CONTENTSPART 1 THE FIRM AND ITS ENVIRONMENT

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 1 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

Determinants of Demand

A Note on Determinants of Supply

Elasticity of Demand

Summary

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

Appendix 3 Linear Regression Analysis

The Linear Regression Model and Underlying Assumptions

Logarithmic Transformations

Summary

Types of Economic Forecasts

4 Economic Forecasting

Two Major Kinds of Data

Factors Affecting Economic Variables

Forecasting Methods

Accuracy of Forecasts

Summary

Integrating Case 1A Are There Two Marketsfor Microwave Ovens?

Integrating Case 1B Omega Distributing Company Ⅰ

PART 2 PRODUCTION,COST,AND PROFIT MAXIMIZATION

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 LeastCost 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-RunProduct Curves

Relation of Short-Run to Long-Run Average Costs

The Learning Effect

Economies of Scope

Choosing the Optimal Plant Size:An Example

Estimation of Cost

Summary

International Capsule I Some International Dimensionsof Demand,Production,and Cost

The Basis for International Trade

Payment for Exports

The Problem of Trade Barriers

7 Profit Analysis of the Firm

Profit Maximization

Shut-Down Point

Break-Even Analysis

Profit Maximization versus Break-Even Analysis

Incremental Profit Analysis

Summary

Relationship between Linear Programming andCalculus Techniques

8 Linear Programming and the Firm

The Primal Program

The Dual Program

Activity Analysis:One Product

Summary

Integrating Case 2A Frontier Concrete Products Company

Integrating Case 2B Shanghai Magnificent HarmonyFoundry Ⅰ

PART 3 MARKETS AND THE BEHAVIOR OF THE FIRM

9 Perfect Competition and Monopoly:The Limiting Cases

Perfect Competition and Its Setting

Monopoly and Its Setting

Summary

10 Monopolistic Competition,Oligopoly,and RivalrousMarket Structures

Monopolistic Competition:A Case of Many Firms

Duopoly:An Oligopoly with Two Firms

The Question of Entry

The Kinked Oligopoly Demand Curve:Price Rigiditywithout Collusion

Tacit Collusion and Price Leadership

Perfect Collusion—The Cartel

Production with Multiple Plants

Summary

Appendix 10 Game Theory in Oligopoly Analysis

Markup Pricing

11 Selected Topics in Pricing and Profit Strategy

Decisions Involving Multiple Products

Price Discrimination

Two-Part Pricing(Access Fees)

Bundling

Alternatives to Profit Maximization

Summary

Appendix 11A Transfer Pricing with a Less-Than-PerfectlyCompetitive Market for the Intermediate Product

Appendix 11B Mathematics of Price Discrimination

Solution Procedure If Discrimination Is Permitted

Solution Procedure If Discrimination Is Not Permitted

Market Segmentation in International Trade

International Capsule Ⅱ Markets and Pricing Strategyin International Trade

The Problem of Dumping

Webb-Pomerene and Export Trading Companies

The Effects of Trade Restrictions on Prices

International Transfer Pricing

12 Factor Markets and Profit-Maximizing Employmentof 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 in 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 Ⅱ

PART 4 ANALYSIS OF PROJECT DECISIONS

13 Fundamentals of Project Evaluation

Capital Budgeting and Project Analysis

Costs in New Undertakings

Stream of Receipts or Returns

A Simple Capital Project Analysis

Project Yield or Rate of Return

Project Ranking in Capital Budgeting Analysis

Cost of Capital and the Discount Rate

Summary

Appendix 13 Compounding and Discounting

Compound Interest

Present Value and Discounting

Annuities

14 Risk in Project Analysis

Certainty versus Risk

Risk in Economic Analysis

Risk-Return Indifference Curves

Probability and Uncertainty

Application of Probability Analysis to Risk

Evaluating Risky Streams of Receipts

Probability Approach to Multiple Project Alternatives

Acceptable Shortcuts to Risk Analysis

Risk Adjustment in Practice

Externalities and Their Nature

An Example of Internalization

Summary

International Capsule Ⅲ Project Analysis in a MultinationalSetting

International Dimensions of Project Analysis

Example of a Foreign Project

Integrating Case 4A A Guaranteed Foreign Investment

Proposal Ⅰ

Proposal Ⅱ

Integrating Case 4B Shanghai Magnificent HarmonyFoundry Ⅱ

PART 5 THE FIRM AND THE PUBLIC SECTOR

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

Summary

The Future of Cost-Benefit Analysis

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

Regulation,Deregulation,and Privatization

17 The Firm and the Future

Developing Countries and the Eastern 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