Managerial Economics Solutions Manual Cengage
Teach your students how to think analytically and make better decisions as future business leaders with MANAGERIAL ECONOMICS: APPLICATIONS, STRATEGIES AND TACTICS, 14E. This timely edition illustrates how today’s effective managers apply economic theory and techniques to solve real-world everyday decision problems. The book’s seasoned author team McGuigan/Moyer/Harris balances a solid foundation of traditional microeconomic theory with extensive exploration of the latest analytical tools in managerial economics. Students master game-theoretic tactics, information economics, and organizational architecture. About the Authors.
PART I: INTRODUCTION. Introduction and Goals of the Firm.
Fundamental Economic Concepts. PART II: DEMAND AND FORECASTING. Demand Analysis. Estimating Demand. Business and Economic Forecasting. Managing in the Global Economy. PART III: PRODUCTION AND COST.
Production Economics. Production Economics of Renewable and Exhaustible Natural Resources. Cost Analysis. Applications of Cost Theory. PART IV: PRICING AND OUTPUT DECISIONS: STRATEGY AND TACTICS.
Prices, Output, and Strategy: Pure and Monopolistic Competition. Price and Output Determination: Monopoly and Dominant Firms. Price and Output Determination: Oligopoly. Best-Practice Tactics: Game Theory. Entry Deterrence and Accommodation Games. Pricing Techniques and Analysis.
PART V: ORGANIZATIONAL ARCHITECTURE AND REGULATION. Contracting, Governance, and Organizational Form. Auction Design and Information Economics. Government Regulation. Long-Term Investment Analysis.
The Time Value of Money. Differential Calculus Techniques in Management. Check Answers to Selected End-of-Chapter Exercises.
Web Appendices. FEATURES STRENGTHEN DECISION-MAKING SKILLS: “What Went Right/What Went Wrong” features, now included in all chapters, enable students to apply what they have learned to real-business decisions and examine the positive and negative outcomes of management decisions. These insightful features show the relevance of managerial economic insights to avoiding widely discussed corporate mistakes. Students learn how to critically evaluate good and bad decisions and anticipate the subsequent effects. SESSION-SIZE PACKETS OFFER READINGS, ASSIGNMENTS, AND MORE FOR YOUR FLEXIBILITY: The latest content from this edition is now available in session packet filled with student exercises, author videos, text readings, and assignments. Aplia quizzes offer insightful feedback and subtle as well as basic insights regarding correct and incorrect answers.
REAL-WORLD EMPHASIS HIGHLIGHTS HANDS-ON PRACTICE: This edition provides more than 300 applications and examples from today’s practice that offer hands-on experience with the decision-making challenges students will face as managers - as well as the tools most effective for solving those challenges. Each chapter opens with a unique Managerial Challenge illustrating an economic analysis problem related to the chapter’s material that today’s managers could face. MORE INTERNATIONAL COVERAGE EMPHASIZES BUSINESS ISSUES IN CHINA, INDIA, AND THE GLOBAL MARKETPLACE: This edition integrates international issues throughout, illustrating how they relate to managerial efficiency and shareholder wealth maximization. Additionally, intriguing “International Perspectives” illustrate how students can apply chapter concepts to problems facing today’s managers in an increasingly global climate. Readers gain a better understanding of the international impact of economics.
AUTHORS OFFER DIVERSE APPROACHES TO KEY ANALYTICAL CONCEPTS: This edition presents key analytical concepts in several different ways - including tabular analysis, graphical analysis, spreadsheet, and algebraic analysis - making difficult material more accessible. Your students are able to learn in the format with which they are most comfortable. When elementary differential calculus is used, at least one alternative mode of analysis also is presented.
The book also offers a strong finance emphasis. NEW, MINDTAP® ECONOMICS DIGITAL SOLUTION TRANSFORMS LEARNING: Available for the first time with this edition, MindTap® Economics digital learning solution helps you engage and transform today’s students into critical thinkers. Through paths of dynamic assignments and applications that you can personalize, real-time course analytics and an accessible reader, MindTap® helps you turn cookie cutter into cutting edge, apathy into engagement, and memorizers into higher-level thinkers. NEW Aplia WITHIN MINDTAP® CONNECTS CONCEPTS TO THE REAL WORLD: Aplia significantly improves outcomes and elevates thinking by increasing student effort and engagement.
Developed by leading teachers, Aplia assignments connect concepts to the real world and focus on the unique course challenges facing students. In just 10 years, more than one billion answers have been submitted through Aplia, representing millions of students who have come to class more engaged and better prepared.
