economia

The Manager

A person who directs resources to achieve a stated goal, such as purchasing inputs, setting prices, and directing employees.

Economics

The science of making decisions in the presence of scarce resources.

Managerial Economics

The study of how to direct scarce resources to achieve managerial goals efficiently.

Accounting Profit

Total revenue minus explicit costs (money spent).

Economic Profit

Total revenue minus opportunity costs (what you give up by choosing one option over another).

Opportunity Cost

The value of the best alternative forgone when making a decision.

Incentives

Changes in benefits or costs that motivate people to change their behavior.

Market Rivalry

Competition between consumers and producers that affects prices and quality.

Present Value

The current value of a future amount of money, discounted by an interest rate.

Marginal Analysis

Comparing the additional benefit with the additional cost of a decision.

Marginal Benefit

The change in total benefit from increasing one more unit of a variable.

Marginal Cost

The change in total cost from increasing one more unit of a variable.

Marginal Principle

To maximize net benefits, increase a variable until marginal benefit equals marginal cost.

Regression

A statistical technique to understand the relationship between variables, such as price and quantity demanded.

R-Square

A measure of how well a regression model explains the variation in the data (0 to 1, where 1 is perfect).

Five Forces Framework

A framework to analyze industry competitiveness: rivalry, supplier power, buyer power, threat of new entrants, and substitute products.

Time Value of Money

Money today is worth more than money in the future due to its potential to earn interest.

Data-Driven Decisions

Using data and statistical analysis to make informed decisions.

Incremental Revenues

Additional revenues generated by a specific decision.

Incremental Costs

Additional costs generated by a specific decision.

Profit Maximization

A firm’s goal to maximize the present value of its current and future profits.

Value of a Firm

The present value of a firm’s current and future profits.

ANOVA

A statistical technique to compare means between groups and determine if differences are significant.

Estadístico T

A measure that indicates whether a coefficient in a regression is significantly different from zero.

Estadístico F

A measure that evaluates the overall significance of a regression model.

Demand

The quantity of a good that consumers are willing and able to buy at different prices.

Law of Demand

As the price of a good increases, the quantity demanded decreases, and vice versa.

Demand Curve

A graph showing the relationship between the price of a good and the quantity demanded.

Change in Quantity Demanded

• Movement along the demand curve due to a change in the price of the good.

Change in Demand

Shift of the entire demand curve due to factors like income, prices of related goods, or tastes.

Normal Good

A good whose demand increases when consumer income increases

Inferior Good

A good whose demand decreases when consumer income increases.

Substitute Goods

• Goods that can be used in place of one another (e.g., tea and coffee).

Complementary Goods

Goods that are used together (e.g., coffee and milk).

Demand Function

A mathematical representation of how the quantity demanded of a good depends on its price, income, and other factors.

Consumer Surplus

The difference between what consumers are willing to pay and what they actually pay.

Supply

The quantity of a good that producers are willing and able to sell at different prices.

Law of Supply

As the price of a good increases, the quantity supplied increases, and vice versa.

Supply Curve

A graph showing the relationship between the price of a good and the quantity supplied.

Change in Quantity Supplied

Movement along the supply curve due to a change in the price of the good.

Change in Supply

Shift of the entire supply curve due to factors like production costs or technology.

Excise Tax

• A tax per unit sold, which increases the cost of production.

Ad Valorem Tax

A percentage tax on the price of a good.

Producer Surplus

The difference between what producers receive and what they need to produce.

Market Equilibrium

The point where quantity demanded equals quantity supplied.

Equilibrium Price

• The price at which quantity demanded equals quantity supplied.

Equilibrium Quantity

The quantity of a good bought and sold at the equilibrium price

Price Ceiling

The maximum legal price that can be charged for a good, usually below equilibrium.

Price Floor

The minimum legal price that can be charged for a good, usually above equilibrium.

Comparative Static Analysis

The study of how market equilibrium changes when supply or demand conditions change.

Elasticity

A measure of the responsiveness of one variable to changes in another variable. It is the percentage change in one variable due to a percentage change in another.

Own Price Elasticity of Demand

Measures the responsiveness of the quantity demanded of a good to changes in its price. It is negative due to the law of demand.

Elastic Demand

When the absolute value of the price elasticity of demand is greater than 1. Quantity demanded is very responsive to price changes.

Inelastic Demand

When the absolute value of the price elasticity of demand is less than 1. Quantity demanded is not very responsive to price changes.

Unitary Elastic Demand

When the absolute value of the price elasticity of demand is equal to 1. The change in quantity demanded is proportional to the change in price.

Elasticity and Total Revenue

• If demand is elastic, a decrease in price increases total revenue.

• If demand is inelastic, an increase in price increases total revenue.

• If demand is unitary, total revenue is maximized.

Marginal Revenue

The additional revenue generated by selling one more unit of a good. It is related to the price elasticity of demand.

Cross-Price Elasticity

• Measures the responsiveness of the demand for good X to changes in the price of another good Y. It can be positive (substitutes) or negative (complements).

