MGCR 293 Study Guide - Midterm Guide: Profit (Economics), Standard Cost Accounting, Economic Equilibrium

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27 Apr 2012

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Microeconomics: decision making undertaken by individuals/households and by firms. Macroeconomics: behavior of the economy as a whole. Positive economics: purely descriptive statements or scientific predictions. Managerial economics: application of economic theory and tools of analysis of decisions-making science to analyze how a business, a not-for-profit or governmental entity can utilize its limited resources. Theory of the firm: indicates how a firm behaves and what its goals are. Used to assume that the main objective of a company is to maximize its profits . Now, assumes main objective to be to maximize its wealth . Managerial objective: make choices that increase the value of the firm (present value of future profits) Influence relevant i by managing finances and risk. Exploiting market inefficiencies (barriers to entry, pricing strategies, diversifying) Principal-agent problem: interests of a firm"s owners and those of its managers may differ. Owners want managers to maximize value of firm.

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7) Economists, statisticians, and business analysts are interested in the "unemployment rate” because this number indicates an economic system's ability to effectively use an important factor of production. However, many people believe that a government's "official unemployment rate understates a country's ability to match the skills of its workforce to appropriately productive jobs. The other reason highlighted during the lecture was: a) b) c) d) the mismatch effect underemployment microeconomic underutilisation the factor utilisation gap

Economists, statisticians, and business analysts are interested in the "unemployment rate” because this number indicates an economic system's ability to effectively and productively use an important factor of production. However, many people believe that a government's "official unemployment rate understates a country's ability to find jobs for its people. One of the two reasons highlighted during the lecture was: a) b) c) d) the seasonality effect the cyclicality effect the discouraged worker effect the retirement effect

Which of the following statements about nonprice competition is most accurate?

A. Marketers often rely on nonprice differences in their competitive strategy to enhance a relatively homogeneous product.

B. As microeconomic theory suggests, firms have found that nonprice competition plays a secondary role that supplements the more important competition based on price.

C. Nonprice competition is much more important to large firms than it is to small firms.

D. While still important, nonprice competition is becoming less critical as a result of the Internet.

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MGCR 293 Study Guide - Midterm Guide: Profit (Economics), Standard Cost Accounting, Economic Equilibrium

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