Economics for Managers, Global Edition

✍ Scribed by (author), Paul G Farnham

• Publisher: Pearson Education Limited
• Year: 2014;2015
• Tongue: English
• Leaves: 553
• Edition: 3rd
• Category: Library

✦ Synopsis

For one semester MBA Managerial Economics courses Economics for Managers presents the fundamental ideas of microeconomics and macroeconomics and integrates them from a managerial decision-making perspective in a framework that can be used in a single-semester course. To be competitive in today's business environment, managers must understand how economic forces affect their business and the factors that must be considered when making business decisions. This is the only book that provides business students and MBAs with a thorough and applied understanding of both micro- and macroeco.

✦ Table of Contents

Cover......Page 1
Title......Page 2
Copyright......Page 3
Contents......Page 8
Preface......Page 18
About the Author......Page 30
Chapter 1 Managers and Economics......Page 33
CASE FOR ANALYSIS: Micro- and Macroeconomic Influences on the Global Automobile Industry......Page 34
Two Perspectives: Microeconomics and Macroeconomics......Page 36
Markets......Page 37
Macroeconomic Influences on Managers......Page 40
Factors Affecting Macro Spending Behavior......Page 42
Summary......Page 44
Application Questions......Page 45
Chapter 2 Demand, Suply, and Equilibrium Prices......Page 47
CASE FOR ANALYSIS: Demand and Supply in the Copper Industry......Page 48
Demand......Page 49
Nonprice Factors Influencing Demand......Page 50
Demand Function......Page 54
Demand Curves......Page 55
Change in Quantity Demanded and Change in Demand......Page 56
Linear Demand Functions and Curves......Page 57
Mathematical Example of a Demand Function......Page 58
Nonprice Factors Influencing Supply......Page 59
Supply Function......Page 61
Change in Quantity Supplied and Change in Supply......Page 62
Mathematical Example of a Supply Function......Page 63
Summary of Demand and Supply Factors......Page 64
Lower-Than-Equilibrium Prices......Page 65
Higher-Than-Equilibrium Prices......Page 67
Changes in Equilibrium Prices and Quantities......Page 68
Mathematical Example of an Equilibrium Change......Page 71
Exercises......Page 73
Application Questions......Page 75
Chapter 3 Demand Elasticities......Page 77
CASE FOR ANALYSIS: Demand Elasticity and Procter & Gamble’s Pricing Strategies......Page 78
Demand Elasticity......Page 79
Price Elasticity of Demand......Page 80
The Influence of Price Elasticity on Managerial Decision Making......Page 81
Elasticity and Total Revenue......Page 82
Determinants of Price Elasticity of Demand......Page 84
Percent of Consumer’s Income Spent on the Product......Page 85
Calculating Price Elasticities......Page 86
Other Functions Related to Demand......Page 88
Calculation of Arc and Point Price Elasticities......Page 89
Price Elasticity Versus Slope of the Demand Curve......Page 90
Demand Elasticity, Marginal Revenue, and Total Revenue......Page 91
Vertical Demand Curves......Page 93
Horizontal Demand Curves......Page 94
Income Elasticity of Demand......Page 95
Cross-Price Elasticity of Demand......Page 96
Elasticity Estimates: Economics Literature......Page 98
Elasticity and Chicken and Agricultural/Food Products......Page 99
Elasticity and Beer......Page 100
Elasticity and the Tobacco Industry......Page 101
Tuition Elasticity in Higher Education......Page 102
Elasticity Issues: Marketing Literature......Page 103
Marketing Study I: Tellis (1988)......Page 104
Marketing Study II: Sethuraman and Tellis (1991)......Page 105
Marketing Study Update......Page 106
Summary......Page 107
Appendix 3A Economic Model of Consumer Choice......Page 108
Exercises......Page 114
Application Questions......Page 115
