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Ch 1 - Intro Managerial Economics

Ch 1 - Intro Managerial Economics - MANAGERIAL ECONOMICS...

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MANAGERIAL ECONOMICS: Economics – the study of how people allocate their limited resources to satisfy their unlimited wants Resources – are items used to produce goods & services Wants – the goods & services that are consumed by people Micro vs Macro: - Microeconomics: the study of decision making undertaken by individuals (or households) & by firms (includes individual markets, wages, prices, pollution) - Macro Economics: the study of economic behaviour as a whole (inflation, unemployment, taxes) Microeconomics Macroeconomics Production Production/Output in Individual Industries & Businesses Eg: - How much steel - How many offices - How many cars National Production/Output Eg: -Total Industrial Output - Gross Domestic Prod - Growth of Output Prices Price of Individual Goods and Services Eg: - Price of medical care - Price of gasoline - Food prices - Apartment rent Aggregate Price Level Eg: - Consumer prices - Producer Prices - Rate of Inflation Income Distribution of Income and Wealth Eg: - Wages in the auto industry - Minimum wages - Executive salaries - Poverty National Income Total wages and salaries Eg: - Total corporate profits Employment Employment by Individual Businesses & Industries Eg: - Jobs in the steel industry - Number of employees in a firm Employment & Unemployment in the Economy Eg: - Total number of jobs - Unemployment rate Positive vs Normative: - Positive: purely descriptive statement or scientific predictions - Normative: analysis involving judgements - eg “the economy seems to be in recover, but the unemployment rate has not fallen enough” Economic Person: - Rationality Assumption: - make decision to leave you better of (eg max profits & optimize time) - individuals respond to changing incentives - decisions are made on the margin
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Economics as Science: - Model/Theory:
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