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Managerial Economics in a Global Economy

Ninth Edition

Dominick Salvatore

Reflecting the highly globalized nature of tastes, production, labor markets, and financial markets in today's world, Managerial Economics in a Global Economy is ideal for undergraduate and MBA courses in managerial economics. Adopting a thoroughly global perspective, this text synthesizes economic theory, decision science, and business administration studies, examining how they interact as a firm strives to reach optimal profitability and efficiency in the face of modern constraints.

Readership : Suitable for courses in managerial economics offered out of Business or Economics departments.

Part One: Introduction
1. The Nature and Scope of Managerial Economics
· The Scope of Managerial Economics
· The Basic Process of Decision Making
· Case Study 1.1: Peter Drucker-The Man Who Invented Management
· Case Study 1.2: The Management Revolution
· The Theory of the Firm
· The Nature and Function of Profits
· Case Study 1.3: Profits in the Personal Computer Industry
· Business Ethics
· Case Study 1.4: Business Ethics at Boeing
· Case Study 1.5: Enron-Anderson and Other Financial Disasters
· Case Study 1.6: The Global Financial Crisis
· International Framework of Managerial Economics
· Case Study 1.7: The Rise of the Global Corporation
· Case Study 1.8: The Global Business Leader
· Case Study 1.9: Global Most Admired Companies
· Managerial Economics in a More Risky, Crisis-Prone, and Sluggish Economy
· Case Study 1.10: Terrorism, Cyber Espionage, Financial Crisis, and Globalization
· Managerial Economics and the Internet
· Case Study 1.11: The Most Important Internet Site Addresses for Managerial Economics
2. Demand, Supply, and Equilibrium Analysis
· Marketing Analysis
· Market Demand
· Market Supply
· When Is a Market in Equilibrium?
· Adjustment to Changes in Demand and Supply: Comparative Static Analysis
· Case Study 2.1: Equilibrium Price by Auction
· Case Study 2.2: Changes in Demand and Supply and Coffee Prices
· Domestic Demand and Supply, Imports, and Prices
· Case Study 2.3: Lower Consumer Prices with Imports
· Interfering with versus Working through the Market
· Case Study 2.4: Rent Control Harms the Housing Market
· Case Study 2.5: The Economics of U.S. Farm Support Programs
· Case Study 2.6: Working through the Market with an Excise Tax
3. Optimization Techniques and New Management Tools
· Methods of Expressing Economics Relationships
· Total, Average, and Marginal Relationships
· Case Study 3.1: Total, Average, and Marginal Cost
· Optimization Analysis
· Case Study 3.2: Optimal Pollution Control
· Constrained Optimization
· Case Study 3.3: Pursuing Multiple Objectives under Constraints by Global Corporations
· New Management Tools for Optimization
· Case Study 3.4: Benchmarking at Xerox, Ford, and Mobil
· Case Study 3.5: Total Quality Management at Johnson & Johnson, Motorola
· Case Study 3.6: Reengineering at GE
· Case Study 3.7: Applying Learning-Organization Principles at Ford and Southwest Airlines
· Case Study 3.8: Big Data Analytics at Amazon, MIT, and Johns Hopkins School of Medicine
· Case Study 3.9: The American Business Model
· Case Study 3.10: When Governance Rules Fail, Public Trust is Eroded
· Integrating Case Study 1: Steve Jobs: A Genius Departs: The Astonishing Career of the World's Most Revered Chief Executive
Part Two: Demand Analysis
4. Demand Theory
· The Demand for a Commodity
· Case Study 4.1: The Demand for Big Macs
· Price Elasticity of Demand
· Case Study 4.2: The Demand for Sweet Potatoes in the United States
· Income Elasticity of Demand
· Case Study 4.3: Price Elasticities of Demand in the Real World
· Case Study 4.4: Income Elasticities of Demand in the Real World
· Cross-Price Elasticities of Demand in the Real World
· Case Study 4.5: Cross-Price Elasticities of Demand in the Real World
· Case Study 4.6: Substitution between Domestic and Foreign Goods
· Using Elasticities in Managerial Decision Making
· International Convergence of Tastes
· Case Study 4.7: Gillette Introduces Space-Technology Global Razors
· Case Study 4.8: Ford's World Car(s)
· Electronic Commerce
· Case Study 4.9: E-Commerce at Amazon.com
· Case Study 4.10: Amazon Puts an End to eBay Star Performance
5. Demand Estimation
· The Identification Problem
· Marketing Research Approaches to Demand Estimation
· Case Study 5.1: Micromarketing: Marketers Zero in on Their Customers
· Case Study 5.2: Estimation of the Demand for Oranges by Market Experiment
· Case Study 5.3: Reaching Consumers in the Vanishing Mass Market
· Introduction to Regression Analysis
· Simple Regression Analysis
· Multiple Regression Analysis
Problems in Regression Analysis
· Demand Estimation by Regression Analysis
· Estimating the Demand for U.S. Imports and Exports
· Case Study 5.4: Estimation of the Demand for Air Travel over the North Atlantic
· Case Study 5.5: Price and Income Elasticities of Imports and Exports in the Real World
· Case Study 5.6: The Major Commodity Exports and Imports of the United States
· Case Study 5.7: The Major Trade Partners of the United States
· Case Study 5.8: The Top U.S. International Exporters
6. Demand Forecasting
