{"product_id":"managerial-economics-9781118091364","title":"Managerial Economics","description":"\u003cb\u003eBook Synopsis\u003c\/b\u003e\u003cbr\u003eUncertainty is present in every managerial decision, and \u003ci\u003eManagerial Economics: A Mathematical Approach\u003c\/i\u003e effectively demonstrates the application of higher-level statistical tools to inform and clarify the logic of problem solving in a managerial environment.  \u003cp\u003eWhile illuminating managerial decision-making from all possible angles, this book equips readers with the tools and skills needed to recognize and address uncertainty. The book also explores individual, firm, and market-level decisions; discusses all possible risks and uncertainties encountered in the decision-making process; and prepares readers to deal with both epistemic and aleatory uncertainty in managerial decisions. \u003ci\u003eManagerial Economics\u003c\/i\u003e features:\u003c\/p\u003e \u003cp\u003e An emphasis on practical application through real-life examples and problems\u003c\/p\u003e \u003cp\u003e An accessible writing style that presents technical theories in a user-friendly way\u003c\/p\u003e \u003cp\u003e A mathematical and statistical point of view that reveals the presence of uncerta\u003cbr\u003e\u003cbr\u003e\u003cb\u003eTable of Contents\u003c\/b\u003e\u003cbr\u003e\u003c\/p\u003e\u003cp\u003ePREFACE xix\u003c\/p\u003e \u003cp\u003e\u003cb\u003eUNIT I METHODOLOGICAL PRELIMINARIES\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e1 Qualitative Fundamentals 3\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e1.1 Economic Theory and Managerial Economics 3\u003c\/p\u003e \u003cp\u003e1.2 Some Methodological Fallacies 5\u003c\/p\u003e \u003cp\u003e1.3 Paradigms, Models, and the Scientific Method 6\u003c\/p\u003e \u003cp\u003e1.4 The Descriptive and Prescriptive Treatments 8\u003c\/p\u003e \u003cp\u003e1.5 The Profit Function: Accounting versus Economics 8\u003c\/p\u003e \u003cp\u003e1.6 Entrepreneurship, Management, and Leadership 9\u003c\/p\u003e \u003cp\u003eSummary 11\u003c\/p\u003e \u003cp\u003eKey Terms 12\u003c\/p\u003e \u003cp\u003eExercises 12\u003c\/p\u003e \u003cp\u003e\u003cb\u003e2 Quantitative Fundamentals 13\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e2.1 Introduction 13\u003c\/p\u003e \u003cp\u003e2.2 Functions 14\u003c\/p\u003e \u003cp\u003e2.3 Exponents 16\u003c\/p\u003e \u003cp\u003e2.4 Logarithms and the Number e 18\u003c\/p\u003e \u003cp\u003e2.5 Differential Calculus 19\u003c\/p\u003e \u003cp\u003e2.6 Multivariate and Equality Constrained Optimization 22\u003c\/p\u003e \u003cp\u003e2.7 Inequality Constrained Optimization: Linear Programming 30\u003c\/p\u003e \u003cp\u003e2.8 Selected Statistical Concepts 30\u003c\/p\u003e \u003cp\u003e2.9 Maximum Likelihood Estimation 36\u003c\/p\u003e \u003cp\u003e2.10 Ordinary and Nonlinear Least Squares Estimation 37\u003c\/p\u003e \u003cp\u003eSummary 38\u003c\/p\u003e \u003cp\u003eKey Terms 40\u003c\/p\u003e \u003cp\u003eList of Formulas 40\u003c\/p\u003e \u003cp\u003eExercises 42\u003c\/p\u003e \u003cp\u003e\u003cb\u003eUNIT II DECISIONS AT THE CONSUMER LEVEL\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e3 Theory of Consumer Choice 47\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e3.1 Consumer Preferences 47\u003c\/p\u003e \u003cp\u003e3.1.1 Indifference Curve 50\u003c\/p\u003e \u003cp\u003e3.1.2 Marginal Rate of Substitution (MRS) 52\u003c\/p\u003e \u003cp\u003e3.1.3 Nontypical Indifference Curves 55\u003c\/p\u003e \u003cp\u003e3.2 Consumer’s Affordability 58\u003c\/p\u003e \u003cp\u003e3.2.1 Budget Line 58\u003c\/p\u003e \u003cp\u003e3.2.2 Slope of the Budget Line 60\u003c\/p\u003e \u003cp\u003e3.2.3 Shift, Swing, and Kink of the Budget Line 60\u003c\/p\u003e \u003cp\u003eThe Shift 60\u003c\/p\u003e \u003cp\u003eThe Swing 63\u003c\/p\u003e \u003cp\u003eThe Kink 64\u003c\/p\u003e \u003cp\u003e3.2.4 Three-Dimensional Budget 66\u003c\/p\u003e \u003cp\u003e3.3 The Optimal Choice 68\u003c\/p\u003e \u003cp\u003e3.3.1 Interior and Corner Solutions 69\u003c\/p\u003e \u003cp\u003e3.3.2 Utility and Its Measurability 71\u003c\/p\u003e \u003cp\u003e3.3.3 Utility Maximization 76\u003c\/p\u003e \u003cp\u003e3.4 Effects on the Optimal Choice 81\u003c\/p\u003e \u003cp\u003e3.4.1 Change in Income 81\u003c\/p\u003e \u003cp\u003eNormal and Inferior Commodities 82\u003c\/p\u003e \u003cp\u003eIncome–Consumption Curve 83\u003c\/p\u003e \u003cp\u003eEngel Curve: Nominal and Real 83\u003c\/p\u003e \u003cp\u003eEngel Curve and Income–Consumption Curve for Homothetic and Quasi-Linear Preferences 85\u003c\/p\u003e \u003cp\u003eIncome Elasticity of Demand 86\u003c\/p\u003e \u003cp\u003e3.4.2 Change in Prices 88\u003c\/p\u003e \u003cp\u003eGiffen and Non-Giffen Commodities 90\u003c\/p\u003e \u003cp\u003ePrice–Consumption Curve 90\u003c\/p\u003e \u003cp\u003ePrice Change and the Demand Curve 91\u003c\/p\u003e \u003cp\u003ePrice Elasticity of Demand 91\u003c\/p\u003e \u003cp\u003eSubstitutes and Complements 93\u003c\/p\u003e \u003cp\u003eCross-Price Elasticity of Demand 94\u003c\/p\u003e \u003cp\u003e3.5 Income and Substitution Effects 95\u003c\/p\u003e \u003cp\u003e3.6 Slutsky Equation 96\u003c\/p\u003e \u003cp\u003eSummary 98\u003c\/p\u003e \u003cp\u003eKey Terms 99\u003c\/p\u003e \u003cp\u003eList of Formulas 99\u003c\/p\u003e \u003cp\u003eExercises 101\u003c\/p\u003e \u003cp\u003e\u003cb\u003e4 Consumer Demand: Theoretical Analysis 103\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e4.1 Demand and Supply: Functions and Laws 103\u003c\/p\u003e \u003cp\u003e4.2 Deriving a Demand Function from Utility Maximization 105\u003c\/p\u003e \u003cp\u003e4.3 Homogeneity and the Numeraire 109\u003c\/p\u003e \u003cp\u003e4.4 Inverse Demand Function 111\u003c\/p\u003e \u003cp\u003e4.5 Demand and Supply: Table and Curves 111\u003c\/p\u003e \u003cp\u003e4.6 Market Equilibrium 114\u003c\/p\u003e \u003cp\u003e4.7 From Individual to Market Demand 120\u003c\/p\u003e \u003cp\u003e4.8 Demand