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Managerial

Economics

Managerial

Economics

朱敏 朱敏 23123167076707

zhuminer@tom.comzhuminer@tom.com

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Managerial EconomicsManagerial Economics : :

WWW.mhhe.com/WWW.mhhe.com/

economics/maurice7economics/maurice7

TEXT BOOKTEXT BOOK TEXT BOOKTEXT BOOK

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S.Charles Maurice 得克萨斯 A&M 大学

Christopher R Thomas 南佛罗里达大学

The authorThe author The authorThe author

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1.1. P A SamuelsonP A Samuelson ，， W D Nordhaus. W D Nordhaus. EconomicEconomicss ．． 1616thth Edition Edition ，， 19981998 ，， McGraw-Hill CoMcGraw-Hill Companiesmpanies ，， Inc. Inc.

2.2. Joseph E StiglitzJoseph E Stiglitz ．． EconomicsEconomics ．． 22thth edition edition ，，19971997 ，， W W Norton & CompanyW W Norton & Company

3.3. Robert S PindyckRobert S Pindyck ，， Daniel L RubinfeldDaniel L Rubinfeld. . MiMicroeconomicscroeconomics ．． 55thth edition edition ，， 20012001 ，， PrentiPrentice-Hallce-Hall

REFERRENCE REFERRENCE REFERRENCE REFERRENCE

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4.4. Hal R VarianHal R Varian. . Intermediate MicroeconoIntermediate Microecono

micsmics ：： A Modern ApproachA Modern Approach. 5. 5thth eds, W eds, W W Norton & Company, 1999W Norton & Company, 1999

5.5. Gregory N MankiwGregory N Mankiw. . Principles of EconoPrinciples of Economicsmics. The Dryden Press, 1998. The Dryden Press, 1998

6.6. James R . McGuiganJames R . McGuigan, , R Charles MoyorR Charles Moyor, , Frederick HFrederick H. Management Economics—. Management Economics—Application, Strategy, and Tactics Application, Strategy, and Tactics

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• 学习经济学，似乎不需要什么高度特有的天资。从智力上来看，跟哲学或纯科学的一些学科比起来，不是很容易吗？这门学科看起来容易，但是能学得出人头地的却很少！这一难以理解的现象似乎是在于，作为一个杰出的经济学家，必须具有种种才能的结合，这一点是很难能可贵的。他必须在某种程度上是个数学家，又是历史学家、政治家和哲学家。他必须精通的是把他要说的话写下来。他必须善于运用思考力，从一般原则推断出个别现象，在思想奔放中，既要触及抽象的方面，又要触及具体的方面。他必须根据过去，研究现在，推测未来。对人类性格及其风俗习惯的任何方面，他都不应当完全置之度外。他同时必须保持着既不是无所为而为之，又不是不偏不倚的态度，像个艺术家那样地头脑冷静和孤芳自赏，然而有时也必须像个政治家那样地接近尘世环境。

——约翰·梅纳德·凯恩斯

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Why do we learn Managerial Economics?

• Business students who wish to become successful managers of business enterprises should understand how the economic forces of the market create both opportunities and constraints for making profit.

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• Managerial Economics brings together those topics in microeconomic theory that can be applied to business decision making to create a powerful and timeless way of thinking about markets and business decisions—both today decisions and tomorrow.

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What is Managerial Economics?

• Managerial economics applies microeconomic theory-the study of the behavior of individual economic agents -to business problems in order to teach business decision makers how to use economic analysis to make decisions that will achieve the firm’s goal: the maximization of profit.

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管理经济学的分析方法

•均衡分析法•边际分析法•数学模型分析法

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均衡分析方法主要应用方向

•制定价格•确定产量•确定要素组合

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边际分析方法主要应用方向

•确定企业规模•制定价格策略•确定要素投入量•产品结构分析

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数学模型主要的应用方向

•需求预测•生产分析•成本决策•市场分析•风险分析

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Emphasis on the Economic Way of Thinking

• The primary goal of this book continues to teach students the economic way of thinking about business decisions. Managerial Economics emphasizes critical thinking skills and provides students with a logical way of analyzing business decisions.

• Emphasize active study rather than passive study.

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Chapter 1 Chapter 1 Managers,Profits,and MarketsManagers,Profits,and Markets

• Managerial economics and Managerial economics and economic theoryeconomic theory

• maximizing profitmaximizing profit• separation of ownership and control separation of ownership and control • market structure and Managerial market structure and Managerial decision making decision making

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Some basic understandings

In Chinese lectures, the instructor usually follow the practice

What is managerial economics?

