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Tables of Contents for Managerial Economics
Chapter/Section Title
Page #
Page Count
Preface
xiii
Part One Introduction
1
78
Chapter 1 Introduction and Goals of the Firm
2
25
Chapter Preview
2
1
Managerial Challenge Salomon Brothers' Executive Officer Performance Bonus Plan
3
What Is Managerial Economics?
2
2
Managerial Economics and Economic Theory
4
1
The Decision-Making Model
5
1
The Role of Profits
5
3
Objective of the Firm
8
6
Alternative Objectives of the Firm
14
6
Goals in the Public Sector and the Not-For-Profit Enterprise
20
3
International Perspectives Managing in a Global Competitive Economy
23
1
Summary
23
1
Exercises
24
1
Case Exercise: Reforming the Former Soviet Economy
25
2
Chapter 2 Fundamental Economic Concepts
27
22
Chapter Preview
27
1
Marginal Analysis
27
1
Managerial Challenge American Airlines Restructures Its Fares
28
4
The Net Present Value Concept
32
3
Meaning and Measurement of Risk
35
8
The Relationship between Risk and Return
43
2
Summary
45
1
Exercises
45
3
Case Exercise: The Toro Company and the Probability of Snow
48
1
Chapter 3 Optimization Techniques
49
30
Chapter Preview
49
1
Types of Optimization Techniques
49
1
Managerial Challenge A Skeleton in the Stealth Bomber's Closet
50
3
Differential Calculus
53
8
Applications of Differential Calculus to Optimization Problems
61
4
Partial Differentiation and Multivariate Optimization
65
2
International Perspectives Dealing with Import Restraints
67
1
Summary
68
1
Exercises
69
5
Appendix 3A Constrained Optimization and Lagrangian Multiplier Techniques
74
5
Simple Constrained Optimization
74
2
Lagrangian Multiplier Techniques
76
2
Exercises
78
1
Part Two Demand and Forecasting
79
165
Chapter 4 Theory of Demand
80
50
Chapter Preview
80
1
Demand Relationships: The Demand Schedule and the Demand Curve
80
1
Managerial Challenge Health-Care Reform and Cigarette Taxes
81
1
Demand Relationships: The Demand Function
81
10
Price Elasticity of Demand
91
13
International Perspectives Free Trade and the Price Elasticity of Demand
104
1
Income Elasticity of Demand
104
4
Cross Elasticity of Demand
108
2
Other Demand Elasticity Measures
110
1
Combined Effect of Demand Elasticities
111
2
Summary
113
1
Exercises
113
8
Appendix 4A Indifference Curve Analysis of Demand
121
9
Introduction
121
1
Indifference Curves
121
1
Budget Lines
122
1
Graphical Determination of the Optimal Combination
123
2
Algebraic Determination of the Optimal Combination
125
1
Graphical Derivation of the Demand Function
126
1
Income and Substitution Effects
126
2
Exercise
128
2
Chapter 5 Estimation of Demand
130
57
Chapter Preview
130
1
Demand Estimation Using Marketing Research Techniques
130
1
Managerial Challenge Demand for Public Transportation
131
3
Statistical Estimation of the Demand Function
134
5
Simple Linear Regression Model
139
14
Multiple Linear Regression Model
153
4
Problems in Applying the Linear Regression Model
157
11
Summary
168
1
Exercises
169
10
Case Exercise: Demand Estimation
179
3
Appendix 5A Nonlinear Regression Models
182
5
Introduction
182
1
Semilogarithmic Transformation
182
1
Double-Log Transformation
183
1
Reciprocal Transformation
183
1
Polynomial Transformation
184
1
Exercises
184
3
Chapter 6 Business and Economic Forecasting
187
57
Chapter Preview
187
1
Significance of Forecasting
187
1
Managerial Challenge Ford Motor Company: The Demand for Sport Utility Vehicles
188
2
Selection of a Forecasting Technique
190
2
Time-Series Analysis
192
8
Smoothing Techniques
200
6
Barometric Techniques
206
4
Survey and Opinion-Polling Techniques
210
2
Econometric Methods
212
5
International Perspectives Long-Term Sales Forecasting by General Motors in Overseas Markets
217
1
Summary
218
1
Exercies
219
7
Case Exercise: South Pole Ice Cream Company
226
1
Appendix 6A Forecasting with Input-Output Analysis
227
11
Introduction
227
1
Input-Output Tables
227
9
Exercises
236
2
Appendix 6B Forecasting with Vector Autoregressions
238
6
Introduction
238
1
Unrestricted VAR
239
1
Bayesian VAR
240
2
Exercise
242
2
Part Three Production and Cost
244
159
Chapter 7 Theory of Production