NEW INDIVIDUAL CLASS SESSION PAGES AND TOOLS MAKE CLASS PREPARATION SIMPLE: Now you can easily access the authors’ individual class session page selections from this edition as well as caselette exercises, problem sets, and multiple-choice quizzes to assist in developing an engaging course. NEW INDIVIDUAL CLASS SESSION PREPARATION QUESTIONS FACILITATE IN-CLASS DISCUSSION: These intriguing Class Preparation Questions motivate students to think at a higher level and prompt meaningful whole class discussions.
INFOTRAC® STUDENT COLLECTIONS PROVIDES INSTANT ACCESS TO MANAGERIAL ECONOMIC RESEARCH: With InfoTrac, your students gain convenient access to hundreds of scholarly and popular articles related to managerial economic through a user-friendly database at http://gocengage.com/infotrac. McGuigan owns and operates his own numismatic investment firm. Prior to this business, he was Associate Professor of Finance and Business Economics in the School of Business Administration at Wayne State University. He also taught at the University of Pittsburgh and Point Park College. McGuigan received his undergraduate degree from Carnegie-Mellon University; his M.B.A. At the Graduate School of Business at the University of Chicago and his Ph.D. From the University of Pittsburgh.
In addition to his interests in economics, he has co-authored several well-known books on financial management. Charles Moyer earned his B.A.
In Economics from Howard University and his M.B.A. In Finance and Managerial Economics from the University of Pittsburgh. Moyer is Dean Emeritus of the College of Business at the University of Louisville and Professor of Finance and Entrepreneurship.
He is Dean Emeritus and former holder of the GMAC Insurance Chair in Finance at the Babcock Graduate School of Management, Wake Forest University. Previously, he was Professor of Finance and Chairman of the Department of Finance at Texas Tech University. Moyer also has taught at the University of Houston, Lehigh University, and the University of New Mexico and spent a year at the Federal Reserve Bank of Cleveland. Moyer has taught extensively abroad in Germany, France, and Russia. In addition to this text, Moyer has coauthored two other financial management texts. He has been published in many leading journals, including Financial Management, Journal of Financial and Quantitative Analysis, Journal of Finance, Financial Review, Journal of Financial Research, International Journal of Forecasting, Journal of Economics and Business, Strategic Management Journal, and Journal of Industrial Organization.
Moyer has been a member of the Board of Directors of King Pharmaceuticals, Inc. And is on the board of Capitala Finance Corporation, the board of Enterprise Community Fund I, the board of US WorldMeds, and the board of Summit Biosciences. Harris (Rick) is Professor of Economics and Finance at the Schools of Business, Wake Forest University.
Harris holds a Ph.D. From the University of Virginia and a Dartmouth College A.B. In Economics.
His specialties are pricing tactics and capacity planning in product markets as well as price discovery in financial markets and security market design. He has taught managerial economics required courses in the M.A.
In Management and M.B.A. Programs and elective B.A., B.S., M.S., M.B.A., and Ph.D. Courses at Wake Forest, the University of Texas, and William and Mary, as well as several universities in France, Italy, Germany, and Australia. Harris has earned two school-wide Educator of the Year awards and two Researcher of the Year awards. Other recognitions include Outstanding Faculty (Inc., 1998 and 2001), Outstanding Faculty (Business Week’s Guide to the Best Business Schools, 1997-2004), Board of Associate Editors (Journal of Industrial Economics, 1988-2003), and the Runner-up Prize (European Corporate Governance Institute, 2007). His numerous publications have appeared in leading journals in economics, finance, and operations, such as the Review of Economics and Statistics, The Journal of Financial and Quantitative Analysis, Journal of Financial Markets, The Journal of Operations Management, and The Journal of Business Ethics.
He also writes with practitioners in the Journal of Trading from Institutional Investor Inc. And in the Inform’s Journal of Revenue and Pricing Management.
Solutions manual and test bank Luke M. Froeb Brian T. McCann Michael R.
Ward Mikhael Shor Managerial Economics: A Problem-Solving Approach 3 rd Edition End-of-Chapter Questions and Answers Table of Contents Multiple Choice Questions 1. An individual’s value for a good or service is the a. The amount of money he or she used to pay for a good b. The amount of money he or she is willing to pay for it c. The amount of money he or she has to spend on goods d.
None of the above 2. The biggest advantage of capitalism is a. Generates wealth with the help of government intervention b. That prices assists in moving assets from high valued to low value uses c. It forces involuntary exchanges d.
Creates wealth by letting a person follow his or her own self-interest 3. Wealth creating transactions are more likely to occur a. With private property rights b. With contract enforcement c.
With black markets d. Government regulation a. Provides incentives to conduct business in an illegal black market b.
Plays no role in generating wealth c. Is the best way to eliminate poverty d. Does not enforce property rights 5. An example of price floor is a. Minimum wages b. Rent controls in New York c.
