Managerial Economics Course Outline

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What is the main focus of Part III of the book?

Managerial economics of strategy

Situations of market power

Issues of management in imperfect markets (correct)

Modern managerial economics – strategy and organization

What is the only chapter in Part III that depends on understanding Part II?

Chapter 16

Chapter 15 (correct)

Chapter 12

Chapter 14

What would a course focusing on the managerial economics of strategy comprise of?

Chapters 1–7 and 12–14

Chapters 1–11 (correct)

Chapters 1–15

Chapters 1–4 and 7–14

What can be found on the book's website?

Additional cases and applications, as well as updates and corrections to the book Signup and view all the answers

Who is the author of the book?

Ivan Png Signup and view all the answers

Who did the author gratefully acknowledge for their advice and suggestions?

Nicholas Snowden, Richard Leigh, and Joy Cheng Signup and view all the answers

What is one way managerial economics can aid in decision-making?

By correcting systematic biases in individual decision-making Signup and view all the answers

What type of models describe behavior at a single point in time?

Static models Signup and view all the answers

What is a key aspect of dynamic models?

They focus on behavior at multiple points in time Signup and view all the answers

Why must future dollars be discounted to their present value?

Because a dollar now is different from a dollar in the future Signup and view all the answers

What is a characteristic of investments, according to the text?

They involve using resources at specific times to receive benefits at other times Signup and view all the answers

What is the primary focus of dynamic models in extensive form?

The sequence of actions and payments Signup and view all the answers

What is the fundamental assumption of managerial economics models?

People always choose the alternative that maximizes the difference between benefit and cost Signup and view all the answers

What is the term used to describe the limitation of human cognitive abilities and self-control in decision-making?

Bounded rationality Signup and view all the answers

What is the sunk-cost fallacy an example of?

A systematic error in decision-making Signup and view all the answers

What was the result of the experiment by Hal Arkes and Catherine Blumer?

Consumers who had incurred a larger sunk cost tended to consume more Signup and view all the answers

What is the status quo bias an example of?

A systematic error in decision-making Signup and view all the answers

What was the purpose of the experiment by Jack Knetsch and Jack Sinden?

To compare the value of cash and lottery tickets Signup and view all the answers

What happens to Joy's demand curve when the price of popcorn increases?

It shifts to the left Signup and view all the answers

What is the effect of an increase in advertising on the demand curve?

It shifts to the right Signup and view all the answers

What is the primary goal of persuasive advertising?

To influence consumer choice Signup and view all the answers

What type of goods are movies and mobile telephone services?

Consumer goods Signup and view all the answers

What is the majority of economic transactions in an economy?

Business-to-business sales Signup and view all the answers

What is the purpose of informative advertising?

To communicate information to potential buyers and sellers Signup and view all the answers

What happens to the market as a whole when the price of a good decreases?

It will buy a larger quantity Signup and view all the answers

Which of the following factors affects the market demand for a consumer good?

The prices of related products Signup and view all the answers

What is the graphical representation of the market buyer surplus?

The area between the market demand curve and the price line Signup and view all the answers

What happens to the demand for a product when the price of a substitute increases?

It increases Signup and view all the answers

What is the difference between the buyers' total benefit from consumption and the buyers' actual expenditure?

Buyers' surplus Signup and view all the answers

How can a seller extract the buyers' surplus and raise profit?

By selling through package deals and two-part pricing Signup and view all the answers