EC270 Chapter Notes - Chapter 1: Demand Curve, Market Entry Strategy, Market Power
Document Summary
Most resources are scarce within the firm, managerial decision making often involves allocating scarce inputs to support the production, distribution, and sales of goods and services that are sold at a price that exceeds their costs. Legal or contractual minimum wage laws, taxes, contracts. Managerial economics uses formal models to analyze managerial actions and their effect on firm performance. These models are used to sow cost, demand, profit, competition, pricing, compensation, market entry strategy, and auction strategy all under control of managers. In managerial economics, the focus is on managerial behaviour. Profit - when economists speak of profit, the mean profit over and above what the owner"s labor and capital employed in the business cold earn elsewhere. If the firms profit is greater than zero, she should continue to operate the firm; otherwise she should close it down and pursue other opportunities. 3 fertile profit-generating areas used by managers are innovation, risk, and market power.
