Managerial economics

Managerial economics applies economic theory and quantitative methods to business decisions about pricing, production, investment, and strategy.

Price discrimination: A pricing strategy that charges different customers different prices for the same good when resale is limited. It shows how demand differences and market power can shape a firm's pricing decisions.
Marginal analysis: A method of comparing the additional benefits and costs of a small change in an action. It identifies whether one more unit of output, spending, or effort improves the decision's outcome.
Supply and demand: The model describing how buyers' demand and sellers' supply interact to determine prices and quantities. It provides a basic account of the market conditions firms face.
Business administration: The study and practice of organizing and managing business operations and resources. It covers a wider range of management functions than economics-based decision analysis.
Profit maximization: The objective of choosing actions that produce the greatest difference between revenue and cost. It is a common benchmark for evaluating a firm's output and pricing decisions.
Break-even analysis: A method for finding the sales level at which revenue equals total costs. Managers use it to assess the sales volume needed for a product or project to cover its costs.
Elasticity (economics): A measure of how responsive one economic variable is to a change in another. Price elasticity helps predict how a price change affects sales and revenue.
Production function: A mathematical relationship between production inputs and the maximum output they can generate. It connects decisions about labor and capital to the firm's productive capacity.
Financial economics: The branch of economics that studies financial markets, assets, and investment decisions. It focuses chiefly on financial choices, while managerial economics spans operating and strategic decisions.
Productivity: The amount of output produced per unit of input over a given period. Resource-allocation decisions can raise or lower a firm's productivity.

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