Managerial Economics and Strategy Plus MyLab Economics with Pearson eText -- Access Card Package (Pearson Series in Economics)

__For courses in Managerial Economics.__ **A Problem-based Approach that Uses Modern Theories and Real-world Examples** **__Managerial Economics and Strategy__** uses real-­world issues and examples to illustrate how economic principles impact business decisions. Emphases on agency and contract theory, managerial behavioral economics, game theory, and pricing are especially valuable to future managers. In-text examples and boxed mini­-cases use actual data to illustrate the use of basic economic models, while Q&As pose important managerial or economic problems and demonstrate a step-by-step approach to solving them. The **Second Edition** has been fully revised and updated to reflect new supply-and-demand curves and include discussions of corporate social responsibility, opportunistic behavior, and innovation. It also features new learning objectives, examples, end-of-chapter questions, and spreadsheet exercises. **Also available with MyEconLab^®^** MyEconLab is an online homework, tutorial, and assessment program designed to work with this text to engage students and improve results. Within its structured environment, students practice what they learn, test their understanding, and pursue a personalized study plan that helps them better absorb course material and understand difficult concepts. **NOTE:** You are purchasing a **standalone** product; MyEconLab does not come packaged with this content. If you would like to purchase both the physical text and MyEconLab search for: **0134472551 / 9780134472553 __Managerial Economics and Strategy Plus MyEconLab with Pearson eText -- Access Card Package__** **Package consists of:** * **0134167872 / 9780134167879 __Managerial Economics and Strategy__** * **013416976X / 9780134169767 __MyEconLab with Pearson eText -- Access Card -- for Managerial Economics and Strategy__** Cover 1 Half Title Page 2 Title Page 4 Copyright Page 5 Brief Contents 6 Contents 7 Preface 14 Chapter 1 Introduction 24 1.1 Managerial Decision Making 24 Profit 25 Trade‐Offs 25 Other Decision Makers 26 Strategy 26 1.2 Economic Models 26 Mini‐Case Using an Income Threshold Model in China 27 Simplifying Assumptions 27 Testing Theories 28 Positive and Normative Statements 29 Summary 30 Chapter 2 Supply and Demand 31 Managerial Problem Carbon Taxes 31 2.1 Demand 33 The Demand Curve 34 The Demand Function 37 Using Calculus Deriving the Slope of a Demand Curve 38 Summing Demand Curves 39 Mini‐Case Summing Corn Demand Curves 39 2.2 Supply 40 The Supply Curve 40 The Supply Function 41 Summing Supply Curves 42 2.3 Market Equilibrium 43 Using a Graph to Determine the Equilibrium 43 Using Algebra to Determine the Equilibrium 44 Forces That Drive the Market to Equilibrium 44 2.4 Shocks to the Equilibrium 45 Effects of a Shift in the Demand Curve 46 Q&A 2.1 46 Effects of a Shift in the Supply Curve 47 Managerial Implication Taking Advantage of Future Shocks 48 Effects of Shifts in both Supply and Demand Curves 48 Mini‐Case Genetically Modified Foods 48 Q&A 2.2 49 2.5 Effects of Government Interventions 50 Policies That Shift Curves 50 Mini‐Case Occupational Licensing 50 Price Controls 51 Mini‐Case Venezuelan Price Ceilings and Shortages 53 Sales Taxes 56 Q&A 2.3 58 Managerial Implication Cost Pass‐Through 59 2.6 When to Use the Supply‐and‐Demand Model 59 Managerial Solution Carbon Taxes 61 Summary 63 Questions 63 Chapter 3 Empirical Methods for Demand Analysis 68 Managerial Problem Estimating the Effect of an iTunes Price Change 68 3.1 Elasticity 69 The Price Elasticity of Demand 70 Managerial Implication Changing Prices to Calculate an Arc Elasticity 71 Q&A 3.1 71 Mini‐Case Demand Elasticities for Google Play and Apple Apps 73 Using Calculus The Point Elasticity of Demand 73 Elasticity Along the Demand Curve 73 Q&A 3.2 74 Other Demand Elasticities 77 Mini‐Case Anti‐Smoking Policies May Reduce