Chapter 4 Techniques for Understanding Consumer Demand and Behavior......Page 117
CASE FOR ANALYSIS: The Use of New Technology to Understand and Impact Consumer Behavior......Page 118
Expert Opinion......Page 119
Consumer Surveys......Page 120
Test Marketing and Price Experiments......Page 121
Unconventional Methods......Page 122
Evaluating the Methods......Page 123
Consumer Demand and Behavior: Economic Approaches......Page 124
Relationship Between One Dependent and One Independent Variable: Simple Regression Analysis......Page 125
Relationship Between One Dependent and Multiple Independent Variables: Multiple Regression Analysis......Page 130
Other Functional Forms......Page 132
Demand Estimation Issues......Page 133
Case Study of Statistical Estimation of Automobile Demand......Page 134
Case Study I: Carnation Coffee-mate......Page 138
Case Study II: Carnation Evaporated Milk......Page 140
Case Study III: The Demand for Cheese in the United States......Page 141
Key Terms......Page 142
Exercises......Page 143
Application Questions......Page 144
Chapter 5 Production and Cost Analysis in the Short Run......Page 145
CASE FOR ANALYSIS: Production and Cost Analysis in the Fast-Food Industry......Page 146
Fixed Inputs Versus Variable Inputs......Page 147
Productivity and the Fast-Food Industry......Page 148
Average Product and Marginal Product......Page 149
Relationships Among Total, Average, and Marginal Product......Page 150
Economic Explanation of the Short-Run Production Function......Page 152
Other Examples of Diminishing Returns......Page 153
Productivity and the Agriculture Industry......Page 154
Productivity and the Automobile Industry......Page 155
Productivity Changes Across Industries......Page 156
Measuring Opportunity Cost: Explicit Versus Implicit Costs......Page 157
Accounting Profit Measures Versus Economic Profit Measures......Page 158
Managerial Rule of Thumb: The Importance of Opportunity Costs......Page 159
Fixed Costs Versus Variable Costs......Page 160
Relationships Among Total, Average, and Marginal Costs......Page 161
Relationship Between Short-Run Production and Cost......Page 163
Other Short-Run Production and Cost Functions......Page 164
Econometric Estimation of Cost Functions......Page 165
Survey Results on Cost Functions......Page 166
Constant Versus Rising Marginal Cost Curves......Page 167
Implications for Managers......Page 168
Key Terms......Page 169
Exercises......Page 170
Application Questions......Page 171
Chapter 6 Production and Cost Analysis in the Long Run......Page 173
CASE FOR ANALYSIS: The iPhone in China......Page 174
Input Substitution......Page 175
Derivation of the Long-Run Average Cost Curve......Page 183
Economies and Diseconomies of Scale......Page 184
Factors Creating Economies and Diseconomies of Scale......Page 185
Other Factors Influencing the Long-Run Average Cost Curve......Page 186
The Minimum Efficient Scale of Operation......Page 187
Summary......Page 190
Appendix 6A Isoquant Analysis......Page 191
Exercises......Page 198
Application Questions......Page 199
Chapter 7 Market Structure: Perfect Competition......Page 201
CASE FOR ANALYSIS: Competition and Cooperative Behavior in the Potato Industry......Page 202
Characteristics of the Model of Perfect Competition......Page 203
Model of the Industry or Market and the Firm......Page 204
Long-Run Adjustment in Perfect Competition: Entry and Exit......Page 210
Adjustment in the Potato Industry......Page 211
Long-Run Adjustment in Perfect Competition: The Optimal Scale of Production......Page 212
Other Illustrations of Competitive Markets......Page 213
Competition and the Agricultural Industry......Page 214
Competition and the Broiler Chicken Industry......Page 215
Competition and the Red-Meat Industry......Page 216
Competition and the Milk Industry......Page 218
