CONTENTS
         PART l THE FlRM AND ITS ENVlRONMENT
         1 Introduction, Environment, and Methodology
         Managerial Economics and the Global Economy
         Economics and the Management of Organizations
         Our Approach to Problem Solving
         Organization of This Book
         Appendix l Demand, Supply, and Market Price:
         A Brief Review
         Demand and the Demand Curve
         Supply and the Supply Curve
         Determination of Market Price
         Carryover to Analysis of Other Markets
         2 Revenue of the Firm
         Advertising, Consumer Demand, and Business Research
         The Demand Function
         De terminants of Demand
         A Note on Determinants of Supply
         Elasticity of Demand
         Sununary
         Appendix 2 Theory of Consumer Behavior
         Cardinal Utility Approach
         Ordinal Utility Theory
         Marginal Rate of Substitution
         Consumer Equilibrium
         Deriving a Demand Curve
         3 Topics in Demand Analysis and Estimation
         Market Surveys
         Demand Estimation with Regression Analysis
         Market Experiments
         Summary 108
         Appendix 3 Linear Regression Analysis l l l
         The Linear Regression Model and Underlying Assumptions l l l
         Logarithmic Transformations 129
         Summary 132
         4 Economic Forecasting
         Types of Economic Forecasts
         Two Major Kinds of Data
         Factors Affecting Economic Variables
         Forecasting Methods
         Accuracy of Forecasts
         Summary
         Integrating Case lA Are There Two Markets
         for Microwave Ovens?
         Integrating Case 1B Omega Distributing Company l
         PART 2 PRODUCTlON, COST, AND PROFlT MAXlMlZATlON
         5 Theory of Production
         The Production Function and the Long Run
         Total Product Curves and the Short Run
         Summary
         Appendix 5 Mathematics of Determining the Least
         Cost Combination of Inputs
         6 Cost of Production
         Types of Costs
         Costs in the Long Run
         Costs in the Short Run
         Relationship of Short-Run Cost Curves to Short-Run
         Product Curves
         Relation of Short-Run to Long-Run Average Costs
         The Leaming Effect
         Economies of Scope
         Choosing the Optimal Plant Size: An Example
         Estimation of Cost
         Summary
         Intemational Capsule l Some Intemational Dimensions
         of Demand, Production, and Cost
         The Basis for Intemational Trade
         Payment for Exports
         The Problem of Trade Barriers
         7 profit Analysis of the Firm
         Profit Maximization
         Shut-Down Point
         Break-Even Analysis
         Profit Maximizahon versus Break-Even Analysis
         Incremental Profit Analysis
         Summary
         8 Linear Programming and the Firm
         Relationship between Linear Programming and
         Calculus Techniques
         The Primal Program
         The Dual Program
         Activity Analysis: One Product
         Summary
         Integrating Case 2A Frontier Concrete Products Company
         Integrating Case 2B Shanghai Magnificent Harmony
         Foundry l
         PART 3 MARKETS AND THE BEHAVlOR OF THE FlRM
         9 Perfect Competition and Monopoly: The Limiting Cases
         Perfect Competition and Its Setting
         Monopoly and Its Setting
         Summary
         10 Monopolistic Competition, Oligopoly, and Rivalrous
         Market Structures
         Monopolistic Competition: A Case of Many Firms
         Duopoly: An Oligopoly with Two Firms
         The Question of Entry
         The Kinked Oligopoly Demand Curve: Price Rigidity
         without Collusion
         Tacit Collusion and Price Leadership
         Perfect Collusion--The Cartel
         Production with Multiple Plants
         Summary
         Appendix lO Game Theory in Oligopoly Analysis
         11 Selected Topics in Pricing and Profit Strategy
         Markup Pricing
         Decisions Involving Multiple Products
         Price Discrimination
         Two-Part Pricing (Access Fees)
         Bundling
         Altematives to Profit Maximization
         Summary
         Appendix llA Transfer Pricing with a Less-Than-Perfectly
         Competitive Market for the Intermediate Product
         Appendix 11B Mathematics of Price Discrimination
         Solution Procedure If Discrimination Is Permitted
         Solution Procedure If Discrimination Is Not Permitted
         Intemational Capsule ll Markets and Pricing Strategy
         in Intemational Trade
         Market Segmentation in intemational Trade
         The Problem of Dumping
         Webb-Pomerene and Export Trading Companies
         The Effects of Trade Restrictions on Prices
         Intemational Transfer Pricing
         12 Factor Markets and Profit-Maximizing Employment
         of Variable Inputs
         Profit-Maximizing Employment of One Variable Input
         Determination of Equilibrium Prices for Inputs:
         Perfect Competition in the Input Market
         Determination of Equilibrium Prices for Inputs:
         Monopsony m the Input Market
         Determination of Equilibrium Prices for Inputs:
         Bilateral Monopoly in the Input Market
         Summary
         Integrating Case 3A German-American Metals Corporation
         Integrating Case 3B Bonco, Incorporated: A Firm in Transition
         Integrating Case 3C A Hare-Raising Decision
         Integrating Case 3D Omega Distributing Company ll
         13 Fundamentals of Project Evaluation
         Capital Budgeting and Project Analysis
         Costs in New Undertakings
         Stream of Receipts or Retums
         A Simple Capital Project Analysis
         Project Yield or Rate of Retum
         Project Ranking in Capital Budgeting Analysis
         Cost of Capital and the Discount Rate
         Summary
         Appendix 13 Compounding and Discountmg
         Compound Interest
         Present Value and Discounting
         Annuities
         14 Risk in Project Analysis
         Certainty versus Risk
         Risk in Economic Analysis
         Risk-Retum Indifference Curves
         Probability and Uncertainty
         Application of Probability Analysis to Risk
         Evaluating Risky Streams of Receipts
         Probability Approach to Multiple Project Altemahves
         Acceptable Shortcuts to Risk Analysis
         Risk Adjustment in Practice
         Extemalities and Their Nature
         An Example of Intemalization
         Summary
         Intemational Capsule lll Project Analysis in a Multinational
         Setting
         Intemational Dimensions of Project Analysis
         Example of a Foreign Project
         Integrating Case 4A A "Guaranteed" Foreign Investment
         Proposal l
         Proposal ll
         Integrating Case 4B Shanghai Magnificent Hannony
         Foundry ll
         15 Economics of Public Sector Decisions
         Micro- versus Macroeconomics in Public Sector Analysis
         The Public Sector's Product
         Resource Allocation and the Supply of Public Goods
         Cost-Benefit Analysis: A Procedural Outline
         Public Investment and the Discount Rate
         Cost-Benefit Analysis and Divergent Public Objectives
         Pitfalls of Cost-Benefit Analysis
         The Future of Cost-Benefit Analysis
         Summary
         16 Legal and Regulatory Environment of the Firm
         Managers and the Law
         Types of Law Affecting the Firm
         Antitrust and Business Practices Laws
         Administrative Agencies and the Law
         The Regulated Industries
         Whose Interests Do Regulators Serve?
         Regulation of "Unregulated Industries'
         Laws, Regulations, and the Firm's Strategy
         Summary
         17 The Firm and the Future
         Regulation, Deregulation, and Privatization
         Developing Countries and the Eastem Bloc
         Social Costs and "Accountability"
         Structure and Organization of Firms
         Economics and Tomorrow's Manager
         Integrating Case 5 Bayville Convention Center
         Appendix A Mathematical Appendix
         Appendix B Interest Factor Tables
         Appendix C Answers to Selected Odd-Numbered Problems
         Glossary
         Index
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