BAM 040 - Managerial Economics P1 Reviewer

• Economy - organizational mechanism by which goods and services are produced, sold and bought in a country or region
• Economics - is the social science of the efficient and effective allocation of scarce resources to satisfy their unlimited need and wants
• Scarcity - the demand for a good or service is greater than the availability of the good or service; one of the key concepts of economics
• Shortage - temporary condition where the demand on certain commodities and services cannot be met by the current supply
• shortage - temporary
• scarcity - perpetual
• Opportunity Cost - cost we forgo to getting something else
• Marginal Analysis - analysis that focuses on changes in costs, revenues, profits, etc.
• Utility - (economics) individuals pleasure, happiness or satisfaction
• marginal - additional, change in or add in
• marginal benefit - the additional satisfaction or utility received for an additional unit of good or service
• marginal cost - the additional cost incurred for an additional unit of good or service
• Microeconomics - focuses on how decisions are made by individuals and firms, and the consequences of those decisions
• whether price rises in the automobile or oil industries - Microeconomics
• consumer behavior - microeconomics
• how to make a business more profitable - microeconomics
• why some countries have higher standards of living than others - macroeconomics
• what determines whether a country has high inflation rates - macroeconomics
• what determines whether a firm will hire more workers, cut back production, or expand its operations - microeconomics
• Macroeconomics - examines the aggregate behavior of the economy
• Macroeconomics 


  examines the aggregate behavior of the economy
• Economy 


  organizational mechanism by which goods and services are produced, sold and bought in a country or region
• place where buyers and sellers meet

  Market
• ceteris paribus 


  assuming all factors are constant
• Demand


  Quantity of goods or services buyers are willing to buy
• Demand Function 


  what describes a relationship between one variable and its determinants; it describes how much quantity of goods is purchased at alternative prices of the good and its related goods, alternative income levels, and alternative values of other variables affecting demand
• Law of Demand


  States that ceteris paribus, price and quantity demanded are inversely related
• Supply Function 


  what describes a relationship between one variable and its determinants; it describes how much quantity of goods is supplied at alternative prices of the good and its related goods, alternative input/cost levels, and alternative values of other variables affecting supply
• Law of Supply 


  states that ceteris paribus, price and quantity demanded are directly related
• Porter’s Five Forces Framework

  Created by Michael Eugene Porter and was first published in 1979. It is used to understand more about the main competitive forces at work in different industries