Explain the context

Give further examples or

analysis

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But in the original English textbook,

the order is just inverted.

To find problems

(case study)

Try to find solutions

To summarize the theory

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•1.1Managerial economics and economic

theory

• Economics tells you basis theories

and principles (which may be found

not applicable);

• Managerial economics tells you

how to manage your firm

economically.

•p4

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Problems faced by decision makers in

management

Managerial economics, which applies and extends economics

and the decision science to solve management problems

Decision science

Economic theory

Solutions to decision problems faced by

managers

Relationship between managerial economics and related disciplines

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• Managerial economics provides a systematic, logical way of analyzing business decisions that focuses on the economic forces that shape both day-to-day decisions and long-run planning decisions. Managerial economics applies microeconomic theory-the study of the behavior of individual economic agents -to business problems in order to teach business decision makers how to use economic analysis to make decisions that will achieve the firm’s goal: the maximization of profit.

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• Economic theory helps managers understand real-world business problems by using simplifying assumptions to abstract away from irrelevant ideas and information and turn complexity into relative simplicity. Like a road map, economic theory ignores everything irrelevant to the problem and reduces business problems to their most essential components.

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e.g. You are an ice-cone firm. In the just passing summer, your performance were not so satisfactory as a whole, so you are thinking of some possible decisions for the next summer.

? What will you do?

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Not so satisfactory

Profit maximization

Satisfactory EPS ( Earning per share)

Market share

Market growth rate, etc

(usu. )Profit maximization

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1.2 maximizing profit

• In practice,owners of firms,seeking to increase their personal wealth,generally do run a business primarily for the purpose of making as much profit as possible.This text focuses on making profitable business decisions.

• •Usually firms are assumed to maximize its profits

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1.2.1 Economic profit versus Accounting profit

• Economic profit is the difference between a firm’s total revenue and the total economic cost of using productive resources. The economic cost of using resources is the opportunity cost of using those resources.

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• For resources owned by others, the opportunity cost of resource use is the dollar amount paid to the resource owners.These payments made to resource owners are called explicit costs.For resources the firm uses that are owned by the firm, the opportunity cost is equal to the largest payment that the owner could have received if those resources had been leased or sold in the market.These costs of using a firm’s own resources are called implicit costs.

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• economic profitThe difference between total revenue and total economic cost, including both explicit and implicit costs.

• explicit costsThe opportunity cost of using resources owned by others.

• implicit costsThe opportunity costs of using resources owned by the firm

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• accounting profit differs from economic profit because accounting profit does not subtract from total revenue the implicit costs of using resources.The value of owning a business is measured by economic profit rather than accounting profit.accounting profitThe difference between total revenue and explicit costs.

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• The opportunity cost of using the owner’s own resources is called normal profit. Normal profit is part of total cost,just another name for the implicit cost . When economic profit is zero, the firm is just earning a normal profit. When economic profit is positive (negative), the firm earns more (less) than a normal profit. Since accountants are not allowed to deduct normal profit as a cost, economic profit is less than accounting profit by the amount of normal profit:

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• Economic profit = Accounting profit - Normal profit

• normal profitThe implicit cost of owner-supplied resources.

• p7

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• Since all costs matter to owners of a firm, maximizing economic profit, rather than accounting profit, is the objective of the firm’s owners.

• p23 1. 2.

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例题• 莎伦是手艺很高的女裁缝，几年前，她以每码 5美元的价格购买了一块布料。现在由于涨价，把这块布料卖回给商店的价格为每码 15美元。沙伦打算用这块布料做衣服，卖给她的朋友。他估计每件衣服需用 4码布和 4个工时，他估计每个工时的价格为 10美元。如果每件衣服能卖 90美元，问：莎伦通过制作和销售衣服能否赚得经济利润呢？

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1.2.2 maximizing the value of the firm

• The value of a firm is the price for which it can be sold, and that price is equal to the present value of the expected future profits of the firm.

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Why you prefer money today?

It is the property of the passage of time.

Present valuePresent valuePresent valuePresent value

MONEY $1000

TODAY TOMORROW? ?

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Since interest can be earned over time means that, all future costs and revenues (future cash flows) must be discounted to get the present value (PV).

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• value of a firmThe price for which the firm can be sold, which equals the present value of future profits.

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• The risk associated with not knowing future profits of a firm is accounted for by using a higher risk-adjusted discount rate to calculate the present value of the firm’s future profits. The larger (smaller) the risk associated with future profits, the higher (lower) the risk-adjusted discount rate used to compute the value of the firm, and the lower (higher) will be the value of the firm.