and Network Externalities 122\u003c\/p\u003e \u003cp\u003e4.8.1 The Case of the Bandwagon Effect 122\u003c\/p\u003e \u003cp\u003e4.8.2 The Case of the Snob Effect 124\u003c\/p\u003e \u003cp\u003e4.9 Deriving a Market Demand Function under Externalities 126\u003c\/p\u003e \u003cp\u003e4.10 Changes in QD and QS versus Changes in D and S 129\u003c\/p\u003e \u003cp\u003e4.11 Changes in Equilibrium 131\u003c\/p\u003e \u003cp\u003e4.11.1 The Case of Thanksgiving Turkey 132\u003c\/p\u003e \u003cp\u003e4.11.2 The Case of Sales and Excise Taxes 134\u003c\/p\u003e \u003cp\u003e4.12 Market Disequilibrium 138\u003c\/p\u003e \u003cp\u003e4.12.1 The Case of a Price Ceiling 139\u003c\/p\u003e \u003cp\u003e4.12.2 The Case of a Price Floor 142\u003c\/p\u003e \u003cp\u003e4.13 Marshallian versus Hicksian Demand Curves 144\u003c\/p\u003e \u003cp\u003e4.13.1 Shephard Lemma and the Expenditure Function 145\u003c\/p\u003e \u003cp\u003e4.14 Deriving the Hicksian (Compensated) Demand Curve 147\u003c\/p\u003e \u003cp\u003e4.15 Revealed Preferences 149\u003c\/p\u003e \u003cp\u003e4.16 Interdependent Demand 152\u003c\/p\u003e \u003cp\u003eSummary 155\u003c\/p\u003e \u003cp\u003eKey Terms 157\u003c\/p\u003e \u003cp\u003eList of Formulas 157\u003c\/p\u003e \u003cp\u003eExercises 157\u003c\/p\u003e \u003cp\u003e\u003cb\u003e5 Consumer Demand: Empirical Estimation 160\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e5.1 Simple Market Experimentation 160\u003c\/p\u003e \u003cp\u003e5.2 Linearity of the Demand Function: From Visual to Regression 163\u003c\/p\u003e \u003cp\u003e5.3 Reliability of the Estimation 168\u003c\/p\u003e \u003cp\u003e5.4 Quality of Fitting 170\u003c\/p\u003e \u003cp\u003e5.5 Fitting by Computerized Regression 172\u003c\/p\u003e \u003cp\u003e5.6 Demand Estimation by the Multiple Regression Method 174\u003c\/p\u003e \u003cp\u003e5.6.1 Results and Interpretation 179\u003c\/p\u003e \u003cp\u003e5.6.2 Goodness of Fit 181\u003c\/p\u003e \u003cp\u003e5.6.3 The Overall Explanatory Power of the Model 182\u003c\/p\u003e \u003cp\u003e5.6.4 Major Problems to Check On 183\u003c\/p\u003e \u003cp\u003eMulticollinearity 183\u003c\/p\u003e \u003cp\u003eAutocorrelation 184\u003c\/p\u003e \u003cp\u003eHeteroscedasticity 185\u003c\/p\u003e \u003cp\u003e5.7 Nonregression Approaches to Estimation 186\u003c\/p\u003e \u003cp\u003e5.7.1 Market Experimentation 186\u003c\/p\u003e \u003cp\u003e5.7.2 Observational Studies 187\u003c\/p\u003e \u003cp\u003e5.7.3 Micromarketing and Virtual Shopping 187\u003c\/p\u003e \u003cp\u003e5.8 Advanced Demand Estimation: The Pad Model 188\u003c\/p\u003e \u003cp\u003e5.8.1 Model Specification 188\u003c\/p\u003e \u003cp\u003eDesired Demand 188\u003c\/p\u003e \u003cp\u003eAdjustment Equation 188\u003c\/p\u003e \u003cp\u003eEstimating Equation 189\u003c\/p\u003e \u003cp\u003e5.8.2 Graph of the Linear PAD Model 189\u003c\/p\u003e \u003cp\u003eSummary 196\u003c\/p\u003e \u003cp\u003eKey Terms 196\u003c\/p\u003e \u003cp\u003eList of Formulas 196\u003c\/p\u003e \u003cp\u003eExercises 198\u003c\/p\u003e \u003cp\u003e\u003cb\u003e6 Consumer Demand: Economic Forecasting 200\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e6.1 Forecasting Models 201\u003c\/p\u003e \u003cp\u003e6.1.1 Quantitative Models 201\u003c\/p\u003e \u003cp\u003e6.1.2 Qualitative Models 202\u003c\/p\u003e \u003cp\u003e6.2 Time Series Analysis 202\u003c\/p\u003e \u003cp\u003e6.2.1 Secular Trends 202\u003c\/p\u003e \u003cp\u003e6.2.2 Seasonal Variations 202\u003c\/p\u003e \u003cp\u003e6.2.3 Cyclical Fluctuations 203\u003c\/p\u003e \u003cp\u003e6.2.4 Random Changes 203\u003c\/p\u003e \u003cp\u003e6.3 From Symbolic to Numeric Fitting 203\u003c\/p\u003e \u003cp\u003e6.4 Adjusting for Seasonality 207\u003c\/p\u003e \u003cp\u003e6.4.1 The Simple Average of Errors Method 208\u003c\/p\u003e \u003cp\u003e6.4.2 The Actual-to-Forecast (A\/F) Ratio Method 210\u003c\/p\u003e \u003cp\u003e6.4.3 The Dummy Variables Method 212\u003c\/p\u003e \u003cp\u003e6.5 Smoothed Forecasts 214\u003c\/p\u003e \u003cp\u003e6.5.1 Simple Moving Average Method 214\u003c\/p\u003e \u003cp\u003eThe RMSE Check 217\u003c\/p\u003e \u003cp\u003e6.5.2 The Weighted Moving Average 218\u003c\/p\u003e \u003cp\u003e6.5.3 Exponential Smoothing 219\u003c\/p\u003e \u003cp\u003eMean Absolute Deviation (MAD) 223\u003c\/p\u003e \u003cp\u003e6.6 Barometric Forecasting 224\u003c\/p\u003e \u003cp\u003e6.7 Econometric Models 226\u003c\/p\u003e \u003cp\u003e6.7.1 Single-Equation Model 227\u003c\/p\u003e \u003cp\u003e6.7.2 Multiple-Equation Model 229\u003c\/p\u003e \u003cp\u003e6.8 Input–Output Matrix 231\u003c\/p\u003e \u003cp\u003e6.9 Judgmental Models 233\u003c\/p\u003e \u003cp\u003e6.9.1 Opinions and Polls 233\u003c\/p\u003e \u003cp\u003e6.9.2 Surveys and Market Research 233\u003c\/p\u003e \u003cp\u003e6.10 Forecasting Accuracy and Reliability 234\u003c\/p\u003e \u003cp\u003eSummary 235\u003c\/p\u003e \u003cp\u003eKey Terms 236\u003c\/p\u003e \u003cp\u003eList of Formulas 236\u003c\/p\u003e \u003cp\u003eExercises 238\u003c\/p\u003e \u003cp\u003e\u003cb\u003eUNIT III MANAGERIAL DECISIONS AT THE FIRM LEVEL\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e7 Production Theory 243\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e7.1 Variability of Inputs throughout Time 243\u003c\/p\u003e \u003cp\u003e7.2 Production Function 244\u003c\/p\u003e \u003cp\u003e7.3 Graphical Representation of the Production Function 246\u003c\/p\u003e \u003cp\u003e7.4 Short-Run, One Variable Input Function 250\u003c\/p\u003e \u003cp\u003e7.5 Dynamic Relations among Production Curves 252\u003c\/p\u003e \u003cp\u003e7.6 Law of Diminishing Marginal Returns 260\u003c\/p\u003e \u003cp\u003e7.7 Long-Run, Two Variable Input Function 261\u003c\/p\u003e \u003cp\u003eIsoquants 261\u003c\/p\u003e \u003cp\u003e7.8 Marginal Rate of Technical Substitution (MRTS) 263\u003c\/p\u003e \u003cp\u003e7.9 The Economically Efficient Region of Production 266\u003c\/p\u003e \u003cp\u003e7.10 Returns to Scale 267\u003c\/p\u003e \u003cp\u003e7.11 Elasticity of Substitution 269\u003c\/p\u003e \u003cp\u003e7.11.1 Elasticity of the Cobb–Douglas Production Function 270\u003c\/p\u003e \u003cp\u003e7.11.2 Elasticity of the Leontief Production Function 271\u003c\/p\u003e \u003cp\u003e7.11.3 Leontief Technology and Linear Programming 272\u003c\/p\u003e \u003cp\u003e7.11.4 Elasticity of the Linear Production Function 273\u003c\/p\u003e \u003cp\u003e7.11.5 Elasticity of the CES Production Function 274\u003c\/p\u003e \u003cp\u003e7.11.6 Graphical Representation of CES 275\u003c\/p\u003e \u003cp\u003e7.12 Optimal Employment of an Input 277\u003c\/p\u003e \u003cp\u003e7.13 Technological Progress, Invention, and Innovation 278\u003c\/p\u003e \u003cp\u003e7.14 Technological Progress and Production Function 280\u003c\/p\u003e \u003cp\u003eSummary 282\u003c\/p\u003e \u003cp\u003eKey Terms 283\u003c\/p\u003e \u003cp\u003eList of Formulas 283\u003c\/p\u003e \u003cp\u003eExercises 285\u003c\/p\u003e \u003cp\u003e\u003cb\u003e8 Cost Theory 287\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e8.1 Cost Concepts and Categories 287\u003c\/p\u003e \u003cp\u003e8.2 Short-Run Costs 289\u003c\/p\u003e \u003cp\u003e8.3 The Optimal Combination of Inputs 297\u003c\/p\u003e \u003cp\u003e8.3.1 Isocost 297\u003c\/p\u003e \u003cp\u003e8.4 Minimizing Input Cost and Maximizing Output 298\u003c\/p\u003e \u003cp\u003e8.5 Long-Run Costs 301\u003c\/p\u003e \u003cp\u003e8.6 Short-Run and Long-Run Average Costs: Economies of Scale 303\u003c\/p\u003e \u003cp\u003e8.7 Derivation of the Cost Function 306\u003c\/p\u003e \u003cp\u003e8.8 Economies of Scope: Basic Concept and Cost Complementarities 311\u003c\/p\u003e \u003cp\u003e8.9 Economies of Scope: Synergy and Input Indivisibility 313\u003c\/p\u003e \u003cp\u003e8.10 The Learning Curve 316\u003c\/p\u003e \u003cp\u003e8.11 Cost–Volume–Profit Analysis and Operating Leverage 321\u003c\/p\u003e \u003cp\u003e8.11.1 Break-Even Quantity and Break-Even Revenue 322\u003c\/p\u003e \u003cp\u003eFixed Cost 323\u003c\/p\u003e \u003cp\u003eVariable Cost 323\u003c\/p\u003e \u003cp\u003eContribution Margin 324\u003c\/p\u003e \u003cp\u003e8.11.2 Cash Break-Even Technique 326\u003c\/p\u003e \u003cp\u003e8.11.3 The Break-Even Point and Target Profit 327\u003c\/p\u003e \u003cp\u003e8.11.4 An Algebraic Approach to the Break-Even Point 329\u003c\/p\u003e \u003cp\u003e8.11.5 Break-Even Time 330\u003c\/p\u003e \u003cp\u003e8.11.6 The Dual Break-Even Points 334\u003c\/p\u003e \u003cp\u003e8.12 Leverage 337\u003c\/p\u003e \u003cp\u003e8.12.1 Operating Leverage 338\u003c\/p\u003e \u003cp\u003e8.12.2 Operating Leverage, Fixed Cost, and Business Risk 341\u003c\/p\u003e \u003cp\u003eSummary 342\u003c\/p\u003e \u003cp\u003eKey Terms 344\u003c\/p\u003e \u003cp\u003eList of Formulas 344\u003c\/p\u003e \u003cp\u003eExercises 347\u003c\/p\u003e \u003cp\u003e\u003cb\u003e9 Production and Cost: Estimation and Forecasting 349\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e9.1 Estimation of the