Competition and the Trucking Industry......Page 219
Managerial Rule of Thumb: Adopting Strategies to Gain Market Power in Competitive Industries......Page 220
Appendix 7A Industry Supply......Page 221
Exercises......Page 223
Application Questions......Page 224
Chapter 8 Market Structure: Monopoly and Monopolistic Competition......Page 227
CASE FOR ANALYSIS: Changing Market Power for Eastman Kodak Co.......Page 228
The Monopoly Model......Page 229
Comparing Monopoly and Perfect Competition......Page 231
Sources of Market Power: Barriers to Entry......Page 232
Changes in Market Power......Page 242
Measures of Market Power......Page 244
Antitrust Issues......Page 247
Monopolistic Competition......Page 252
Short-Run and Long-Run Models of Monopolistic Competition......Page 253
Examples of Monopolistically Competitive Behavior......Page 254
Key Terms......Page 257
Exercises......Page 258
Application Questions......Page 259
Chapter 9 Market Structure: Oligopoly......Page 261
CASE FOR ANALYSIS: Oligopoly Behavior in the Airline Industry......Page 262
The Airline Industry......Page 263
The Soft Drink Industry......Page 265
The Doughnut Industry......Page 266
The Parcel and Express Delivery Industry......Page 267
Oligopoly Models......Page 268
The Kinked Demand Curve Model......Page 269
Game Theory Models......Page 270
Strategic Entry Deterrence......Page 273
Predatory Pricing......Page 274
Cartels......Page 276
Tacit Collusion......Page 282
Exercises......Page 284
Application Questions......Page 286
Chapter 10 Pricing Strategies for the Firm......Page 289
CASE FOR ANALYSIS: Airline Pricing Strategies: Will They Start Charging for the Use of the Lavatories?......Page 290
The Role of Markup Pricing......Page 291
Marginal Revenue and the Price Elasticity of Demand......Page 292
Profit Maximization and Markup Pricing......Page 293
Business Pricing Strategies and Profit Maximization......Page 295
Markup Pricing Examples......Page 296
Managerial Rule of Thumb: Markup Pricing......Page 297
Definition of Price Discrimination......Page 298
Theoretical Models of Price Discrimination......Page 299
Price Discrimination and Managerial Decision Making......Page 305
Marketing and Price Discrimination......Page 313
Macroeconomics and Pricing Policies......Page 314
Key Terms......Page 316
Exercises......Page 317
Application Questions......Page 318
Chapter 11 Measuring Macroeconomic Activity......Page 321
CASE FOR ANALYSIS: Measuring Changes in Macroeconomic Activity: Implications for Managers......Page 322
The Circular Flow in a Mixed, Open Economy......Page 323
National Income Accounting Systems......Page 325
Characteristics of GDP......Page 326
Real Versus Nominal GDP......Page 327
Alternative Measures of GDP......Page 330
Price Level Measures......Page 338
Measures of Employment and Unemployment......Page 342
Major Macroeconomic Policy Issues......Page 344
Can Policy Makers Maintain Stable Prices, Full Employment, and Adequate Economic Growth over Time?......Page 345
Managerial Rule of Thumb: Competitive Strategies and the Macro Environment......Page 347
Key Terms......Page 348
Exercises......Page 349
Application Questions......Page 350
Chapter 12 Spending by Individuals, Firms, and Governments on Real Goods and Services......Page 351
CASE FOR ANALYSIS: Mixed Signals on the U.S. Economy in Summer 2012......Page 352
Focus on the Short Run......Page 353
Outline for Macroeconomic Analysis......Page 354
Personal Consumption Expenditure......Page 355
Gross Private Domestic Investment Expenditure......Page 363
Government Expenditure......Page 372
Net Export Expenditure......Page 373
Aggregate Expenditure......Page 376
Equilibrium Level of Income and Output......Page 378
Effect of the Interest Rate on Aggregate Expenditures......Page 383
Appendix 12A Numerical Example of Equilibrium and the Multiplier......Page 384
