61151 - Managerial Economics What is it? Applied...

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Chapter 1-1 Managerial Economics What is it? Applied microeconomic theory A systematic way of analyzing business decisions Although focus is on “for profit” firms, tools are relevant for “not for profit” firms also
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Chapter 1-2 Defining Profit Profit is the difference between a firm’s revenues and costs. However, economic costs requires some clarification since it differs from accounting costs. Economic Costs = Explicit Costs + Normal Profit(which is an implicit or implied costs)
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Chapter 1-3 The Two Types of Economic Costs Explicit costs reflect payments made to resource owners external to the firm for the use of their land, labor services, or capital. Implicit costs(Normal profit) reflect an implicit payment(no explicit dollar flow) made to the firm’s owner(s) for the use of their services.
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Chapter 1-4 Accounting Profit Accounting Profit is the difference between total revenue and explicit cost.
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Chapter 1-5 Maximizing Profit Throughout the course the basic goal of the
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This note was uploaded on 09/18/2011 for the course ECO 6115 taught by Professor Staff during the Spring '08 term at University of Central Florida.

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61151 - Managerial Economics What is it? Applied...

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