EC260 Lecture Notes - Economic Equilibrium, Demand Curve, Jato
Document Summary
Managers will choose actions that will increase their firms profits over time. : tr - total revenue, tc - total cost, i - interest rate, t - time a managers decisions will determine total revenues and costs for their organizations, influencing profits. Managers do not have total control as their decisions are limited by operating constraints such as scarce inputs, laws, and contracts. Micro version differs from the accounting version. Economists view profit anything that is earned over and above what the owners" labour and capital employed in the business could earn elsewhere(opportunity costs) Managerial interests and he principal-agent problem managers and firm owners sometimes have different interests owners(shareholders/principals) are interested in maximizing a firms long term value and they trust managers(agents) to make appropriate decisions to achieve this. Managers may share this goal, but may also have the goal of increasing managerial compensation(potential conflict) Market demand curve shows the amount buyers will purchase at a price level.