Appendix 12B Algebraic Derivation of the Aggregate Expenditure Function......Page 386
Exercises......Page 389
Application Questions......Page 390
Chapter 13 The Role of Money in the Macro Economy......Page 391
CASE FOR ANALYSIS: The Chairman’s Quandary......Page 392
Measures of the Money Supply......Page 393
Depository Institutions and the Fractional Reserve Banking System......Page 394
The Central Bank (Federal Reserve)......Page 397
Tools of Monetary Policy......Page 399
The Supply of Money......Page 408
The Demand for Money......Page 410
Change in the Supply of Money......Page 412
Change in the Demand for Money......Page 413
Appendix 13A Monetary Tools and the Market for Bank Reserves......Page 414
Key Terms......Page 415
Application Questions......Page 416
Chapter 14 The Aggregate Model of the Macro Economy......Page 417
CASE FOR ANALYSIS: What Role for Inflation?......Page 418
The Aggregate Demand Curve......Page 419
Fiscal and Monetary Policy Implementation......Page 423
The Aggregate Supply Curve......Page 428
Using the Aggregate Model to Explain Changes in the Economy from 2007 to 2008 and from 2011 to 2012......Page 435
Impact of Macro Changes on Managerial Decisions......Page 439
Measuring Changes in Aggregate Demand and Supply......Page 441
Appendix 14A Specific and General Equations for the Aggregate Macro Model......Page 443
Exercises......Page 445
Application Questions......Page 446
Chapter 15 International and Balance of Payments Isues in the Macro Economy......Page 447
CASE FOR ANALYSIS: Uncertainty in the World Economy in 2012......Page 448
Exchange Rates......Page 449
Managerial Rule of Thumb: Currency Exchange Rates......Page 452
Equilibrium in the Open Economy......Page 453
The Current Account......Page 454
The Financial Account......Page 455
Revenue or T-Account......Page 456
The Demand for and Supply of Dollars in the Foreign Exchange Market......Page 458
Equilibrium in the Foreign Exchange Market......Page 460
Exchange Rate Systems......Page 461
Flexible Exchange Rate System......Page 463
Fixed Exchange Rate System......Page 464
Sterilization......Page 466
The U.S. Economy, 1995–2000......Page 467
The U.S. Economy, 2007–2008 and 2010–2012......Page 469
Effects of the Euro in the Macroeconomic Environment......Page 471
Euro Macro Environment Effects on Managerial Decisions......Page 474
Southeast Asia: An Attempt to Maintain Fixed Exchange Rates......Page 475
Macro and Managerial Impact of the Chinese Yuan Since 2003......Page 477
Policy Effectiveness with Different Exchange Rate Regimes......Page 479
Appendix 15A Specific and General Equations for the Balance of Payments......Page 480
Exercises......Page 481
Application Questions......Page 482
Chapter 16 Combining Micro and Macro Analysis for Managerial Decision Making......Page 483
CASE FOR ANALYSIS: Strong Headwinds for McDonald’s......Page 484
Shifting Product Demand......Page 485
Oligopolistic Behavior......Page 486
Strategies to Offset Shifting Demand......Page 488
Innovations for Different Tastes......Page 489
Drawing on Previous Experience......Page 490
2012 and Beyond: A Focus on China and Other Emerging Markets......Page 491
Economic and Political Issues......Page 493
Responses of Other Fast-Food Competitors......Page 495
Calorie Counts on Menus......Page 496
Summary: Macro and Micro Influences on the Fast-Food Industry......Page 498
Appendix 16A Statistical Estimation of Demand Curves......Page 499
Application Questions......Page 501
Solutions to Even-Numbered Problems......Page 502
Glossary......Page 522
A......Page 536
C......Page 537
D......Page 539
F......Page 540
G......Page 541
I......Page 542
L......Page 543
M......Page 544
N......Page 545
P......Page 546
S......Page 548
T......Page 549
V......Page 550
Z......Page 551