-Lived Assets
F. Use Marginal Analysis
1. Discrete Decisions
2. Continuous Decisions
3. Incremental Decisions
III. Learning Managerial Economics
, Manager – person who directs resources to achieve a stated goal. This includes all the people
who:
direct the efforts of others
purchase inputs to be used in the production of goods and services
are in charge of making other decisions
The manager generally isn’t only responsible for his or her own actions, but also for the actions
of individuals, machines and other inputs under his or her control.
Economics - the science of making decisions in the presence of scarce resources.
Scarcity - involves making choice from alternatives available.
Resources – anything used to achieve a goal or produce a service or good.
Managerial economics – the study of how to direct scarce resources in the way that most
efficiently achieves a managerial goal
Opportunity cost refers to the cost of the explicit and implicit resources that are foregone
When a decision is made.
Economic profit is the difference between the total revenue and total opportunity cost.
Profits signal resource holders where resources are most highly valued by society.
Effective Managers must:
1. Identify goals and constraints you have to decide what you want to achieve and allocate
your resources accordingly. The scarcity of the resources is the constraint. It is important
to have well-defined goals.
2. Recognize the nature and importance of profits
Accounting profits – Profits that appear on the income statement of a firm. Total
Revenue (TR) – Total Cost (TC)
Economic profits – Total Revenue (TR) – Total Opportunity Cost (TOC)
Opportunity cost – Explicit Cost (accounting costs) + Implicit Cost (cost of giving up
the best alternative use of the resource)
The TOC is generally higher than the accounting costs, because implicit resources (the
alternative uses of a resource) are taken into account. Example: the opportunity cost of studying
at university is the cost of tuition fee, books, living and food (explicit cost) plus the cost of
giving up the alternative to work and earn money (implicit cost).
The benefits of buying summaries with Stuvia:
Guaranteed quality through customer reviews
Stuvia customers have reviewed more than 700,000 summaries. This how you know that you are buying the best documents.
Quick and easy check-out
You can quickly pay through credit card or Stuvia-credit for the summaries. There is no membership needed.
Focus on what matters
Your fellow students write the study notes themselves, which is why the documents are always reliable and up-to-date. This ensures you quickly get to the core!
Frequently asked questions
What do I get when I buy this document?
You get a PDF, available immediately after your purchase. The purchased document is accessible anytime, anywhere and indefinitely through your profile.
Satisfaction guarantee: how does it work?
Our satisfaction guarantee ensures that you always find a study document that suits you well. You fill out a form, and our customer service team takes care of the rest.
Who am I buying these notes from?
Stuvia is a marketplace, so you are not buying this document from us, but from seller alikarimi. Stuvia facilitates payment to the seller.
Will I be stuck with a subscription?
No, you only buy these notes for $6.79. You're not tied to anything after your purchase.
Can Stuvia be trusted?
4.6 stars on Google & Trustpilot (+1000 reviews)
79079 documents were sold in the last 30 days
Founded in 2010, the go-to place to buy study notes for 14 years now