Production Function 350\u003c\/p\u003e \u003cp\u003e9.2 Estimation of the Cost Function 352\u003c\/p\u003e \u003cp\u003e9.3 Forecasting Output 355\u003c\/p\u003e \u003cp\u003e9.4 Forecasting Cost 359\u003c\/p\u003e \u003cp\u003e9.5 Meeting Obligations through Decisions with Probabilistic Results 360\u003c\/p\u003e \u003cp\u003eSummary 361\u003c\/p\u003e \u003cp\u003eKey Terms 361\u003c\/p\u003e \u003cp\u003eList of Formulas 361\u003c\/p\u003e \u003cp\u003eExercises 363\u003c\/p\u003e \u003cp\u003e\u003cb\u003eUNIT IV MANAGERIAL DECISIONS AT THE MARKET LEVEL\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e10 Market Structure and Business Organization 367\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e10.1 Perfect Competition 368\u003c\/p\u003e \u003cp\u003e10.1.1 Characteristics of Perfect Competition 368\u003c\/p\u003e \u003cp\u003e10.1.2 Profit Maximization for Competitive Firms 369\u003c\/p\u003e \u003cp\u003e10.1.3 The Decision to Shut Down 373\u003c\/p\u003e \u003cp\u003e10.1.4 The Competitive Firm in the Long Run 377\u003c\/p\u003e \u003cp\u003e10.2 Monopoly 381\u003c\/p\u003e \u003cp\u003e10.2.1 Monopoly’s Equilibrium in the Short Run 381\u003c\/p\u003e \u003cp\u003e10.2.2 Monopoly’s Equilibrium in the Long Run 385\u003c\/p\u003e \u003cp\u003e10.2.3 Monopoly Power and the Lerner Index 388\u003c\/p\u003e \u003cp\u003e10.3 Monopolistic Competition 389\u003c\/p\u003e \u003cp\u003e10.3.1 Monopolistic Competition Equilibrium in the Short Run 390\u003c\/p\u003e \u003cp\u003e10.3.2 Monopolistic Competition Equilibrium in the Long Run 391\u003c\/p\u003e \u003cp\u003e10.4 Oligopoly 393\u003c\/p\u003e \u003cp\u003e10.4.1 The Concentration Ratio and the Herfindahl Index 394\u003c\/p\u003e \u003cp\u003e10.4.2 Models of Oligopoly 395\u003c\/p\u003e \u003cp\u003eCournot Model 395\u003c\/p\u003e \u003cp\u003eStackelberg Model 399\u003c\/p\u003e \u003cp\u003eBertrand Model 403\u003c\/p\u003e \u003cp\u003eSweezy Model 407\u003c\/p\u003e \u003cp\u003eSummary 410\u003c\/p\u003e \u003cp\u003eKey Terms 411\u003c\/p\u003e \u003cp\u003eList of Formulas 411\u003c\/p\u003e \u003cp\u003eExercises 412\u003c\/p\u003e \u003cp\u003e\u003cb\u003e11 Pricing Decisions and Practices 414\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e11.1 Basics of Price Setting 414\u003c\/p\u003e \u003cp\u003e11.2 The Markup Rule 415\u003c\/p\u003e \u003cp\u003e11.3 Multiproduct Pricing Strategies 418\u003c\/p\u003e \u003cp\u003e11.4 Joint Products with Independent Demands 419\u003c\/p\u003e \u003cp\u003e11.4.1 Product Set of Fixed Proportions 419\u003c\/p\u003e \u003cp\u003e11.4.2 Product Set of Variable Proportions 421\u003c\/p\u003e \u003cp\u003e11.5 Transfer Pricing 423\u003c\/p\u003e \u003cp\u003e11.5.1 The Intermediate Product in a Perfectly Competitive Market 424\u003c\/p\u003e \u003cp\u003e11.5.2 The Intermediate Product in an Imperfectly Competitive Market 429\u003c\/p\u003e \u003cp\u003e11.6 Pricing Strategies and Practices 430\u003c\/p\u003e \u003cp\u003e11.7 Price