· Qualitative Forecasts
· Time-Series Analysis
· Case Study 6.1: Forecasting the Number of McDonald's Restaurants Worldwide
· Case Study 6.2: Forecasting New-Housing Starts with Time-Series Analysis
· Smoothing Techniques
· Case Study 6.3: Forecasting Lumber Sales with Smoothing Techniques
· Barometric Methods
· Case Study 6.4: Forecasting the Level of Economic Activity with Composite and Diffusion Indexes
· Case Study 6.5: The Index of Leading Indicators Goes Global
· Econometric Models
· Case Study 6.6: Forecasting the Demand for Air Travel over the North Atlantic
· Case Study 6.7: Economic Forecasts with Large Econometric Models
· Input-Output Forecasting
· Integrating Case Study 2: Ford's Bet: It's a Small World After All
· Integrating Case Study 3: Estimating and Forecasting the U.S. Demand for Electricity
Part Three: Production and Cost Analysis
7. Production Theory and Estimation
· The Organization of Production and the Production Function
· The Production Function with One Variable Input
· Optimal Use of the Variable Input
· Case Study 7.1: Labor Productivity and Total Compensation in the United States and Abroad
· The Production Function with Two Variable Inputs
· Optimal Combination of Inputs
· Case Study 7.2: Substitutability between Gasoline Consumption and Driving Time
· Returns to Scale
· Case Study 7.3: Returns to Scale in U.S. Manufacturing Industries
· Case Study 7.4: General Motors Decides Smaller is Better
· Empirical Production Functions
· Case Study 7.5: Output Elasticities in U.S. Manufacturing Industries
· The Innovation Process
· Case Study 7.6: How Do Firms Get New Technology?
· Case Study 7.7: Open Innovations at Procter & Gamble
· Innovation and Global Competitiveness
· Case Study 7.8: The New U.S. Digital Factory
· Case Study 7.9: The Euro and the International
8. Cost Theory and Estimation
· The Nature of Costs
· Short-Run Cost Functions
· Case Study 8.1: Per-Unit Cost Curves in the Cultivation of Corn and in Traveling
· Long-Run Cost Curves
· Case Study 8.2: The Long-Run Average Cost Curve in Electricity Generation
· Plant Size and Economies of Scale
· Case Study 8.3: The Shape of the Long-Run Average Cost Curves in Various Industries
· Learning Curves
· Case Study 8.4: To Reduce Costs, Firms Often Look Far Afield
· Minimizing Costs Internationally-The New Economies of Scale
· Logistics of Supply-Chain Management
· Case Study 8.5: Logistics at National Semiconductors, Saturn, and Compaq
· Cost-Volume-Profit Analysis and Operating Leverage
· Case Study 8.6: Breakeven Analysis for Lockheed's Tri-Star and Europe's Airbus Industry
· Case Study 8.7: Estimates of Short-Run and Long-Run Cost Functions
· Integrating Case Study 4: Competition in High-Tech Industries in the Age of Disruptive Innovations
· Integrating Case Study 5: The Third Industrial Revolution
Part Four: Market Structure and Pricing Practices
9. Market Structure: Perfect Competition, Monopoly, and Monopolistic Competition
· Market Structure and Degree of Competition
· Perfect Competition
· Case Study 9.1: Competition in the New York Stock Market
· Case Study 9.2: Long-Run Adjustment in the U.S. Cotton
· Competition in the Global Economy
· Case Study 9.3: Foreign Exchange Quotations of the Dollar
· Case Study 9.4: Foreign Exchange Rate of the U.S. Dollar and the Profitability of U.S. Firms
· Monopoly
· Case Study 9.5: Barriers to Entry and Monopoly by Alcoa
· Case Study 9.6: The Market Value of Monopoly Profits in the New York City Taxi Industry
· Monopolistic Competition
· Case Study 9.7: The Monopolistically Competitive Restaurant Market
· Short-Run Price and Output Determination under Monopolistic Competition
· Long-Run Price and Output Determination under Monopolistic Competition
· Product Variation and Selling Expenses under Monopolistic Competition
· Case Study 9.8: Advertisers Are Taking on Competitors by Name . . . and Being Sued
10. Oligopoly and Firm Architecture
· Oligopoly and Market Concentration
· Case Study 10.1: Brands: Thrive or Die
· Case Study 10.2: Industrial Concentration in the States
· Oligopoly Models
· Case Study 10.3: The Organization of Petroleum
· Profitability and Efficiency Implications of Oligopoly
· Case Study 10.4: Firm Size and Profitability
· Case Study 10.5: Measuring the Pure Efficiency of Operating Units
· The Sales Maximization Model
· The March of Global Oligopolists
· Case Study 10.6: The Globalization of the Automobile Industry
· Case Study 10.7: Rising Competition in Global Banking
· Case Study 10.8: The Globalization of the Pharmaceutical Industry
· The Architecture of the Ideal Firm and the Creative Company
· Case Study 10.9: Firm Architecture and Organizational Competitiveness of High-Performance Organizations
· Case Study 10.10: The Most Innovative Companies in the World
· The Virtual Corporation and Relationship Enterprises
· Case Study 10.11: Relationship Enterprises in Aerospace, Airlines, Telecommunications, and Automobiles
11. Game Theory and Strategic Behavior
· Strategic Behavior and Game Theory
· Case Study 11.1: Military Strategy and Strategic Business Decisions
· Dominant Strategy and Nash Equilibrium
· Case Study 11.2: Dell Computers and Nash Equilibrium
· The Prisoners' Dilemma
· Price and Nonprice Competition, Cartel Cheating, and Prisoners' Dilemma
