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Week One Student Guide

One purpose of this course is to integrate economic concepts and business decision making. Managers must make decisions based on available information, theoretical knowledge, and experience. This week’s information may help you understand that decisions must often be made based on limited information regarding the direction of the company, which affects revenue, pricing, and market stability.

A manager must understand many factors to help a business increase revenue. One factor is that price times quantity yields total revenue for a product. Another relevant concept is that there are opportunity costs associated with any decision. Elasticity also affects revenues as managers change prices and quantities.

Increasing Revenue

OBJECTIVE: Choose methods to increase revenue in an organization.

Resource: Ch. 1, 2, & 6 of Economics

Content

• Ch. 1: Limits, Alternatives, and Choices

o The Economic Perspective o Theories, Principles, and Models o Microeconomics and Macroeconomics o Individuals’ Economizing Problem o Society’s Economizing Problem o Production Possibilities Model o Unemployment, Growth, and the Future

• Ch. 2: The Market System and the Circular Flow

o Economic Systems o Characteristics of the Market System o Five Fundamental Questions o The “Invisible Hand” o The Demise of the Command System o The Circular Flow Model

• Ch. 6: Elasticity, Consumer Surplus, and Producer Surplus

o Price Elasticity of Demand o Price Elasticity of Supply o Cross Elasticity and Income Elasticity of Demand o Consumer and Producer Surplus

OBJECTIVE: Explain the market equilibrating process.

Resource: Ch. 3 of Economics

Content

• Ch. 3: Demand, Supply, and Market Equilibrium

o Markets o Demand o Supply o Market Equilibrium o Application:

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