Managerial economic : economic tools for today's decision markers

One day after class, a student in one of our courses commented on the managerial economics text then being used: "This book is very dry. What it needs large extent, the idea for this text stemmed from this remark. This is a text that we believe will excite readers about managerial economics as well as inform them about this vital part t of management education. Each chapter begins with a "Situation," h which managers in a fictional company, Global Foods, Inc., must make certain key decisions about their products in the beverage industry. After the relevant economic concepts or tools of analysis are presented, each chapter ends with a "Solution, a suggested way in the best decision. which these concepts or tools can be used to help managers make is a plot 10%

The heart of managerial economics is the microeconomic theory of the firm Much of this theory was formalized in a textbook written over 100 years ago by Professor Alfred Marshall of Cambridge University. Indeed, if readers were to refer to his Principles of Economics (1890), they would find many of the diagrams and equa tions presented in this text as well as in all other texts in managerial economics. To be sure, the world has changed greatly since Marshall's ideas were developed. Market structures other than the "perfectly competitive model" are now much more impor tant Technology moves at such a rapid pace that the rate of obsolescence of products is now often measured in months rather than years. Competition among firms is fre quently conducted on a global scale rather than a local or national one. Multinational firms invest, manufacture, and sell around the world. In so doing, they sometimes buy out their global competitors or form alliances or joint ventures with them. In recent years, the Internet and e-commerce have become critical elements of most businesses.

Yet through all of these changes, basic microeconomic principles such as supply and demand, elasticity, short-run and long-run shifts in resource allocation, dimin ishing returns, economies of scale, and pricing according to marginal revenue and marginal cost continue to be important tools of analysis for managerial decision makers. In fact, the overall objective of this text is to demonstrate to our readers that the application of microeconomic theory has stood the test of time and continues to be relevant to many facets of modern business decision making.