Both a and b d. None of the above 6. A price ceiling: a. Is a government-set price above market equilibrium price. Is the equivalent of an implicit tax on producers and an implicit subsidy to consumers. Will create a surplus.
Causes an increase in consumer and producer surplus. Impede the movement of assets to higher valued uses b. Reduce incentives to work c. Decreases the number of wealth creating transactions d.
All the above 8. A consumer values a car at $30,000 and a producer values the same car at $20,000. If the transaction is completed at $24,000, the transaction will generate: a. No surplus b. $4,000 worth of seller surplus and unknown amount of buyer surplus c. $6,000 worth of buyer surplus and $4,000 of seller surplus d.
$6,000 worth of buyer surplus and unknown amount of seller surplus 9. A consumer values a car at $525,000 and a producer values the same car at $485,000. If sales tax is 8% and is levied on the seller, then the sellers bottom line price is a. Efficiency implies opportunity, a.
Only if accompanied by secure property rights d. None of the above Multiple Choice Key 1. B Short Answer Questions 2-1 Airline Delays How will commercial airlines respond to the threat of new $27,500 fines for keeping passengers on the tarmac for more than 3 hours? What inefficiency will this create? 2-2 Selling Used Cars I recently sold my used car.
If no new production occurred for this transaction, how could it have created value? 2-3 Flood Insurance The U.S.
Government subsidizes flood insurance because those who want to buy it live in the flood plain and cannot get it at reasonable rates. What inefficiency does this create? 2-4 Goal Alignment among Physicians An elderly physician has built up his own practice into a quite valuable business.
Now that he is thinking of retiring, he wants to take on a partner to learn the business and eventually buy the practice in three years. Her compensation will be a salary plus 25% of the profits if they are below the historical average and 50% for any increase above the historical average. The eventual purchase price for the practice will be 5 times the average profits over the three years.
Discuss the efficiency aspects of such a contract. Are the incentives of the buyer and seller aligned? 2-5 Kraft and Cadbury When Kraft recently bid $16.7 billion for Cadbury, Cadbury ’s market value rose, but Kraft ’s market value fell by more. What does this tell you about the value-creating potential of the deal?
2-6 Price of Breast Reconstruction vs. Breast Augmentation Two similar surgeries, breast reconstruction and breast augmentation, have different prices. Breast augmentation is cosmetic surgery not covered by health insurance. Patients who want the surgery must pay for it themselves. Breast reconstruction following breast removal due to cancer is covered by insurance. The price for one of the surgeries has increased by about 10% each year since 1995 while the other has increased by only 2%per year.
Managerial Economics Solutions Manual Cengage Learning
Which of the surgeries has the lower inflation rate? Short Answer Key 2-1 Airline Delays Carriers say that to avoid those fines, they will aggressively cancel flights before and during storms—even if the bad weather never materializes. The threats could foreshadow significant changes in air travel, making it even less reliable for millions of road warriors and vacationers. By canceling flights, it could take days for all travelers to get home when storms strike. 2-2 Selling Used Cars The value of my willingness-to-sell was less than the buyer's willingness-to-pay. Any transaction price between these allows for a voluntary exchange in which we both benefit. Since we are both better off, value was created.
2-3 Flood Insurance Subsidies are like taxes in this case. Taxation will keep some efficient transactions from being consummated because potential transactions where the difference in buyer and seller valuation is positive will no longer cover the amount of the tax to be paid. This prevents the asset from moving to its highest valued use. With a subsidy, transactions in which the assets moves from a higher valued use to a lower valued use can be consummated so long as the difference is less than the amount of the subsidy. This moves the asset to a lower valued use.
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With flood insurance worth an expected $20,000, homeowners would be willing to spend $120,000 to build a house that they value at only $100,000. Wealth is destroyed. 2-4 Goal Alignment among Physicians There are a few points: Overlapping tenure for the retiring and new physicians tends to increase the transfer of practice specific knowledge. Profit sharing with the new physician increases her incentives to maximize profits. However, since the sale price is a multiple of the profits during this 3 year 'probation' the new physician has an incentive to shirk to keep the profits low. It might have been better to use a multiple of profits from the period before she began this probation.
2-5 Kraft and Cadbury It means that Kraft's shareholders, and potential shareholders, think that Kraft’s profits will fall. This would be the case if Kraft's $16.7 billion bid is greater than the present value of the expected future profits from the Cadbury unit. Essentially, the combined market value of the firms separately is greater than the market value of the firms together. The market thinks that combining these assets will destroy value. 2-6 Price of Breast Reconstruction vs. Breast Augmentation Market pressure comes from two sources: consumers who can choose not to purchase, and competitors who can offer lower prices. Breast augmentation is subject to both of these forces, and thus has a lower price, while breast reconstruction is covered by insurance where the consumer pressure is weaker.