· Case Study 11.3: The Airlines' Fare War and the Prisoners' Dilemma
· Repeated Games and Tit-for-Tat Strategy
· Strategic Moves
· Case Study 11.4: Wal-Mart's Preemptive Expansion Marketing Strategy
· Strategic Behavior and International Competitiveness
· Sequential Games and Decision Trees
· Case Study 11.5: Airbus's Decision to Build the A380 and Boeing's Sonic Cruiser Response and the 747-8
12. Pricing Practices
· Pricing of Multiple Products
· Case Study 12.1: Optimal Pricing and Output by Gillette
· Price Discrimination
· Case Study 12.2: Price Discrimination by Con Edison
· International Price Discrimination and Dumping
· Transfer Pricing
· Case Study 12.3: Transfer Pricing by Multinationals Operating in Emerging Markets
· Case Study 12.4: Transfer Pricing in Advanced Countries
· Pricing in Practice
· Case Study 12.5: Incremental Pricing at Continental Airlines
· Case Study 12.6: Peak-Load Pricing by Con Edison
· Case Study 12.7: Bundling in the Leasing of Movies
· Case Study 12.8: No-Haggling Value Pricing in Car Buying
· Case Study 12.9: Name Your Price at Priceline
· Integrating Case Study 6: E-Books Rewrite Bookselling
· Integrating Case Study 7: Has Apple Peaked and Are Its Best Days Behind It?
· Integrating Case Study 8: Pricing on the Internet
Part Five: Regulation, Risk Analysis, and Capital Budgeting
13. Regulation and Antitrust: The Role of Government in the Economy
· Government Regulation to Support Business and to Protect Consumers, Workers, and the Environment
· Case Study 13.1: Restrictions on Competition in the Pricing of Milk In New York City and the Nation
· Case Study 13.2: The FDA Steps Up Regulation of the Food and Drug Industry
· Case Study 13.3: Regulation Greatly Reduced Air Pollution
· Externalities and Regulation
· Public Utility Regulation
· Case Study 13.4: The Market for Dumping Rights
· Case Study 13.5: Regulated Electricity Rates for Con Edison
· Antitrust: Government Regulation of Market Structure and Conduct
· Enforcement of Antitrust Laws and the Deregulation Movement
· Case Study 13.6: The IMB and AT&T Cases
· Case Study 13.7: Antitrust and the New Merger Boom
· Case Study 13.8: The Microsoft Antitrust Case
· Regulation of International Competition
· Case Study 13.9: Deregulation of the Airline Industry: An Assessment
· Case Study 13.10: Voluntary Export Restraints on Japanese Automobiles to the United States
· The Effect of Taxation on Business Decisions
· Case Study 13.11: U.S. Border Taxes and Export Subsidies
14. Risk Analysis
· Risk and Uncertainty in Managerial Decision Making
· Case Study 14.1: The Risk Faced by Coca-Cola in Changing Its Secret Formula
· Case Study 14.2: The 10 Biggest Failures in the United States
· Measuring Risk with Probability Distributions
· Case Study 14.3: RiskMetrics: A Method of Measuring Value at Risk
· Utility Theory and Risk Aversion
· Case Study 14.4: The Purchase of Insurance and Gambling by the Same Individual-A Seeming Contradiction
· Adjusting the Valuation Model for Risk
· Case Study 14.5: Adjusting the Valuation Model for Risk in the Real World
· Other Techniques for Incorporating Risk into Decision Making
· Decision Making under Uncertainty
· Case Study 14.6: Spreading Risks in the Choice of a Portfolio
· Foreign-Exchange Risks and Hedging
· Case Study 14.7: Information, Risk, and the Collapse of Long-Term
· Information and Risk
· Case Study 14.8: Do Golden Parachutes Reward Failure?
· Case Study 14.9: Auctioning of the Airwaves
15. Long-Run Investment Decisions: Capital Budgeting
· Capital Budgeting: An Overview
· Case Study 15.1: Cost-Benefit Analysis and the SST
· The Capital Budgeting Process
· Case Study 15.2: The Eurotunnel: Another Bad French-British Investment?
· Case Study 15.3: Pennzoil's $3 Billion Capital Budgeting Challenge
· Case Study 15.4: Capital Budgeting for Investments in Human Capital
· Box 15: Managerial Economics at Work: Is a College Education Still Worth It?
· Capital Rationing and the Profitability Index
· The Cost of Capital
· Case Study 15.5: The Choice between Equity and Debt
· Case Study 15.6: Capital Budgeting Techniques of Major U.S. firms
· Reviewing Investment Projects After Implementation
· The Cost of Capital and International Competitiveness
· Integrating Case Study 9: How the U.S. Airline Industry Found Its Edge
· Integrating Case Study 10: How Silicon Valley Conquered the Carriers
· Integrating Case Study 11: Turning Networks into Software Will Trigger a Storm in the Telecom World
Appendix A: Compounding, Discounting, and Present Value
· Future Value and Compounding
· Present Value and Discounting
· Future Value of an Annuity
· Present Value of an Annuity
· Compounding and Discounting Periods
· Determining the Interest Rate
· Perpetuities
Appendix B: Interest Factor Tables
· Compound Value of $1
· Present Value of $1
· Future Value of an Annuity of $1 for n Periods
· Present Value of an Annuity of $1 for n Periods
Appendix C: Statistical Tables
· Areas under the Standard Normal Distribution
· Areas in the Tails of the t Distribution
· F Distribution for 5 Percent Significance
· Durbin-Watson Statistic for 5 Percent
· Significance Points of dL dU
Appendix D: Answers to Selected (Asterisked) ProblemsGlossary

