Managerial Economics: Theory, Applications, and Cases 8th Edition by W. Bruce Allen, ISBN-13: 978-0393124491
[PDF eBook eTextbook] – Available Instantly
- Publisher: W. W. Norton & Company; Eighth edition (September 15, 2012)
- Language: English
- 912 pages
- ISBN-10: 0393124495
- ISBN-13: 978-0393124491
Thoroughly updated to reflect the post-crisis, global, and digital economy.
Modernized for the 21st century, the Eighth Edition emphasizes strategic thinking by managers and includes over 50 new case studies on events that prepare students for today’s changing economy.
Table of Contents:
Part 1: The Need for a Guide
Chapter 1: Introduction
The Theory of the Firm
What is Profit?
Reasons for the Existence of Profit
Managerial Interests and the Principal–Agent Problem
Demand and Supply: A First Look
The Demand Side of a Market
The Supply Side of a Market
Equilibrium Price
Actual Price
What If the Demand Curve Shifts?
What If the Supply Curve Shifts?
Summary
Problems
Excel Exercise: Demand, Supply, and Market Equilibrium
Part 2: The Nature of Markets
Chapter 2: Demand Theory
The Market Demand Curve
Industry and Firm Demand Functions
The Own-Price Elasticity of Demand
Point and Arc Elasticities
Using the Demand Function to Calculate the Price Elasticity of Demand
The Effect of Price Elasticity on the Firm’s Revenue
Funding Public Transit
Determinants of the Own-Price Elasticity of Demand
The Strategic Use of the Price Elasticity of Demand
Total Revenue, Marginal Revenue, and Price Elasticity
The Income Elasticity of Demand
Cross-Price Elasticities of Demand
The Advertising Elasticity of Demand
The Constant-Elasticity and Unitary Elastic Demand Functions
Summary
Problems
Chapter 3: Consumer Behavior and Rational Choice
Indifference Curves
The Marginal Rate of Substitution
The Concept of Utility
The Budget Line
The Equilibrium Market Bundle
Maximizing Utility: A Closer Look
Corner Solutions
How Managers Can Strategically Influence Consumer Choices
Deriving the Individual Demand Curve
Deriving the Market Demand Curve
Consumer Surplus
Summary
Problems
Chapter 4: Estimating Demand Functions
The Identification Problem
Consumer Interviews
Market Experiments
Regression Analysis
Simple Regression Model
Sample Regression Line
Method of Least Squares
Coefficient of Determination
Multiple Regression
Software Packages and Computer Printouts
Interpreting the Output of Statistical Software
Multicollinearity
Serial Correlation
Further Analysis of the Residuals
Summary
Problems
Appendix: The Coefficient of Determination and the Concept of Explained Variation
Part 3: Production and Cost
Chapter 5: Production Theory
The Production Function with One Variable Input
The Law of Diminishing Marginal Returns
The Production Function with Two Variable Inputs
Isoquants
The Marginal Rate of Technical Substitution
The Optimal Combination of Inputs
Corner Solutions
Returns to Scale
The Output Elasticity
Estimations of Production Functions
Summary
Problems
Appendix: Lagrangian Multipliers and Optimal Input Combinations
Chapter 6: The Analysis of Costs
Opportunity Costs
Short-Run Cost Functions
Average and Marginal Costs
Long-Run Cost Functions
Managerial Use of Scale Economies
Managerial Use of Scope Economies
Transactions Costs Can Take Many Forms
Network Economies
Managerial Use of Break-Even Analysis
Profit Contribution Analysis
Summary
Problems
Excel Exercise: Production and Cost
Appendix A: Break-Even Analysis and Operating Leverage
Appendix B: Measurement of Short-Run Cost Functions: The Choice of a Mathematical Form
Part 4: Market Structure and Simple Pricing Strategies
Chapter 7: Perfect Competition
Market Structure
Market Price in Perfect Competition
Shifts in Supply and Demand Curves
The Output Decision of a Perfectly Competitive Firm
Setting the Marginal Cost Equal to the Price
Another Way of Viewing the Price Equals Marginal Cost Profit-Maximizing Rule
Producer Surplus in the Short Run
Long-Run Equilibrium of the Firm
The Long-Run Adjustment Process: A Constant-Cost Industry
The Long-Run Adjustment Process: An Increasing-Cost Industry
How a Perfectly Competitive Economy Allocates Resources
Summary
Problems
Excel Exercise: Perfect Competition
Chapter 8: Monopoly and Monopolistic Competition
Pricing and Output Decisions in Monopoly
Cost-Plus Pricing
Cost-Plus Pricing at Therma-Stent
Cost-Plus Pricing at Internet Companies and Government-Regulated Industries
Can Cost-Plus Pricing Maximize Profit?