Discrimination 433\u003c\/p\u003e \u003cp\u003e11.7.1 First-Degree Price Discrimination 434\u003c\/p\u003e \u003cp\u003e11.7.2 Second-Degree Price Discrimination 436\u003c\/p\u003e \u003cp\u003e11.7.3 Third-Degree Price Discrimination 437\u003c\/p\u003e \u003cp\u003eSummary 445\u003c\/p\u003e \u003cp\u003eKey Terms 446\u003c\/p\u003e \u003cp\u003eList of Formulas 446\u003c\/p\u003e \u003cp\u003eExercises 447\u003c\/p\u003e \u003cp\u003e\u003cb\u003eUNIT V MANAGERIAL DECISIONS IN THE LONG RUN\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e\u003cb\u003e12 Capital Budgeting and Investment Project Evaluation 451\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e12.1 What is Capital Budgeting? 451\u003c\/p\u003e \u003cp\u003e12.2 Basic Model of Capital Budgeting 453\u003c\/p\u003e \u003cp\u003e12.3 Selection Process and Project Evaluation 454\u003c\/p\u003e \u003cp\u003e12.4 Methods of Evaluation for Proposed Investment Projects 455\u003c\/p\u003e \u003cp\u003e12.4.1 Net Present Value 455\u003c\/p\u003e \u003cp\u003e12.4.2 Internal Rate of Return 459\u003c\/p\u003e \u003cp\u003e12.4.3 NPV versus IRR for Mutually Exclusive Projects 462\u003c\/p\u003e \u003cp\u003e12.4.4 NPV Profile, Crossover Rate, and the Ranking Reversal 465\u003c\/p\u003e \u003cp\u003e12.5 Profitability Index and Capital Rationing 467\u003c\/p\u003e \u003cp\u003e12.6 Payback Method 469\u003c\/p\u003e \u003cp\u003e12.7 Cost of Capital 471\u003c\/p\u003e \u003cp\u003e12.7.1 Cost of Debt Capital 472\u003c\/p\u003e \u003cp\u003e12.7.2 Cost of Equity Capital 473\u003c\/p\u003e \u003cp\u003eThe CAPM Estimation 473\u003c\/p\u003e \u003cp\u003eThe Dividend Valuation Estimation 474\u003c\/p\u003e \u003cp\u003e12.7.3 The Weighted Marginal Cost of Capital 476\u003c\/p\u003e \u003cp\u003e12.7.4 Capitalization and Capitalized Cost 478\u003c\/p\u003e \u003cp\u003e12.7.5 Last Words on the Cost of Capital 481\u003c\/p\u003e \u003cp\u003eSummary 481\u003c\/p\u003e \u003cp\u003eKey Terms 483\u003c\/p\u003e \u003cp\u003eList of Formulas 483\u003c\/p\u003e \u003cp\u003eExercises 485\u003c\/p\u003e \u003cp\u003e\u003cb\u003e13 Risk Analysis and Managerial Decisions under Uncertainty 487\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e13.1 Risk and Uncertainty 487\u003c\/p\u003e \u003cp\u003e13.2 Sources of Risk 488\u003c\/p\u003e \u003cp\u003e13.2.1 Economic Sources 488\u003c\/p\u003e \u003cp\u003e13.2.2 Political Sources 488\u003c\/p\u003e \u003cp\u003e13.2.3 Social Sources 489\u003c\/p\u003e \u003cp\u003e13.2.4 International Sources 489\u003c\/p\u003e \u003cp\u003e13.3 Measurement of Risk 489\u003c\/p\u003e \u003cp\u003e13.3.1 The Absolute Measure 490\u003c\/p\u003e \u003cp\u003e13.3.2 The Relative Measure 495\u003c\/p\u003e \u003cp\u003e13.4 Risk Aversion 495\u003c\/p\u003e \u003cp\u003e13.5 Risk Attitudes and Utility of Money 496\u003c\/p\u003e \u003cp\u003e13.6 Expected Utility of Money versus Expected Monetary Return 498\u003c\/p\u003e \u003cp\u003e13.7 Risk Discount and Certainty Equivalent 