MGCR 293 Study Guide - Midterm Guide: Normative Economics, Opportunity Cost, Cost
7 Nov 2016
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Economics: how people use limited resources to satisfy unlimited wants. Microeconomics: study of decision making undertaken by individuals and by firms. Ex: taking a vacation= micro, personal income, personal decision. Positive vs. normative economics: positive= purely descriptive statements or scientific predictions ex: gov policies, normative= analysis involving judgement, ex: the economy seems to be in a recovery there is still unemployment. Managerial economics= how can businesses utilize its limited resources most efficiently. Indicates how a firm behaves and what its goals are. Traditionally assumed that the main objective of a company is to maximize profits. More recent version of the theory assumes that the main objective is to maximize its wealth (value) Make choices that increase the value of the firm. The value of the firm is defined as the present value of future profits. t= time. If total revenue and total cost is give, 3rd formula i= interest rate.