The Multiple-Product Firm: Demand Interrelationships
Pricing of Joint Products: Fixed Proportions
Output of Joint Products: Variable Proportions
Monopsony
Monopolistic Competition
Advertising Expenditures: A Simple Rule
Using Graphs to Help Determine Advertising Expenditure
Advertising, Price Elasticity, and Brand Equity: Evidence on Managerial Behavior
Summary
Problems
Excel Exercise: Simple Monopoly
Appendix: Allocation of Output Among Plants
Part 5: Sophisticated Market Pricing
Chapter 9: Managerial Use of Price Discrimination
Motivation for Price Discrimination
Price Discrimination
Using Coupons and Rebates for Price Discrimination
Peak Load Pricing
Two-Part Tariffs
Summary
Problems
Excel Exercise: Perfect Price Discrimination
Excel Exercise: Third-Degree Price Discrimination
Appendix: Two-Part Tariff with Intersecting Demands
Chapter 10: Bundling and Intrafirm Pricing
The Mechanics of Bundling
When to Unbundle
Bundling as a Preemptive Entry Strategy
Tying at IBM, Xerox, and Microsoft
Transfer Pricing
Transfer Pricing: A Perfectly Competitive Market fo the Upstream Product
The Global Use of Transfer Pricing
Summary
Problems
Excel Exercise: Transfer Pricing
Part 6: The Strategic World of Managers
Chapter 11: Oligopoly
Cooperative Behavior
The Breakdown of Collusive Agreements
Price Leadership
Possible Behavior in Markets with Few Rivals
Duopolists and Price Competition with Differentiated Products
The Sticky Pricing of Managers
Summary
Problems
Excel Exercise: Dominant Firm Price Leader
Excel Exercise: Cournot
Excel Exercise: Stackelberg
Chapter 12: Game Theory
Making Strategy and Game Theory
Strategy Basics
Visual Representation
Solution Concepts
Equilibria
Dominant Strategies
The Nash Equilibrium
Strategic Foresight: The Use of Backward Induction
Repeated Games
Incomplete Information Games
Reputation Building
Coordination Games
Strictly Competitive Games
Summary
Problems
Excel Exercise: Game Theory
Chapter 13: Auctions
A Short History of Auctions
Types of Auction Mechanisms
Auction Mechanism and Revenue Generation
Bidding Strategies
Strategies for Sellers
Value of Information
Risk Aversion
Number of Bidders
Winner’s Curse
Concerns in Auction Design
Summary
Problems
Excel Exercise: Auctions
Part 7: Risk, Uncertainty, and Incentives
Chapter 14: Risk Analysis
Risk and Probability
Probability Distributions and Expected Values
Comparisons of Expected Profit
Road Map to Decision
The Expected Value of Perfect Information
Measuring Attitudes Toward Risk: The Utility Approach
Attitudes Toward Risk: Three Types
The Standard Deviation and Coefficient of Variation: Measures of Risk
Adjusting the Valuation Model for Risk
Certainty Equivalence and the Market for Insurance
Summary
Problems
Excel Exercise: Expected Utility
Chapter 15: Principal–Agent Issues and Managerial Compensatoin
Principal–Agent Issues
The Diverging Paths of Owners and Managers
The Principal–Agent Situation
The Effect of Risk, Information, and Compensation on Principal–Agent Issues
Resolving the Incentive Conflict When Output Is Risky and Effort Is Not Observable
Some Refinements to Managerial Compensation
Principal–Agent in Other Contexts
Product Liability and the Safety of Consumer Goods
Summary
Problems
Excel Exercise: Moral Hazard
Chapter 16: Adverse Selection
The Market for “Lemons”
Adverse Selection in Automobile Insurance
The Market for Annuities
Resolving Adverse Selection Through Self-Selection
Using Education as a Signal: Adverse Selection in the Job Market
Using Warranties as Signals: Adverse Selection in the Product Market
Summary
Problems
Excel Exercise: Adverse Selection
Part 8: Government Actions and Managerial Behavior
Chapter 17: Government and Business
Competition Versus Monopoly
Regulation of Monopoly
The One Star Gas Company: A Pseudo-Case Study
Effects of Regulation on Efficiency
The Concentration of Economic Power
The Sherman Act
The Clayton Act, the Robinson-Patman Act, and the Federal Trade Commission Act
Interpretation of the Antitrust Laws
The Patent System
Trade and Trade Policy
Government Price Ceilings and Price Floors
The Welfare Impacts of Taxes
Regulation of Environmental Pollution
Public Goods
Summary
Problems
Excel Exercise: Externalities
Chapter 18: Optimization Techniques
Functional Relationships
Marginal Analysis
Relationships Among Total, Marginal, and Average Values
The Concept of a Derivative
How to Find a Derivative
Using Derivatives to Solve Maximization and Minimization Problems
Marginal Cost Equals Marginal Revenue and the Calculus of Optimization
Partial Differentiation and the Maximization of Multivariable Functions
Constrained Optimization
Lagrangian Multipliers
Comparing Incremental Costs with Incremental Revenues
Summary
Problems
Appendix A: Technological Change and Industrial Innovation
Technological Change
Labor Productivity
Total Factor Productivity
Using Total Factor Productivity to Track Factory Performance
Research and Development: A Learning Process
Parallel Development Efforts
What Makes for Success?
Project Selection
Innovation
Time-Cost Trade-Offs
The Learning Curve
Applications of the Learning Curve
Henry Ford’s Model T and Douglas Aircraft’s DC-9
Diffusion Models
Forecasting the Rate of Diffusion of Numerically Controlled Machine Tools
Summary
Problems
Appendix B: Business and Economic Forecasting
Survey Techniques
Taking Apart a Time Series
How to Estimate a Linear Trend
How to Estimate a Nonlinear Trend
Seasonal Variation
Calculation of Seasonal Variation
Cyclical Variation
Elementary Forecasting Techniques
How Leading Indicators are Used
How Econometric Models are Used
The Purvere Corporation: A Numerical Example
“Study Your Residuals”
Summary
Problems
Appendix: Exponential Smoothing and Forecasting
Appendix C: Discounting and Present Values
Present Value of a Series of Payments
The Use of Periods Other Than a Year
Determining the Internal Rate of Return
Appendix D: Answers to Select End-Of-Chapter Problems
Appendix E: Tables
Index
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