GLOBAL EDITION. Managerial Economics. Economic Tools for Today s Decision Makers. Paul Keat Philip Young Stephen Erfle SEVENTH EDITION

Transcription

1 GLOBAL EDITION Managerial Economics Economic Tools for Today s Decision Makers SEVENTH EDITION Paul Keat Philip Young Stephen Erfle

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3 Managerial Economics, Global Edition Table of Contents Cover Contents Preface About the Authors Chapter 1 : Economics and Managerial Decision Making A Brief Review of Important Economic Terms and Concepts The Case of Global Foods, Inc.: Situations and Solutions of the Situations and Solutions Global Application: The BRIC Countries Chapter 2 The Firm and Its Goals The Firm Coase and the Internet The Economic Goal of the Firm and Optimal Decision Making Goals Other Than Profit Economic Goals Noneconomic Objectives Do Companies Really Try to Maximize Profits? Profit Maximization, Restated Maximizing the Wealth of Stockholders Market Value Added and Economic Value Added Economic Profits Global Application Chapter 3 Supply and Demand Market Demand Market Supply Market Equilibrium Comparative Statics Analysis

4 Short-Run Market Changes: The Rationing Function of Price Long-Run Market Analysis: The Guiding or Allocating Function of Price Using Supply and Demand in Forecasting Supply, Demand, and Price: The Managerial Challenge Global Application: The Bric Countries and the Supply and Demand for Oil Appendix 3A The Mathematics of Supply and Demand Chapter 4 Demand Elasticity The Economic Concept of Elasticity The Price Elasticity of Demand Measurement of Price Elasticity The Determinants of Elasticity The Effect of Elasticity on Price and Quantity The Elasticity of Derived Demand Elasticity in the Short Run and in the Long Run Demand Elasticity and Revenue The Mathematics of Elasticity and Revenue Empirical Elasticities The Cross-Price Elasticity of Demand Empirical Elasticities Income Elasticity Other Elasticity Measures Elasticity of Supply Global Application: Price Elasticities in Asia Appendix 4A Applications of Supply and Demand Chapter 5 Demand Estimation and Forecasting Demand Estimation Key Chapter Objectives The Critical Importance of Good Data to Regression Analysis Specifying the Regression Equation and Obtaining the Data Estimating and Interpreting the Regression Coefficients

5 Statistical Evaluation of the Regression Results Review of Key Steps for Analyzing Regression Results Implications of Regression Analysis for Management Decisions in the Use of Regression Analysis The Identification Problem Multicollinearity Autocorrelation Examples of Regression Analysis Across the Disciplines Global Application: Food in Spain, Cigarettes in Taiwan Forecasting Subjects of Forecasts Demand Estimating and Demand Forecasting Prerequisites of a Good Forecast Forecasting Techniques Expert Opinion Opinion Polls and Market Research Surveys of Spending Plans Economic Indicators Projections Econometric Models Global Application: Forecasting Exchange Rates Appendix 5A The Demand for White Zinfandel in Los Angeles Appendix 5B Understanding Consumer Behavior Through Testing Chapter 6 The Theory and Estimation of Production The Production Function A Short-Run Analysis of Total, Average, and Marginal Product The Law of Diminishing Returns The Three Stages of Production in the Short Run Derived Demand and the Optimal Level of Variable Input Usage The Case of Multiple Inputs (Abridged Version) The Long-Run Production Function The Estimation of Production Functions The Various Forms of a Production Function The Cobb-Douglas Production Function Statistical Estimation of Production Functions

6 Aggregate Production Functions The Importance of Production Functions in Managerial Decision Making Careful Planning Can Help a Firm to Use Its Resources in a Rational Manner Going Beyond the Curves: Current Production Issues and Challenges for Todays Managers Call Centers: Applying the Production Function to a Service Global Application: Shifting Trends in Global Outsourcing Appendix 6A Productivity in Services Appendix 6B The Multiple-Input Case Appendix 6C Analyzing Production Functions with the Use of Calculus Chapter 7 The Theory and Estimation of Cost The Importance of Cost in Managerial Decisions The Definition and Use of Cost in Economic Analysis Historical Versus Replacement Cost Opportunity Cost Versus Out-of-Pocket Cost Sunk Versus Incremental Cost The Relationship Between Production and Cost The Short-Run Cost Function Increasing Cost Efficiency in the Short Run Alternative Specifications of the Total Cost Function The Long-Run Cost Function The Relationship Between Long-Run Production and Long-Run Cost Economies of Scale The Long-Run Average Cost Curve as the Envelope of Short-Run Average Cost Using Long-Run Average Cost as a Decision-Making Tool: The Importance of Coordinating Production Plans with Market Forecasts The Learning Curve Economies of Scope Economies of Scale: The Short Run Versus the Long Run Supply Chain Management Examples of Ways Companies Have Cut Costs to Remain Competitive Cautionary Note to Managers About the Use of Cost-Cutting as a Strategy Global Applications: Li & Fung Will Do It All for You

