Managerial Economics and Strategy, 2/e

Summary

1. Managerial Decision Making. Economic analysis helps managers develop strategies to pursue their objectives effectively in the presence of scarcity. Various managers within a firm face different objectives and different constraints, but the overriding objective in most private sector firms is to maximize profits. Making decisions subject to constraints implies making trade-offs. To make good managerial decisions, managers must understand how consumers, workers, other managers, and governments will act. Economic theories normally (but not always) assume that all decision makers attempt to maximize their well-being given the constraints they face.

2. Economic Models. Managers use models based on economic theories to help make predictions and ...