2. Welcome to EC 209: Managerial Economics- Group A By: Dr. Jacqueline Khorassani Study Guide Week One (Note: You must go over these slides and complete every task outlined here before Thursday, September 6)

3. 1. Study the Course Contract available on line at www.marietta.edu/~khorassj www.marietta.edu/~khorassj Click on Fall 2007 Courses Click on EC 209: Managerial Economics Click on Course Contract –It is in Microsoft Word format Make sure you understand the contract Ask me questions via an email to khorassj@marietta.edu or jacqueline.khorassani@nuigalway.ie.khorassj@marietta.edu jacqueline.khorassani@nuigalway.ie

4. 2. Study the textbook’s Preface Believe me it is not a waste of time to read the Preface of a book Ask me questions via an email.

5. Chapter 1: Make sure you understand the following topics and can answer the related questions. If not, ask me your questions via an email or in class. Why is a manager? What is economics? What is managerial economics? What are some goals and constraints of managers?

6. Chapter 1 continued What is the –opportunity cost? –Implicit cost? –Explicit cost? –Accounting profit? –Economic profit?

7. Chapter 1 continued. Why are profits so important? The five forces framework and industry profitability –Study Figure 1-1 and the discussion that goes along with it Incentives –Why are they important? –Examples

8. Chapter 1 continued What are markets? –What is consumer-producer rivalry? What causes it? –What is consumer-consumer rivalry? What causes it? –What is producer-producer rivalry? What causes it? –What is the role of the government?

9. Chapter 1 continued The time value of money –Why does time matter? –What is the present value of a lump-sum amount to be received at some point in the future? –What is the present value of a stream of future amounts? –What is the net present value of a stream of future amounts? – What is the present value of a perpetuity of identical cash flows?

10. Chapter 1 continued What is the value of a firm? –How does that relate to profits? What is the value of the firm if profits grow at a constant rate that is below interest rate? –If current profits have not been paid out –If current profits have been paid out

11. Chapter 1 continued What is the marginal analysis? –Why is it so important? –What is marginal benefit? –What is marginal cost? What is the marginal principle? How do we derive marginal curves from total curves? –Make sure you understand Figure 1-2 and the discussion that goes along with it.