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Economics uestion and Answer
Brandon Watson
Davenport University
Managerial Economics
[ECONOMICS UESTION AND ANSWER]
1.
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Define scarcity. What signifies to managers that a resource used in production
isbecoming scarce? What impact does this have on management decisions?
2.
Define economic profit. Explain how economic profit is different than
accountingprofit. Why is it important for economists to measure economic profit rather
than just sticking to the accounting profit used in accounting and finance?
3.
Define opportunity cost. Give an example of a personal decision you made within
thepast year. What explicit costs were involved? What opportunity costs were involved?
Explain how you arrived at your decision. Include the role of opportunity costs in your
explanation and describe criteria you used to evaluate your options.
4.
When analyzing decisions that are made within a firm, economists typically assume
that 2ofit maximization)s the firmàmain goal. However, several other goals are also
possible. Choose one of the ôher0ossible goals and compare it to 2ofit maximization.•nder what circumstances might the ôher’oal that you described become a major focus
for the firm? If you were the CEO of a large firm, what steps might you take to ensure that
departments within the firm are working together toward common goals?
5.
Under what circumstances would a firm benefit from outsourcing a portion of
itsbusiness operations? What are the major costs and benefits that would need to be
considered when deciding to outsource? (Identify at least two costs and two benefits.)

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