Income Elasticity

Measures the responsiveness of the demand for a good to changes in consumer income. If positive, the good is normal; if negative, the good is inferior.

Advertising Elasticity

Measures the responsiveness of the demand for a good to changes in advertising spending. It can be own (for the same good) or cross (for another good).

Linear Demand Function

A mathematical representation of demand where quantity demanded is a linear function of price, income, and other factors.

Log-Linear Demand Function

A mathematical representation of demand where the logarithm of quantity demanded is a linear function of the logarithm of price, income, and other factors. Cuando la relación es más compleja o cuando la elasticidad es importante (por ejemplo, en estudios de elasticidad-precio).

Linear Regression

A statistical technique to estimate the relationship between a dependent variable (like quantity demanded) and one or more independent variables (like price).

Multiple Regression

A statistical technique to estimate the relationship between a dependent variable and multiple independent variables.

R-Square

A measure of how well the regression model explains the variation in the data. It ranges from 0 to 1, where 1 indicates a perfect fit.

Total Revenue Test

• If demand is elastic, an increase in price decreases total revenue.

• If demand is inelastic, an increase in price increases total revenue.

Perfectly Elastic Demand

When the price elasticity of demand is infinite. Consumers are willing to buy any quantity at a specific price.

Perfectly Inelastic Demand

When the price elasticity of demand is zero. Quantity demanded does not change, regardless of price.

Elasticity and Pricing Decisions

Firms use elasticity to decide whether to increase or decrease prices, depending on whether demand is elastic or inelastic.

Demand Estimation

The process of using data and statistical techniques (like regression) to estimate the demand function for a good.

Consumer Preferences

determine which combinations of goods and services a consumer will choose to consume, based on their tastes and desires.

Properties of Consumer Preferences

1. Completeness: The consumer can compare any two bundles of goods.

2. More is better: Prefers more of a good to less.

3. Diminishing Marginal Rate of Substitution: As you consume more of one good, you are willing to give up less of another good.

4. Transitivity: If you prefer A over B and B over C, then you prefer A over C.

Indifference Curve

A curve that shows all combinations of two goods that provide the consumer with the same level of satisfaction.

Budget Constraint

The combinations of goods a consumer can afford given their income and the prices of the goods.

Budget Line

Represents all combinations of goods that exactly exhaust the consumer’s income.

Marginal Rate of Substitution, MRS

The amount of one good a consumer is willing to give up to obtain an additional unit of another good, while maintaining the same level of satisfaction.

Consumer Equilibrium

The point where the consumer maximizes their satisfaction given their budget constraint. It occurs where the indifference curve is tangent to the budget line.

Substitution Effect

The change in consumption of a good due to a change in its relative price, holding the level of satisfaction constant.

Income Effect

The change in consumption of a good due to a change in the consumer’s purchasing power, resulting from a price change.

Normal Good

A good whose consumption increases when the consumer’s income increases.

Inferior Good

A good whose consumption decreases when the consumer’s income increases.

Substitute Goods

Goods that can be used in place of one another (e.g., tea and coffee).

Complementary Goods

Goods that are consumed together (e.g., coffee and milk).

Individual Demand Curve

Shows the quantity of a good a consumer is willing to buy at different prices, holding other factors constant.

Market Demand

The horizontal summation of the individual demands of all consumers in the market.

Labor-Leisure Choice

A model that analyzes how individuals decide how many hours to work and how many hours to dedicate to leisure, given their income and wage.

Gift Certificates

A gift certificate can affect consumption decisions, as it restricts spending to a specific good.

Buy One, Get One Free Deals

These deals can increase the consumption of a good, as they reduce the effective price per unit.

Worker Equilibrium

The point where a worker maximizes their satisfaction between hours of work and hours of leisure, given their wage and time constraints.

Indifference Curve Analysis

A graphical tool to analyze consumption decisions and how they change with variations in prices and income.

Production Function

A mathematical relationship that defines the maximum amount of output that can be produced with a given set of inputs (capital and labor).

Short-Run vs. Long-Run

Short-run: Period where at least one input is fixed (cannot be changed).

Long-run: Period where all inputs are variable (can be adjusted).

Total Product, TP

The maximum level of output that can be produced with a given amount of inputs.

Average Product, AP

The amount of output produced per unit of input. For example, the average product of labor is total output divided by the number of workers.

Marginal Product, MP

The change in total output due to the use of an additional unit of an input. For example, the marginal product of labor is the change in output when hiring one more worker.

Law of Diminishing Marginal Returns

As more units of an input are added (holding other inputs constant), the marginal product of that input will eventually decrease.

Isoquants

Curves that show all combinations of inputs (capital and labor) that produce the same level of output.

Marginal Rate of Technical Substitution, MRTS

The rate at which one input can be substituted for another while maintaining the same level of output. It is the slope of the isoquant.

Isocost Line

A line that shows all combinations of inputs that have the same total cost.

Cost Minimization

Producing a given level of output at the lowest possible cost. It is achieved when the marginal rate of technical substitution (MRTS) equals the ratio of input prices.