Drunk Driving 77 Demand Elasticities over Time 78 Other Elasticities 78 Estimating Demand Elasticities 78 3.2 Regression Analysis 79 A Demand Function Example 79 Mini‐Case The Portland Fish Exchange 81 Multivariate Regression 85 Q&A 3.3 86 Goodness of Fit and the R2 Statistic 86 Managerial Implication Focus Groups 88 3.3 Properties and Statistical Significance of ‐Estimated Coefficients 88 Repeated Samples 88 Desirable Properties for Estimated Coefficients 89 A Focus Group Example 89 Confidence Intervals 91 Hypothesis Testing and Statistical Significance 91 3.4 Regression Specification 92 Selecting Explanatory Variables 92 Mini‐Case Determinants of CEO Compensation 93 Q&A 3.4 94 Functional Form 96 Managerial Implication Experiments 98 3.5 Forecasting 99 Extrapolation 99 Theory‐Based Econometric Forecasting 101 Managerial Solution Estimating the Effect of an iTunes Price Change 102 Summary 105 Questions 106 Chapter 4 Consumer Choice 109 Managerial Problem Paying Employees to Relocate 109 4.1 Consumer Preferences 111 Properties of Consumer Preferences 111 Mini‐Case You Can’t Have Too Much Money 112 Preference Maps 113 4.2 Utility 119 Utility Functions 119 Ordinal and Cardinal Utility 120 Marginal Utility 121 Using Calculus Marginal Utility 122 Marginal Rates of Substitution 122 4.3 The Budget Constraint 122 Slope of the Budget Line 124 Using Calculus The Marginal Rate of Transformation 125 Effects of a Change in Price on the ‐Opportunity Set 125 Effects of a Change in Income on the ‐Opportunity Set 126 Q&A 4.1 126 Mini‐Case Rationing 127 Q&A 4.2 127 4.4 Constrained Consumer Choice 128 The Consumer’s Optimal Bundle 128 Q&A 4.3 130 Mini‐Case Why Americans Buy More E‐Books Than Do Germans 131 Q&A 4.4 131 Promotions 132 Managerial Implication Designing Promotions 134 4.5 Deriving Demand Curves 135 4.6 Behavioral Economics 137 Tests of Transitivity 137 Endowment Effects 138 Mini‐Case How You Ask the Question Matters 138 Salience 139 Managerial Implication Simplifying ‐Consumer Choices 140 Managerial Solution Paying Employees to Relocate 140 Summary 142 Questions 143 Appendix 4A The Marginal Rate of Substitution 147 Appendix 4B The Consumer Optimum 147 Chapter 5 Production 149 Managerial Problem Labor Productivity During Recessions 149 5.1 Production Functions 150 5.2 Short‐Run Production 152 The Total Product Function 152 The Marginal Product of Labor 153 Using Calculus Calculating the Marginal Product of Labor 154 Q&A 5.1 154 The Average Product of Labor 154 Graphing the Product Curves 155 The Law of Diminishing Marginal Returns 157 Mini‐Case Malthus and the Green Revolution 158 5.3 Long‐Run Production 159 Isoquants 160 Mini‐Case A Semiconductor Isoquant 162 Substituting Inputs 163 Q&A 5.2 164 Using Calculus Cobb‐Douglas Marginal Products 166 5.4 Returns to Scale 166 Constant, Increasing, and Decreasing Returns to Scale 167 Q&A 5.3 168 Mini‐Case Returns to Scale for Crocs 168 Varying Returns to Scale 169 Managerial Implication Small Is Beautiful 170 5.5 Innovation 171 Process Innovation 172 Mini‐Case Robots and the Food You Eat 172 Organizational Innovation 173 Mini‐Case A Good Boss Raises Productivity 173 Managerial Solution Labor Productivity During Recessions 173 Summary 175 Questions 175 Chapter 6 Costs 179 Managerial Problem Technology Choice at Home Versus Abroad 179 6.1 The Nature of Costs 180 Opportunity Costs 181 Mini‐Case The Opportunity Cost of an MBA 182 Q&A 6.1 182 Costs of Durable Inputs 182 Sunk Costs 183 Managerial Implication Ignoring Sunk Costs 184 6.2 Short‐Run Costs 184 Common Measures of Cost 184 Using Calculus Calculating Marginal Cost 186 Cost Curves 187 Production Functions and the Shapes of Cost Curves 189 Using Calculus Calculating Cost Curves 191 Short‐Run Cost Summary 192 6.3 Long‐Run Costs 193 Mini‐Case Short Run Versus Long Run in the Sharing Economy 193 Input Choice 194 Managerial Implication Cost Minimization by Trial and Error 198 Mini‐Case The Internet and Outsourcing 199 Q&A 6.2 200 The Shapes