Reviewer eco

• which is a subfield of economics that places special emphasis on the study of choice related to the allocation of scarce resources.

  Managerial Economics
• A second definition is the study of choice related to the allocation of scarce resources.

  economics
• studies phenomena related to goods and services from the perspective of individual decision-making entities—that is, households and businesses

  Microeconomics
• approach provides measures and theories to understand the overall systematic behavior of an economy.

  Macroeconomics
• which is the difference between what they acquire and what they produce.

  Value
• managers who understand economics have a

  Competitive advantage
• The total monetary value of the goods or services sold is called

  Revenue
• The collective expenses incurred to generate revenue over a period of time, expressed in terms of monetary value, are the

  Cost
• cost elements are related to the volume of sales; that is, as sales go up, the expenses go up

  Variable cost
• Other costs are largely invariant to the volume of sales, at least within a certain range of sales volumes

  Fixed cost
• The difference between the revenue and cost

  Profit
• When costs exceed revenue, there is a

  -Profit/loss
• measured according to accounting principles are not necessarily the relevant measurements for decisions related to operating or acquiring a business.

  Cost
• We can consider this forfeited income as being equivalent to a charge against the operation of the ice cream business,

  Opportunities cost
• The volume level that separates the range with economic loss from the range with economic profit is called

  Breakeven point
• relationship between the price charged and the maximum unit quantity that could be sold.

  Demand curve
• measures the change in revenue in response to a unit increase in production level or quantity.

  Marginal revenue
• measures the change in cost corresponding to a unit increase in the production level.

  Marginal cost
• measures the change in profit resulting from a unit increase in the quantity

  Marginal profit
• most profitable production level is where

  MR=MC
• If the selling price per unit is at least as large as the average variable cost per unit, the firm should continue to operate for at least a while; otherwise, the firm would be better to shut down operations immediately.

  Shutdown rule
• Decisions related to demand and pricing are usually called

  Marketing decision
• is someone who makes consumption decisions for herself or for her household unit

  Consumer
• posits that a consumer plans her purchases, the timing of those purchases, and borrowing and saving so as maximize the satisfaction she and her household unit will experience from consumption of goods and services. 

  Theory of the consumer
• hypothetical quantitative value for satisfaction that a consumer receives from a pattern of consumption

  Utility
• If a consumer were to receive one more unit of some good or service, the resulting increase in their utility is called

  Marginal utility of the good
• the consumer’s response to a changing price to restore balance in the ratios of marginal utility to price.

  Substitution effect
• the primary response to a price change is a substitution effect, with a relatively modest income effect. However, for goods and services that a consumer cannot substitute easily, a sizeable price change may have a significant income effect
• which is a situation where consumption of a good or service may increase in response to a price increase or decrease in response to a price decrease. This anomaly is explained by a strong income effect.

  Giffen good
• also the key determinant of demand in the theory of the consumer.

  Price
• The selection of price, promotional activities, location, and channel are generally in the control of the business concern. In texts on marketing strategy, the composition of these decisions is called

  Marketing mix
• Consumption of some goods and services can necessitate greater consumption of other goods and services.

  Complementary relationship
• The function that states the relationship between two or more variables, such as price, etc.

  Demand function
• measuring how sensitive demand is to changes in the level of one of the determinants.

  Demand function
• assess the ratio of percentage change in demand to the percentage change in its determinant factor. This type of measurement is called an

  Elasticity of demand
• Assessing the elasticity of demand relative to changes in the price of the good or service being consumed is called

  Price elasticity
• Goods and services are categorized as being price elastic whenever the price elasticity is more negative than –1. 
• When the computed price elasticity is between 0 and –1, the good or service is considered to be price inelastic. 
• A consumer decision is considered short run when her consumption will occur soon enough to be constrained by existing household assets, personal commitments, and know-how.
• Decisions affecting consumption far enough into the future so that any such adjustments can be made are called

  Long run decisions