Fundamentals of Managerial Economics - Vocabulary Flashcards

Vocabulary flashcards covering key terms from the lecture notes on economics and managerial economics (Pages 1-9).

Economics

A social science concerned with the production, distribution, and consumption of goods and services, studying how people allocate scarce resources to satisfy unlimited wants, with goods and services providing utility.

Utility

The satisfaction or usefulness gained from consuming goods or services.

Scarce resources

Resources that are limited relative to wants, requiring allocation decisions.

Allocation

The process of distributing limited resources among alternative uses.

Managerial Economics

The application of economic theory and principles to business management and decision making; formerly called Business Economics.

Normative Managerial Economics

A type focusing on practical, real-life solutions to managerial problems using forecasting, cost management, recruitment, product design, and promotion.

Liberal Managerial Economics

A type where decisions are guided by market forces and trends, emphasizing analysis of customer behavior and data to satisfy buyers.

Radical Managerial Economics

A type prioritizing customer satisfaction over profit maximization, aiming to generate long‑term profits through loyal customers.

Principle of Decision Making

The framework governing how choices are made in business, including options, opportunity costs, gains, and attraction points.

Choices Made

Decisions to engage in business with a partner or to pursue alternatives.

Opportunity Cost

The value of the next best alternative forgone when a decision is made.

Gains

The benefits or value realized from a decision or transaction.

Attraction Point

Positive incentives or advantages that motivate action in a payoff or offer.

Principles of Business Communication

The idea that effective communication is essential to business success.

Win-win Situation

A scenario in which both parties gain mutual benefits from an exchange.

Economic Relationship

Interactions where producers and consumers meet to achieve mutual gains.

Government Intervention

Policy actions by the government to address unfavorable conditions or stabilize the economy.

Principles of Economic Functions

The idea that economic conditions influence and shape business activity.

Improved Living Standard

A rise in living standards resulting from productive economic activity.

Curbs Inflation

Measures to prevent or reduce inflation, preserving purchasing power.

Economic Stability Efforts

Government policies aimed at maintaining economic stability.

Scientific Managerial Economics

An approach using observations, experiments, and systematic analysis to inform decisions.

The Art of Managerial Economics

An approach that combines knowledge and proven strategies in a structured, step-by-step way to achieve objectives.

Administrative Managerial Economics

Decision making aligned with the business environment and administrative responsibilities.

Resource Control

Managing inputs such as information, human resources, capital, and technology for effective decisions.

Microeconomic

Analysis at the level of individual firms, products, prices, demand, and supply.

Macroeconomic

Analysis of the broader economy, including government policy, inflation, exchange rates, and overall conditions.

Dynamic Managerial Economics

Management as a dynamic, evolving process influenced by changing human preferences.

Multidisciplinary

Incorporating ideas from several disciplines (math, statistics, finance, HR, marketing) into decision making.

Prescriptive

An approach focused on achieving specific goals through recommended actions.

Management-driven

A pragmatic approach that relies on real-time, practical situations.

Analysis of Demand and Forecasting

Examining demand and forecasting to plan production and maintain market share.

Analysis of Cost and Production

Evaluating production costs and aligning them with expected income and pricing strategy.

Pricing Strategy

Method of setting prices based on market analysis to influence demand.

Profit Management

Balancing costs and revenues to maximize profit and reduce uncertainty.

Capital Investment

Investing in capital such as equipment, technology, skills, and information, affecting projects and ROI.

ROI (Return on Investment)

A measure of profitability calculated as net gain divided by cost.

Unpredictable

Economic activities influenced by human behavior that can be unpredictable.

Non-replicable

Market behaviors and outcomes that cannot be reliably reproduced by a single method.

No Unified Solution

Different managers may disagree on the best solution for an economic problem.

Open to Political Manipulation

Normative economics can be influenced by political interests and agendas.

Inaccurate Conclusions

Economic theories may produce conflicting forecasts and conclusions.

Managerial Economics vs Business Economics

Managerial economics applies economic theory to management; business economics uses quantitative methods to analyze organizational structures and relationships.