Managerial Economics, 7/e

Contents:

Preface

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

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 Demand Function • 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

Part 3: Production and Cost

Chapter 4: 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 5: The Analysis of Costs • Opportunity Costs • Short-Run Cost Functions • Average and Marginal Costs • Long-Run Cost Functions • Managerial Use of Scale of Economics • Managerial Use of Scope Economics • Managerial Use of Break-Even Analysis • Profit Contribution Analysis • Summary • Problems • 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 6: Perfect Competition • Market Structure • Market Price in Perfect Competition • Shifts in Supply and Demand Curves • The Output Decision of 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

Chapter 7: 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 • Appendix: Allocation of Output among Plants

Part 5: Sophisticated Market Pricing

Chapter 8: The 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 • Appendix: Two-Part Tariff with Intersecting Demands

Chapter 9: 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 for the Upstream Product • The Global Use of Transfer Pricing • Summary • Problems

Part 6: the strategic world of managers

Chapter 10: 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

Chapter 11: 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

Chapter 12: 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

Part 7: risk, uncertainty, and incentives

Chapter 13: 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 towards 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

Chapter 14: Principal-Agent Issues and Managerial Compensation • 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 Issues in Other Contexts • Product Liability and the Safety of Consumer Goods • Summary • Problems

Chapter 15: 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

Part 8: Government actions and managerial behavior

Chapter 16: Government and Business • Competition versus Monopoly • Regulation of Monopoly • The Lone Star Gas Company: A Case Study • Effects of Regulation and 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

Appendix A: 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 Maximizations of Multivariable Functions • Constrained Optimization • Lagrangian Multipliers • Comparing Incremental Costs with Incremental Revenues

Appendix B: 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 C: Answers to select end-of-chapter problems

Appendix D: tables

Index