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• risk premiumAn increase in the discount rate to compensate investors for uncertainty about future profits.

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• In the absence of any agency problems, the objective of a manager is to maximize the value of the firm. A manager will maximize the value of a firm by making decisions that maximize profit in every single time period, unless cost and/or revenue conditions in any period depend upon decisions made in other time periods.If increasing current output has a positive effect on----.single-period profit.

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1.3 separation of ownership and control

1.3 separation of ownership and control

• Traditional objective: Profit Maximization

(the only objective)

• In reality: a wide range of objectives

• personal goals

• company growth target

• maximization of market share, etc

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1.3.1the principal-agent problem • In firms where the managers are not also the

owners, the managers are agents of the owners, or principals.

• A principal-agent problem exists when the agent has objectives different from those of the principal, and the principal either has difficulty enforcing agreements with the agent or finds it too difficult and costly to monitor the agent to verify that he or she is furthering the principal’s objectives.

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• Agency problems arise because of moral hazard. Moral hazard exists when either party to an agreement has an incentive not to abide by all the provisions of the agreement and one party cannot cost-effectively find out if the other party is abiding by the agreement or cannot enforce the agreement even when the information is available.

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• Principal-agent problemThe conflict that arises when the goals of management (the agent) do not match the goals of the owner (the principal).

• moral hazardExists when either party to an agreement has an incentive not to abide by all provisions of the agreement and one party cannot cost-effectively monitor the agreement.

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Illustration 1.3

• In many industries, the most profitable firms are not the largest or fastest-growing ones, as illustration 1.3 shows.

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1.3.2 corporate control mechanisms• In order to address agency problems, shareholders

can employ a variety of corporate control mechanisms. Shareholders can reduce or eliminate agency problems by (1) requiring that managers hold a stipulated amount of the firm’s equity, (2) increasing the percentage of outsiders serving on the company’s board of directors, and (3) financing corporate investments with debt instead of equity. Corporate takeovers also create an incentive for managers to make decisions that maximize the value of a firm.

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1.4 market structure and Managerial

decision making • The structure of the market in which a firm

operates can limit the ability of managers to increase the price of the firm’s products.

• In some markets, firms are price-takers. In these markets prices are determined not by managers but by market forces that cannot be controlled.

• In other markets, managers of price-setting firms possess some degree of market power and can raise price without losing all their sales.

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• price-taker A firm that cannot set the price of the product it sells, since price is determined strictly by the market forces of demand and supply.

• price-setting firm A firm that can raise its price without losing all of its sales.

• market power A firm’s ability to raise price without losing all sales.

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1.4.1what is a market?

• A market is any arrangement that enables buyers and sellers to exchange goods and services, usually for money payments.

• A market may be a location at a certain time, a newspaper advertisement, a website on the Internet, or any other arrangement that works to bring buyers and sellers together. Markets exist to reduce transaction costs, the costs of making a transaction.

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• marketAny arrangement through which buyers and sellers exchange anything of value.

• transaction costsCosts of making a transaction happen, other than the price of the good or service itself.

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1.4.2 different market structures

• A market structure is a set of market characteristics that determines the economic environment in which a firm operates: (1) the number and size of the firms operating in the market, (2) the degree of product differentiation, and (3) the likelihood of new firms entering.

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• A perfectly competitive market has a large number of relatively small firms selling an undifferentiated product with no barriers to entry. A monopoly market is one in which a single firm, protected by barriers to entry, produces a product that has no close substitutes. In a monopolistically competitive market, a large number of relatively small firms produce differentiated products without any barriers to entry. Finally, in an oligopoly market, there are only a few firms experiencing interdependence-each firm’s pricing decision affects all other firms’sprofits-with varying degrees of product differentiation and barriers to entry.

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• market structure Market characteristics that determine the economic environment in which a firm operates.

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• 一、我国目前研究生经济学学科的设置（ 1）一级学科：理论经济学   下设二级学科（记的可能不太准）：                  a、政治经济学                  b、西方经济学                  c、经济史                  d、经济思想史                  e、人口资源与环境经济学

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• （ 2）一级学科：应用经济学   下设二级学科： a、国民经济学                             b、区域经济学                             c、财政学（含税收学）                             d、金融学                             e、产业经济学                             f、国际经济学                             g、劳动经济学                             h、统计学                             I、数量经济学                            J、国防经济学