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Introduction to Managerial Economics. Economic concepts Economic tools Economic methodology. Using Economics in Managerial Decision Making. What is economics? Economic rhetoric. The Economic Problem. Questions Issues Managerial decisions. Decision Making Problems.
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Introduction toManagerial Economics • Economic concepts • Economic tools • Economic methodology
Using Economics in Managerial Decision Making • What is economics? • Economic rhetoric
The Economic Problem • Questions • Issues • Managerial decisions
Decision Making Problems • Product price and output • Make or buy • Production technique • Inventory levels • Foreign exchange
Economic Concepts • Theory of consumer behavior • Theory of the firm • Production and cost • Theory of market structure • Competition, monopoly, oligopoly • Terminology
Objectives of the Firm • Profit maximization • Cash flow • Alternative objectives • Shareholder value
Defining Value • Role of valuation • Determinants of value • Creating and capturing value
Nature of Profits • Definition • Sources • Role • Incentives • Signal
Theories of Profit • Risk-taking • Frictional • Monopoly rents • Innovation • Managerial efficiency
Principal-Agent Problem • Conflicting motivations among groups • Solutions
Goals in the Not-for-Profit Sector • Maximize quantity s.t. breakeven constraint • Maximize utility of stakeholders • Maximize cash flows
Tools of Analysis • Mathematics • Statistical estimation • Forecasting • Linear programming • Optimization
Methodology of Microeconomics • Model building • Scientific method • Framework • Theory • Hypothesis • Empirical test • Neoclassical framework
Social Responsibility of Business • Invisible hand • Market imperfections • Exploitation • Government response