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Manegerial Economics > Finals > Flashcards

Finals Flashcards

1
Q

Describes how consumers allocate their incomes among different goods and services available to them based on their preferences to maximize their utility.

A

Theory of Consumer Behavior

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2
Q

How does a consumer maximize their utility according to the Theory of Consumer Behavior?

A

consumers allocate their incomes among different goods and services available to them based on their preferences

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3
Q

This is based on the principle that man has the freedom to choose on what to buy, what to consume, within the confinement of his income.

A

Theory of Consumer Behavior

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4
Q

What principle is the Theory of Consumer Behavior based on?

A

Man has the freedom to choose on what to buy, what to consume, within the confinement of his income.

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5
Q

The total satisfaction derived from consuming a good or service

A

Utility

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6
Q

How do we measure utility?

A
  • consumer compares utility of a good with the price he has to pay for it.
  • He keeps buying additional units so long as the utility from them is at least equal to the price to be paid for them.
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7
Q

What are the 3 assumptions by Consumer Theory to predict buyers’ purchasing patterns:

A
  1. Utility Maximization
  2. Non Satiation
  3. Decreasing Marginal Utility
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8
Q

Individuals are said to make calculated decisions when shopping, purchasing products that bring them the greatest benefit or maximum utility.

A

Utility Maximization

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9
Q

People are seldom satisfied with one time consumption of the good or availing service. They always want more.

A

Non Satiation

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10
Q

Consumers lose satisfaction in a product the more they consume it.

A

Decreasing Marginal Utility

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11
Q

It states that all else equal, as consumption of a good increases, the marginal utility derived from each additional unit declines.

A

Law of Diminishing Marginal Utility

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12
Q

It is the change in utility as an additional unit of a product is consumed.

A

Marginal Utility

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13
Q

the incremental increase in utility that results from consumption of one additional unit.

A

Marginal Utility

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14
Q

How to find Marginal Utility?

A

MU = ∆TU / ∆Q

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15
Q

a graph that shows a combination of two goods that give a consumer equal satisfaction and utility, thereby making the consumer indifferent.

A

Indifference Curve

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16
Q

used in economics to describe the point where individuals have no particular preference for either one good or another based on their relative quantities.

A

Indifference Curve

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17
Q

How to get the budget?

A

(Px * Qx ) + (Py * Qy)

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18
Q

What does the indifference curve show?

A

a consumer has an equal preference, satisfaction, and utility for the various combinations of goods shown, making them indifferent

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19
Q

is the graphical representation of two or more indifference curves

A

Indifference Map

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20
Q

What is the implication of the Law of Diminishing Marginal Utility and Indifference Curve in organizations?

A
  • dictate managers to weigh identified alternatives out of a given problem.
    He/She needs to choose the
    best alternative that will result
    to higher return and benefits to
    the organization.
    -These utility concepts can be a great help to managers in the hiring, retention, and training of employees.
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21
Q

Systematic process that INVOLVES anticipating the demand for the product and services of an organization in future under a set of uncontrollable and competitive forces.

A

Demand Forecasting

22
Q

Steps in Forecasting

A
  1. Setting the Objective
  2. Selecting a method for demand forecasting
  3. Data Collection
  4. Estimating Results
23
Q

You need to choose from Qualitative or Quantitative techniques and select the appropriate one for your objective and fits the type of business.

A

Selecting a method for demand forecasting.

24
Q

objective should be specific and attainable

A

Setting the objective

25
Q

What are the two techniques in demand forecasting?

A

Qualitative and Quantitative

26
Q

this forecasting is based on information that can’t be measured.

A

Qualitative Techniques

27
Q

It is important for a company who is just starting out, since there’s a lack of historical data.

A

Qualitative Techniques

28
Q

What are the method used under Qualitative Techniques?

A
  • Complete Enumeration Method
  • Sample Survey Method
  • End-use Method
  • Collective Opinion Method
  • The Delphi Method
  • Market Experiment Method
29
Q

This is a type of demand forecasting method where almost all potential users of a product are contacted and surveyed about their purchasing plans.

A

Complete Enumeration Method

30
Q

method is often referred to as the census method of demand forecasting

A

Complete Enumeration Method

31
Q

a sample of potential buyers is chosen scientifically, and only those chosen are interviewed regarding their future purchase plans.

A

Sample Survey Method

32
Q

In this method, salesmen, marketing manager, production manager, professional experts and the market consultants and others are asked to express their considered opinions about the volume of sales expected in the future.

A

Collective Opinion Method

33
Q

It identifies the final users, such as consuming industries and other sectors, and estimates the demand based on their requirements.

A

End-use Method

34
Q

A structured forecasting method that involves a panel of experts who are individually questioned in multiple rounds to solicit their opinions.

A

The Delphi Method

35
Q

This method involves conducting market experiments under controlled conditions to gather data.

A

Market Experiment Method

36
Q

This technique relies on data that can be measured and manipulated. The data is usually from the past.

A

Quantitative Techniques

37
Q

What are the methods used under Quantitative Techniques?

A
  1. Time-series analysis
    a. Naïve Method
    b. 3 Month Moving Average
  2. Regression Analysis
38
Q

Method used when you make scientific predictions based on historical time stamped data.

A

Time Series Analysis

39
Q

Is a statistical method used in demand forecasting to establish a relationship between the dependent variable (demand) and one or more independent variables (such as price, advertising expenditure, or time) to make predictions.

A

Linear Regression Analysis

40
Q

What is the dependent variable in the linear regression?

A

Demand

41
Q

What are the independent variable in the linear regression?

A

price, advertising expenditure, or time

42
Q

This method is preferred by large companies or large enterprises.

A

Linear Regression Analysis

43
Q

What is the primary purpose of Linear Regression Analysis in demand forecasting?

A

To establish a relationship between dependent and independent variables

44
Q

a company uses Linear Regression Analysis in demand forecasting and finds a strong positive correlation between price and demand, what does this imply?

A

As prices increase, demand also increases.

45
Q

What is the regression equation?

A

y = a +bx

46
Q

How to compute the b in finding the regression equation?

A

b = Σ xy - nx̄ȳ / Σ x² - nx̄²

47
Q

How to compute the a in finding the regression equation?

A

a = ȳ - bx̄

48
Q

Used by small companies than regression because it is not that costly and easy to use. Only uses the previous data.

A

Naïve Method and 3 Month Moving Average

49
Q

How to forecast demand using the Naïve Method?

A
  1. Identify the previous values we have
  2. Find the difference between the two previous values, (difference = PV)
  3. Add the current actual demand and PV to forecast the demand for the next period.
50
Q

How to forecast demand using the 3 Month Moving Average?

A
  1. Get the average of the values from the last 3 months
  2. The average is already the forecast demand for the next period

Manegerial Economics (3 decks)

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