245
49
Chapter Preview
245
1
Production Defined
245
1
Managerial Challenge Electric Utility Deregulation and Economies of Scale
246
1
The Production Function
246
3
Production Functions with One Variable Input
249
8
Determining the Optimal Use of the Variable Input
257
1
Production Functions with Two Variable Inputs
258
7
Determining the Optimal Combination of Inputs
265
6
Returns to Scale
271
4
Statistical Estimation of Production Functions
275
9
Summary
284
1
Exercises
284
6
Case Exercise: Production Function: Wilson Company
290
2
Appendix 7A Maximization of Production Output Subject to a Cost Constraint
292
2
Exercise
293
1
Chapter 8 Theory of Cost
294
34
Chapter Preview
294
1
The Meaning and Measurement of Cost
294
1
Managerial Challenge USAir
295
5
Short-Run Cost Functions
300
8
Long-Run Cost Functions
308
3
Economies and Diseconomies of Scale
311
5
International Perspectives How Japanese Companies Deal with the Problems of Size
316
1
Summary
316
1
Exercises
317
5
Case Exercise: Cost Analysis
322
2
Appendix 8A The Cobb-Douglas Production Function and the Long-Run Cost Function
324
4
The Cobb-Douglas Production Function
324
3
Exercises
327
1
Chapter 9 Applications of Cost Theory
328
39
Chapter Preview
328
1
Estimation of Cost Functions
328
1
Managerial Challenge Product Costing and CAM-I
329
1
Short-Run Cost Functions
330
8
Long-Run Cost Functions
338
6
International Perspectives Economies of Scale and International Joint Ventures in Chipmaking
344
1
Break-even Analysis and Operating Leverage
345
1
Linear Break-even Analysis
346
8
Operating Leverage
354
2
Summary
356
1
Exercises
357
3
Case Exercise: Cost Functions
360
2
Appendix 9A The Learning Curve
362
5
Learning Curve Relationship
362
2
Estimating the Learning Curve Parameters
364
1
The Percentage of Learning
365
1
Exercise
366
1
Chapter 10 Linear-Programming Applications
367
36
Chapter Preview
367
1
A Profit-Maximization Problem
367
1
Managerial Challenge Military Airlift Command
368
9
The Dual Problem and Interpretation of the Dual Variables
377
3
A Cost-Minimization Problem
380
5
A New Technique for Solving Large-Scale Linear-Programming Problems
384
1
Additional Linear-Programming Examples
385
4
Summary
389
1
Exercises
390
6
Appendix 10A Production and Linear Programming
396
7
Algebraic Formulation of the Output-Maximization Problem
396
1
Graphical Representation and Solution of the Output-Maximization Problem
397
4
Profit-Maximization Problem
401
1
Exercise
402
1
Part Four Pricing and Output Decisions
403
251
Chapter 11 Price and Output Determination: Pure and Monopolistic Competition
404
32
Chapter Preview
404
1
The Market Concept
404
1
Managerial Challenge Anti-Ticket-Scalping Laws
405
1
The Supply Concept
406
1
Individual, Firm, and Market Demand Functions
407
4
Price-Output Determination under Pure Competition
411
4
Market Price Determination
415
5
International Perspectives The Determination of Currency Exchange Rates
420
1
Monopolistic Competition
421
4
Selling and Promotional Expenses
425
4
Summary
429
1
Exercises
430
6
Chapter 12 Competitive Markets under Asymmetric Information
436
24
Chapter Preview
436
1
Asymmetric Information Exchange
436
1
Managerial Challenge Debugging Computer Software
437
2
Asymmetric Information in a "Lemons Market"
439
3
Solutions to the Adverse Selection Problem
442
4
Cost Revelation in Joint Ventures and Partnerships
446
3
International Perspectives Joint Venture in Memory Chips: IBM, Siemens, and Toshiba
449
2
The Principal-Agent Problem in Managerial Labor Markets
451
4
Signaling and Sorting Managerial Talent with Optimal Incentives Contracts
455
2
Summary
457
2
Exercises
459
1
Chapter 13 Price and Output Determination: Monopoly
460
28
Chapter Preview
460
1
Monopoly Defined
460
1
Managerial Challenge Public Service Company of New Mexico: Risks of a Monopoly Market Position
461
1
Sources of Market Power for a Monopolist
462
1
Price and Output Determination for a Monopolist
463
8
Regulated Monopolies
471
1
The Economic Rationale for Regulation
472
3
The Regulatory Process
475
2
Special Issues in Utility Regulation
477
4
Summary
481
1
Exercises
482
4
