Final Exam Review Terms to know: Be able to define or describe the following terms/concepts and explain how they can be applied in business decision making. You will be presented with questions in multiple choice or short answer format. (40 points possible for this section). 1. Opportunity cost 10. Manufacturing overhead 18. Substitutes 2. Relevant cost 11. Marginal cost 19. Complements 3. Relevant revenue 12. Marginal revenue 20. Long run and short run 4. Sunk cost 13. Law of demand 21. Breakeven point 5. Variable cost 14. Demand, demand curves 22. Shut-down point 6. Fixed cost 15. Supply, supply curves 23. Game theory 7. Avoidable fixed cost 16. Price elasticity of demand 24. Payoff matrix 8. Unavoidable fixed cost 17. Cross-price elasticity of demand 25. Dominant strategy 9. Prime cost Applying the concepts: You will be presented with five problems inviting you to apply key concepts listed above. Generally speaking these problems will resemble examples from the Ma rburger and Peterson book or exercises we have done in class. (40 points possible for this section). One problem will involve application of game theory concepts covered in class. A second problem will require you to understand how to read a decision tree. Problems may involve topics such as the relationship between elasticity of demand and marginal revenue, break even points and shut down points, using supply and demand analysis, profit maximization, effects of price ceilings and price floors, and/or price discrimination. Explaining the economic approach I: You will be asked to answer your choice of one from among three questions about the economic approach to business decision making and related ideas discussed in class. The questions will ask about the following topics/concepts. (20 points possible.) 1. The relevant cost/relevant revenue framework and the Zappos example in assigned WSJ essay. 2. The relationship between relevant cost/relevant revenue and marginal cost/marginal revenue. 3. The uses and limits of \"cost plus\" pricing (as partly illustrated by the Parker Hannifin example, pp. 103-104 in