EC260 Chapter Notes - Chapter 1: Marginal Cost, Capital Asset Pricing Model, Spreadsheet
Document Summary
Ec260 chapter 1: the fundamentals of managerial economics. Manager: a person who directs resources to achieve a stated goal. Economics: science of making decisions in the presence of scarce resources. Managerial economics: study of how to direct scarce resources in the way that most efficiently achieves a managerial goal. Sound decision-making involves having well-defined goals leads to making right decisions. In striking to achieve a goal we often face constraints (artefact of scarcity) (e. g. budget scarcity) Accounting profits: total revenue dollar cost of producing g/s. Economic profits: total revenue total opportunity cost. Profits signal to resource holders where resources are most highly valued by society. Resources flow into industries that are most highly valued by society. Highest price signals highest utility, and highest profit signals most efficient firm. Entry: entry costs, speed of adjustment, sunk costs, economies of scale, network effects, reputation, switching costs, government restraints.