Case Exercise: A Market Solution to Crowded Airspace
486
2
Chapter 14 Price and Output Determination: Oligopoly
488
33
Chapter Preview
488
1
Oligopolistic Market Structures
488
1
Managerial Challenge Airline Pricing Decisions
489
2
Interdependencies in Oligopolistic Industries
491
1
Ignoring Interdependencies
492
2
Cartels and Other Forms of Collusion
494
6
International Perspectives The International Oil Producers' Cartel (OPEC)
500
2
Price Leadership
502
6
The Kinked Demand Curve Model
508
2
Oligopolistic Rivalry and Game Theory
510
6
Summary
516
1
Exercises
516
5
Chapter 15 Game-Theoretic Oligopolistic Rivalry
521
28
Chapter Preview
521
1
Business Strategy Games
521
1
Managerial Challenge Price Differentials in Computers
522
3
Business Rivalry as a Sequential Game
525
5
Excess Capacity, Scale of Entry, and Entry Deterrence
530
7
Simultaneous Games
537
4
Escape from Prisoner's Dilemma
541
5
Summary
546
2
Exercises
548
1
Chapter 16 Further Topics in Pricing
549
54
Chapter Preview
549
1
Price Discrimination
549
1
Managerial Challenge Pricing of Apple Computers: Market Share versus Profitability
550
5
Mathematics of Price Discrimination
555
5
Pricing of Multiple Products
560
4
Pricing of Joint Products
564
5
Transfer Pricing
569
9
International Perspectives Transfer Pricing, Taxes, and Ethics
578
1
Pricing in Practice
579
5
Other Pricing Strategies
584
3
Summary
587
1
Exercises
588
5
Case Exercise: Transfer Pricing
593
2
Appendix 16A Yield Management
595
8
The Concept of Yield Management
595
1
Yield Management Decisions
595
7
Exercises
602
1
Chapter 17 Government Regulation
603
51
Chapter Preview
603
1
Market Structure, Conduct and Performance
603
1
Managerial Challenge The Coase Theorem and Government Regulation
604
7
Antitrust: Government Regulation of Market Conduct and Structure
611
7
Regulatory Constraints: An Economic Analysis
618
8
Government Support of Business
626
3
International Perspectives The U. S. Sugar Import Quota
629
3
Summary
632
1
Exercises
633
6
Appendix 17A Economic Externalities and Market Failure
639
15
Externalities
639
5
Possible Solutions to the Externalities Problem
644
6
Summary
650
1
Exercises
650
4
Part Five Long-Term Investment Decisions and Risk Management
654
Chapter 18 Long-Term Investment Analysis
655
42
Chapter Preview
655
1
The Nature of Capital Expenditure Decisions
655
1
Managerial Challenge Ford Motor Company's Acquisition of Jaguar
656
1
A Basic Framework for Capital Budgeting
657
1
The Capital Budgeting Process
658
9
Estimating the Firm's Cost of Capital
667
7
Cost-Benefit Analysis
674
3
Steps in Cost-Benefit Analysis
677
2
Objectives and Constraints in Cost-Benefit Analysis
679
1
Analysis and Valuation of Benefits and Costs
680
3
The Appropriate Rate of Discount
683
2
Cost-Effectiveness Analysis
685
2
Summary
687
1
Exercises
688
5
Case Exercise: Cost-Benefit Analysis
693
4
Chapter 19 Risk Analysis
697
Chapter Preview
697
1
Risk and Decision Analysis
697
1
Managerial Challenge Planning for Future Power Needs: Public Service Company of New Mexico
698
1
Incorporating Risk into the Decision-Making Process
699
12
Decision Making under Uncertainty
711
2
Managing Risk and Uncertainty
713
7
Summary
720
1
Exercises
721
Appendices
Appendix A Time Value of Money
A1
Introduction
A1
Present Value of a Single Payment
A2
Present Value of a Series of Equal Payments (Annuity)
A4
Present Value of a Series of Unequal Payments
A6
Appendix B Table
B1
Table 1 Values of the Standard Normal Distribution Function
B1
Table 2 Table of "Students" Distribution-Value of t
B3
Table 3 The F-Distribution
B4
Table 4 Present Value of $1 (PVIF)
B7
Table 5 Present Value of an Annuity of $1 (PVIFA)
B9
Table 6 Durbin-Watson Statistic for 2.5% Significance (one-tail) or 5.0% Significance (two-tail)
B11
Appendix C Documentation for the ForeProfit
C1
Getting Started
C1
Preparing ForeProfit for Use on a Floppy Disk System
C1
Preparing ForeProfit for Use on a Harddrive System
C2
Running the FP Programs
C2
ForeProfit Options-the Main Menu
C5
Operating Tips
C5
Technical Assistance
C7
Check Answers to Selected End-of-Chapter Problems and Cases
C9
Index to Glossary
C12
Index
C14