of Long‐Run Cost Curves 201 Mini‐Case Economies of Scale at Google 203 Q&A 6.3 203 Long‐Run Average Cost as the Envelope of Short‐Run Average Cost Curves 204 Mini‐Case Long‐Run Cost Curves in Beer Manufacturing and Oil Pipelines 205 6.4 The Learning Curve 206 Mini‐Case Learning by Drilling 208 6.5 The Costs of Producing Multiple Goods 208 Mini‐Case Medical Economies of Scope 209 Managerial Solution Technology Choice at Home Versus Abroad 209 Summary 211 Questions 211 Appendix 6A Long‐Run Cost Minimization 216 Chapter 7 Firm Organization and Market Structure 217 Managerial Problem Clawing Back Bonuses 217 7.1 Ownership and Governance of Firms 219 Private, Public, and Nonprofit Firms 219 Mini‐Case Chinese State‐Owned Enterprises 220 Ownership of For‐Profit Firms 221 Firm Governance 223 7.2 Profit Maximization 223 Profit 223 Two Steps to Maximizing Profit 224 Using Calculus Maximizing Profit 225 Q&A 7.1 226 Managerial Implication Marginal Decision Making 226 Profit over Time 228 Managerial Implication Stock Prices Versus Profit 228 7.3 Owners’ Versus Managers’ Objectives 229 Consistent Objectives 229 Q&A 7.2 231 Conflicting Objectives 232 Q&A 7.3 233 Mini‐Case Company Jets 234 Corporate Social Responsibility 235 Monitoring and Controlling a Manager’s Actions 236 Takeovers and the Market for Corporate Control 237 Mini‐Case The Yahoo! Poison Pill 239 7.4 The Make or Buy Decision 239 Stages of Production 240 Vertical Integration 240 Profitability and the Supply Chain Decision 242 Mini‐Case Vertical Integration at Zara 243 Mini‐Case Aluminum 244 Market Size and the Life Cycle of a Firm 245 7.5 Market Structure 247 The Four Main Market Structures 247 Comparison of Market Structures 248 Road Map to the Rest of the Book 249 Managerial Solution Clawing Back Bonuses 250 Summary 251 Questions 251 Appendix 7A Interest Rates, Present Value, and Future Value 255 Chapter 8 Competitive Firms and Markets 257 Managerial Problem The Rising Cost of Keeping On Truckin’ 257 8.1 Perfect Competition 259 Characteristics of a Perfectly Competitive Market 259 Deviations from Perfect Competition 260 8.2 Competition in the Short Run 261 How Much to Produce 262 Q&A 8.1 264 Using Calculus Profit Maximization with a Specific Tax 265 Whether to Produce 265 Mini‐Case Fracking and Shutdowns 267 Managerial Implication Sunk Costs and the Shutdown Decision 268 The Short‐Run Firm Supply Curve 268 The Short‐Run Market Supply Curve 268 Short‐Run Competitive Equilibrium 271 8.3 Competition in the Long Run 273 Long‐Run Competitive Profit Maximization 273 The Long‐Run Firm Supply Curve 273 Mini‐Case The Size of Ethanol Processing Plants 273 The Long‐Run Market Supply Curve 274 Mini‐Case Entry and Exit of Solar Power Firms 275 Mini‐Case An Upward‐Sloping Long‐Run Supply Curve for Cotton 277 Long‐Run Competitive Equilibrium 278 Q&A 8.2 280 Zero Long‐Run Profit with Free Entry 280 8.4 Competition Maximizes Economic Well‐Being 280 Consumer Surplus 281 Managerial Implication Willingness to Pay on eBay 284 Producer Surplus 285 Q&A 8.3 287 Q&A 8.4 287 Competition Maximizes Total Surplus 288 Mini‐Case The Deadweight Loss of Christmas Presents 290 Effects of Government Intervention 292 Q&A 8.5 292 Managerial Solution The Rising Cost of Keeping On Truckin’ 293 Summary 295 Questions 295 Chapter 9 Monopoly 300 Managerial Problem Brand‐Name and Generic Drugs 300 9.1 Monopoly Profit Maximization 302 Marginal Revenue 302 Using Calculus Deriving a Monopoly’s Marginal Revenue Function 305 Q&A 9.1 306 Choosing Price or Quantity 308 Two Steps to Maximizing Profit 308 Using Calculus Solving for the Profit‐Maximizing Output 310 Effects of a Shift of the Demand Curve 311 9.2 Market Power 312 Market Power and the Shape of the Demand Curve 312 Managerial Implication Checking Whether the Firm Is Maximizing Profit 313 Mini‐Case Cable Cars and Profit Maximization 313 The Lerner Index 314 Mini‐Case Apple’s iPad 315 Q&A 9.2 315 Sources of Market Power 316 9.3 Market Failure Due to Monopoly