Ancillary Resource Center:
- PowerPoint Slides
- Test Bank
- Instructor's Manual
Student Resources:
- Chapter overview
- Multiple choice and true/false quizzes
- Additional case studies
- Web links
E-Book ISBN 9780190848279

Dominick Salvatore is Distinguished Professor of Economics and Business at Fordham University in New York and Director of the Global Economic Institute. He is Honorary Professor at Shanghai Finance University, Hunan University, University of Pretoria, and LUM (Free University of the Mediterranean). Consultant to the Economic Policy Institute, several central banks, multinational corporations, and global banks, Dr. Salvatore is the author of more than fifty books and many articles in economic and business journals.

The [Oxford] Handbook of Managerial Economics - Edited by Christopher R. Thomas and William F. Shughart, II
Managerial Economics - Suma Damodaran

Special Features

  • Global context integrated throughout - including examples, data, and theories on the international ramifications of managerial decisions - rather than segregating the material in a separate chapter.
  • Incorporates 128 case studies, showing how firms actually reach managerial decisions today.
  • Modular structure offers instructors maximum flexibility with an organization that is suitable for both full-term and briefer courses, and can be used with or without calculus.
  • A robust instructor ancillary package supports the text, particularly useful for those teaching an online or hybrid lecture/online course.
New to this Edition
  • New case studies - one-third of the case studies in the book are new or have been completely rewritten, while the rest have been revised and updated for relevancy.
  • Three new sections on Big Data, Big Data Analytics, and Behavioural Economics and Marketing keep students up-to-date on these topics.
  • Updated throughout with many rewritten sections, including Managerial Economics in a More Risky, Crisis-Prone, and Sluggish Global Economy; Managerial Economics and the Internet; and Barometric Methods of Forecasting.
  • More end-of-chapter Spreadsheet Problems brings the total up to fifty in this edition, giving students more opportunities to apply what they've learned.
  • Rewritten and heavily revised Managerial Economics at Work boxes give students current insights into the field.