Managerial economics

If consumers can be relied on as assessors of a product's merits then we must thank our colleagues (teachers and students) who have prescribed and read this book for over a decade in at least four continents. In their judgement this book has been useful and successful and for that implied praise we are grateful. We must also express our thanks to our own students over the years. and to fellow teachers who have pointed out inadequacies, errors and omis sions in earlier editions. We have tried to take on board many of their criticisms.

This edition has been thoroughly revised. In particular, the chapter on capital budgeting has been updated to take account of recent advances in the field; the Dorfman-Steiner Theorem has been reintroduced in a more prac tical, normative fashion; applications of theory are even more plentiful than hitherto; and the contribution of the corporate strategy and long-range plan ning literature has been acknowledged by an extensive discussion. The objectives of different stakeholders in the firm have been set in the context of the principal-agent problem; a more descriptively realistic analysis of costs has been included; and the econometrics of demand estimation has been simplified and made more intuitive, as has our explanation of linear program ming. Our discussion of regional and monopoly policies which impinge on managerial decision making have been brought completely up to date.

Of course, there has been a cost in the light of these additions. We have eliminated many of the more trivial study questions, and some of the esoteric appendices of the previous edition. This has been necessary in order to con-. tain the material within market-imposed physical and financial constraints. In the spirit of 'thinking marginally', we hope our readers will agree that the changes in this edition represent a move towards a new optimum.