7 Appendix 7A A Mathematical Restatement of the Short-Run Cost Function Appendix 7B The Estimation of Cost Appendix 7C Interview with a Supply Chain Management Executive Chapter 8 Pricing and Output Decisions: Perfect Competition and Monopoly Competition and Market Types in Economic Analysis The Meaning of Competition Examples of Market Types Market Types and Competition in Theory and Reality Pricing and Output Decisions in Perfect Competition The Basic Business Decision Key Assumptions of the Perfectly Competitive Market The Total RevenueTotal Cost Approach to Selecting the Optimal Output Level The Marginal RevenueMarginal Cost Approach to Finding the Optimal Output Level Economic Profit, Normal Profit, Loss, and Shutdown The Competitive Market in the Long Run Pricing and Output Decisions in Monopoly Markets The Implications of Perfect Competition and Monopoly for Managerial Decision Making Global Application: The $736,000 Bluefin Tuna Appendix 8A The Use of Calculus in Pricing and Output Decisions Appendix 8B Break-Even Analysis (Volume-Cost-Profit) Chapter 9 Pricing and Output Decisions: Monopolistic Competition and Oligopoly Monopolistic Competition Oligopoly Market Concentration Pricing in an Oligopolistic Market: Rivalry and Mutual Interdependence Competing in Imperfectly Competitive Markets Nonprice Competition The Reality of Monopolistic Competition and Oligopoly: Imperfect Competition Strategy: The Fundamental Challenge for Firms in Imperfect Competition Industrial Organization

8 The Structure-Conduct-Performance Paradigm The New Theory of Industrial Organization Strategy and the Ideas of Michael Porter Concluding Remarks on the Linkages Between Managerial Economics and Strategy Global Application: Competition in the Computer Tablet Market Appendix 9A A Mathematical Restatement of Monopolistic Competition Chapter 10 Special Pricing Practices Cartel Arrangements Cases of Price Fixing by Cartels Price Leadership Barometric Price Leadership Dominant Price Leadership Revenue Maximization Price Discrimination Third-Degree Discrimination Examples of Price Discrimination Some Examples of Price Discrimination Practices Pricing in the Hotel Industry: Example of Price Discrimination Tying Arrangements: A Possible Extension of Price Discrimination Social Welfare Implications of Price Discrimination Nonmarginal Pricing Cost-Plus Pricing Incremental Pricing and Costing Analysis Multiproduct Pricing Products Complementary in Demand Products Substitutable in Demand Joint Products with Fixed Proportions Joint Products in Variable Proportions Transfer Pricing No External Markets External Markets Other Pricing Practices Global Application: The Decline of European Cartels The European Carton-Board Cartel The European Vitamin Cartel

9 Some Recent Cases of Price Fixing Price Discrimination by Airlines An Airline Pricing Example Chapter 11 Game Theory and Asymmetric Information Game Theory: Modeling the Strategy of Conflict The Prisoners Dilemma The Basics of Bargaining A General Framework Asymmetric Information The Lemons Model Using Signals to Avoid the Lemons Problem Job Market Signaling Screening in Insurance Markets Moral Hazard and Principal-Agent Creating Incentive-Compatible Mechanisms Chapter 12 Capital Budgeting and Risk The Capital Budgeting Decision Types of Capital Budgeting Decisions Time Value of Money Methods of Capital Project Evaluation Net Present Value Internal Rate of Return The Profitability Index NPV Versus IRR Capital Budgeting in Practice Cash Flows Types of Cash Flows Cost of Capital Debt Equity

10 The Weighted Cost of Capital The Capital Budgeting Model Capital Rationing Risk Versus Uncertainty Sources of Business Risk The Measures of Risk Expected Value The Standard Deviation Discrete Versus Continuous Distributions and the Normal Curve The Coefficient of Variation Capital Budgeting Under Conditions of Risk Two Other Methods for Incorporating Risk The Risk-Adjusted Discount Rate Certainty Equivalents Present Value Break-Even Analysis Sensitivity and Scenario Analysis Simulation Decision Trees Real Options in Capital Budgeting Real Options in Practice An Abandonment Option Global Application Political Risk Containing International Risk Capital Budgeting in Practice Appendix 12A The Value of a Corporation Chapter 13 The Multinational Corporation in a Global Setting Opportunities for Multinational Corporations in a Global Economy Expanding the Dressings Category Throughout the World Doing Business in India Brief to Some of Indias Key Industries The Business and Investment Climate Socioeconomic and Political Factors McDonalds in India Risks Faced by a Multinational Corporation

11 Exchange Rates Exchange Rate Hedging Offsetting Transactions The Forward Market The Futures Market Currency Options Currency Swaps Foreign Direct Investment Multinational Capital Budgeting Intercompany Fund Flows Inflation Rates Exchange Rates Tax Differences Differences in Cash Flows Cost of Capital The Final Project Valuation The Repositioning of Funds Multinational Transfer Pricing Multinational Transfer Pricing Example Transfer Pricing in Practice Global Application: Tony the Tiger Meets a Bengal Tiger Chapter 14 Government and Industry: Challenges and Opportunities for Todays Manager The Rationale for Government Involvement in a Market Economy Providing a Legal Framework for Competition: The Antitrust Laws The Clayton Act (1914) Dealing with Market Externalities: Another Key Function of Government in the Market Economy Stabilization of the Aggregate Economy: Monetary and Fiscal Policy Monetary Policy Fiscal Policy Lags Subprime Loan Financial Crisis of 2007 to 2009 Background Securitization of Mortgaged-Backed Securities

12 Disappearing Liquidity Challenges the Financial System Changing Bank Regulations to Avoid Future Crises Global Financial Deregulation and Growth in International Capital Flows Government Deregulation, Mergers, and Acquisitions Why Firms Merge Government Protection of Intellectual Property (IP) Global Application: The Failed Attempt to Merge by General Electric and Honeywell Chapter 15 The Global Soft Drink Industry Factors and Trends Influencing Demand Factors and Trends Influencing Supply Energy Drinks Appendix A Statistical and Financial Tables Index A B C D E F G H I J K L M N O P Q R S T

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