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Chapter 1 OVERVIEW
How Is Managerial Economics Useful? Theory of the Firm Profit Measurement Why Do Profits Vary among Firms? Role of Business in Society Structure of this Text
Profit Measurement
Business Versus Economic Profit
Business (accounting) profit reflects explicit costs and revenues. Economic profit.
Profit above a risk-adjusted normal return. Considers cash and noncash items.
Compensatory Profit Theories Better, faster, or cheaper than the competition is profitable.