Managerial Economics

Book description

Economic principles inform good business decision making. Although economics is sometimes dismissed as a discourse of practical relevance to only a relatively small circle of academicians and policy analysts who call themselves economists, sound economic reasoning benefits any manager of a business, whether they are involved with production/operations, marketing, finance, or corporate strategy. Along with enhancing decision making, the field of economics provides a common language and framework for comprehending and communicating phenomena that occur within a business, as well as between a business and its environment. This text addresses the core of a subject commonly called managerial economics, which is the application of microeconomics to business decisions. Key relationships between price, quantity, cost, revenue, and profit for an individual firm are presented in form of simple conceptual models. The text includes key elements from the economics of consumer demand and the economics of production. The book discusses economic motivations for expanding a business and contributions from economics for improved organization of large firms. Market price quantity equilibrium, competitive behavior, and the role of market structure on market equilibrium and competition are addressed. Finally, the text considers market regulation in terms of the generic problems that create the need for regulation and possible remedies for those problems. Although the academic literature of managerial economics often employs abstract mathematics and large corporations create and use sophisticated mathematical models that apply economics, this book focuses on concepts, terminology, and principles, with minimal use of mathematics. The reader will gain a better understanding of why businesses and markets function as they do and how those institutions can function better.

Table of contents

  1. Title Page
  2. Copyright
    1. Abstract
    2. Keywords
  3. Contents
  4. Chapter 1: Introduction to Managerial Economics
    1. What Is Managerial Economics?
    2. Why Managerial Economics Is Relevant for Managers
    3. Managerial Economics Is Applicable to Different Types of Organizations
    4. The Focus of This Book
    5. How to Read This Book
  5. Chapter 2: Key Measures and Relationships
    1. A Simple Business Venture
    2. Revenue, Cost, and Profit
    3. Economic Versus Accounting Measures of Cost and Profit
    4. Revenue, Cost, and Profit Functions
    5. Breakeven Analysis
    6. The Impact of Price Changes
    7. Marginal Analysis
    8. The Conclusion for Our Students
    9. The Shutdown Rule
    10. A Final Word on Business Objectives
  6. Chapter 3: Demand and Pricing
    1. Theory of the Consumer
    2. Is the Theory of the Consumer Realistic?
    3. Determinants of Demand
    4. Modeling Consumer Demand
    5. Forecasting Demand
    6. Elasticity of Demand
    7. Consumption Decisions in the Short Run and the Long Run
    8. Price Discrimination
  7. Chapter 4: Cost and Production
    1. Average Cost Curves
    2. Long-Run Average Cost and Scale
    3. Economies of Scope and Joint Products
    4. Cost Approach Versus Resource Approach to Production Planning
    5. Marginal Revenue Product and Derived Demand
    6. Marginal Cost of Inputs and Economic Rent
    7. Productivity and the Learning Curve
  8. Chapter 5: Economics of Organization
    1. Reasons to Expand an Enterprise
    2. Classifying Business Expansion in Terms of Value Chains
    3. Horizontal Integration
    4. Vertical Integration
    5. Alternatives to Vertical Integration
    6. Conglomerates
    7. Transaction Costs and Boundaries of the Firm
    8. Cost Centers Versus Profit Centers
    9. Transfer Pricing
    10. Employee Motivation
    11. Manager Motivation and Executive Pay
  9. Chapter 6: Market Equilibrium and the Perfect Competition Model
    1. Assumptions of the Perfect Competition Model
    2. Operation of a Perfectly Competitive Market in the Short Run
    3. Perfect Competition in the Long Run
    4. Firm Supply Curves and Market Supply Curves
    5. Market Equilibrium
    6. Shifts in Supply and Demand Curves
    7. Why Perfect Competition Is Desirable
    8. Monopolistic Competition
    9. Contestable Market Model
    10. Firm Strategies in Highly Competitive Markets
  10. Chapter 7: Firm Competition and Market Structure
    1. Why Perfect Competition Usually Does Not Happen
    2. Monopoly
    3. Oligopoly and Cartels
    4. Production Decisions in Noncartel Oligopolies
    5. Seller Concentration
    6. Competing in Tight Oligopolies: Pricing Strategies
    7. Competing in Tight Oligopolies: Nonpricing Strategies
    8. Buyer Power
  11. Chapter 8: Market Regulation
    1. Free Market Economies Versus Collectivist Economies
    2. Efficiency and Equity
    3. Circumstances in Which Market Regulation May Be Desirable
    4. Regulation to Offset Market Power of Sellers or Buyers
    5. Natural Monopoly
    6. Externalities
    7. Externality Taxes
    8. Regulation of Externalities Through Property Rights
    9. High Cost to Initial Entrant and the Risk of Free Rider Producers
    10. Public Goods and the Risk of Free Rider Consumers
    11. Market Failure Caused by Imperfect Information
    12. Limitations of Market Regulation
  12. Notes
    1. Chapter 2
    2. Chapter 3
    3. Chapter 4
    4. Chapter 5
    5. Chapter 6
    6. Chapter 7
    7. Chapter 8
  13. References

Product information

  • Title: Managerial Economics
  • Author(s): Donald N. Stengel
  • Release date: June 2011
  • Publisher(s): Business Expert Press
  • ISBN: 9781606492208