501\u003c\/p\u003e \u003cp\u003e13.8 Risk Impact on the Valuation Model 503\u003c\/p\u003e \u003cp\u003e13.8.1 Risk Premium Adjustment 503\u003c\/p\u003e \u003cp\u003e13.8.2 Certainty-Equivalent Adjustment 506\u003c\/p\u003e \u003cp\u003e13.9 Diversifiable versus Nondiversifiable Risk 509\u003c\/p\u003e \u003cp\u003e13.10 Portfolio Risk 510\u003c\/p\u003e \u003cp\u003e13.11 Risk of Two-Asset Portfolio 518\u003c\/p\u003e \u003cp\u003e13.12 Lending and Borrowing at the Risk-Free Rate of Return 520\u003c\/p\u003e \u003cp\u003e13.13 Measuring the Systematic Risk by Beta (β) 522\u003c\/p\u003e \u003cp\u003e13.14 The CAPM Model 525\u003c\/p\u003e \u003cp\u003e13.15 The Security Market Line (SML) 526\u003c\/p\u003e \u003cp\u003e13.15.1 SML Shift by Inflation 527\u003c\/p\u003e \u003cp\u003e13.15.2 SML Swing by Risk Aversion 528\u003c\/p\u003e \u003cp\u003e13.16 Managerial Decision Tree 532\u003c\/p\u003e \u003cp\u003e13.17 Mathematical Simulation and Sensitivity Analysis 533\u003c\/p\u003e \u003cp\u003e13.18 Advanced Choice under Risk, Ambiguity, and Uncertainty 536\u003c\/p\u003e \u003cp\u003e13.18.1 Stochastic Dominance 536\u003c\/p\u003e \u003cp\u003eAssumptions 537\u003c\/p\u003e \u003cp\u003eExpected Utility 537\u003c\/p\u003e \u003cp\u003eFirst-Degree Stochastic Dominance 537\u003c\/p\u003e \u003cp\u003eInterpretation of FSD Conditions 538\u003c\/p\u003e \u003cp\u003eSecond-Degree Stochastic Dominance 538\u003c\/p\u003e \u003cp\u003eInterpretation of FSD Conditions 538\u003c\/p\u003e \u003cp\u003eApplications of SSD Conditions 539\u003c\/p\u003e \u003cp\u003e13.18.2 Choice under Ambiguity 539\u003c\/p\u003e \u003cp\u003e13.18.3 Choice under Uncertainty 539\u003c\/p\u003e \u003cp\u003eSummary 541\u003c\/p\u003e \u003cp\u003eKey Terms 542\u003c\/p\u003e \u003cp\u003eList of Formulas 543\u003c\/p\u003e \u003cp\u003eExercises 544\u003c\/p\u003e \u003cp\u003e\u003cb\u003e14 Management Consultants and Information 546\u003c\/b\u003e\u003c\/p\u003e \u003cp\u003e14.1 Measuring Information and Its Impact on Uncertainty 546\u003c\/p\u003e \u003cp\u003e14.2 Perfect Management Information 548\u003c\/p\u003e \u003cp\u003e14.3 Valuing Perfect Management Information 549\u003c\/p\u003e \u003cp\u003e14.4 Valuing Less-than-Perfect Management Information 549\u003c\/p\u003e \u003cp\u003eSummary 556\u003c\/p\u003e \u003cp\u003eKey Terms 557\u003c\/p\u003e \u003cp\u003eList of Formulas 557\u003c\/p\u003e \u003cp\u003eExercises 558\u003c\/p\u003e \u003cp\u003eAPPENDIX 560\u003c\/p\u003e \u003cp\u003eFURTHER READING 569\u003c\/p\u003e \u003cp\u003eINDEX 573\u003c\/p\u003e","brand":"John Wiley \u0026 Sons Inc","offers":[{"title":"Default Title","offer_id":49406828413271,"sku":"9781118091364","price":107.96,"currency_code":"GBP","in_stock":true}],"thumbnail_url":"\/\/cdn.shopify.com\/s\/files\/1\/0817\/1739\/5799\/files\/9781118091364.jpg?v=1730497256","url":"https:\/\/bookcurl.com\/products\/managerial-economics-9781118091364","provider":"Book Curl","version":"1.0","type":"link"}