Pricing 317 Q&A 9.3 319 9.4 Causes of Monopoly 320 Cost‐Based Monopoly 321 Q&A 9.4 322 Government Creation of Monopoly 323 Mini‐Case The Canadian Medical Marijuana Market 323 Mini‐Case Botox 324 9.5 Advertising 326 Deciding Whether to Advertise 326 How Much to Advertise 327 Using Calculus Optimal Advertising 328 Q&A 9.5 328 Mini‐Case Super Bowl Commercials 329 9.6 Networks, Dynamics, and Behavioral ‐Economics 329 Network Externalities 330 Network Externalities and Behavioral Economics 331 Network Externalities as an Explanation for Monopolies 331 Mini‐Case Critical Mass and eBay 332 Managerial Implication Introductory Prices 332 Managerial Solution Brand‐Name and Generic Drugs 333 Summary 334 Questions 335 Chapter 10 Pricing with Market Power 339 Managerial Problem Sale Prices 339 10.1 Conditions for Price Discrimination 341 Why Price Discrimination Pays 341 Mini‐Case Disneyland Pricing 343 Which Firms Can Price Discriminate 344 Managerial Implication Preventing Resale 344 Mini‐Case Preventing Resale of Designer Bags 345 Not All Price Differences Are Price Discrimination 346 Types of Price Discrimination 346 10.2 Perfect Price Discrimination 346 How a Firm Perfectly Price Discriminates 347 Perfect Price Discrimination Is Efficient but Harms Some Consumers 348 Mini‐Case Botox Revisited 350 Q&A 10.1 351 Individual Price Discrimination 351 Mini‐Case Google Uses Bidding for Ads to Price Discriminate 352 10.3 Group Price Discrimination 353 Group Price Discrimination with Two Groups 353 Using Calculus Maximizing Profit for a Group Discriminating Monopoly 354 Q&A 10.2 356 Identifying Groups 358 Managerial Implication Discounts 359 Effects of Group Price Discrimination on Total Surplus 360 10.4 Nonlinear Price Discrimination 361 10.5 Two‐Part Pricing 363 Two‐Part Pricing with Identical Consumers 363 Two‐Part Pricing with Differing Consumers 365 Mini‐Case Available for a Song 367 10.6 Bundling 367 Pure Bundling 368 Mixed Bundling 369 Q&A 10.3 371 Requirement Tie‐In Sales 372 Managerial Implication Ties That Bind 372 10.7 Peak‐Load Pricing 372 Mini‐Case Downhill Pricing 374 Managerial Solution Sale Prices 375 Summary 376 Questions 377 Chapter 11 Oligopoly and Monopolistic Competition 382 Managerial Problem Gaining an Edge from Government Aircraft Subsidies 382 11.1 Cartels 384 Why Cartels Succeed or Fail 384 Mini‐Case The Apple‐Google‐Intel‐Adobe‐Intuit‐Lucasfilm‐Pixar Wage Cartel 387 Maintaining Cartels 387 Mini‐Case Cheating on the Maple Syrup Cartel 388 11.2 Cournot Oligopoly 389 Airlines 391 Using Calculus Deriving a Cournot Firm’s Marginal Revenue 394 The Number of Firms 395 Mini‐Case Mobile Phone Number Portability 396 Nonidentical Firms 396 Q&A 11.1 397 Q&A 11.2 399 Managerial Implication Differentiating a Product Through Marketing 400 Mergers 401 Mini‐Case Acquiring Versus Merging 402 11.3 Bertrand Oligopoly 403 Identical Products 403 Differentiated Products 405 11.4 Monopolistic Competition 406 Managerial Implication Managing in the Monopolistically Competitive Food Truck Market 407 Equilibrium 408 Q&A 11.3 409 Profitable Monopolistically Competitive Firms 409 Mini‐Case Zoning Laws as a Barrier to Entry by Hotel Chains 410 Managerial Solution Gaining an Edge from Government Aircraft Subsidies 410 Summary 412 Questions 412 Appendix 11A Cournot Oligopoly with Many Firms 416 Appendix 11B Nash‐Bertrand Equilibrium 418 Chapter 12 Game Theory and Business Strategy 419 Managerial Problem Dying to Work 419 12.1 Oligopoly Games 422 Dominant Strategies 423 Best Responses 424 Failure to Maximize Joint Profits 426 Mini‐Case Strategic Advertising 428 Q&A 12.1 429 12.2 Types of Nash Equilibria 430 Multiple Equilibria 431 Mini‐Case Timing Radio Ads 433 Mixed‐Strategy Equilibria 433 Mini‐Case Competing E‐Book Formats 437 Q&A 12.2 437 12.3 Information and Rationality 438 Incomplete Information 439 Managerial Implication Solving Coordination Problems 440 Rationality 440 Managerial Implication Using Game Theory to Make Business Decisions 441 12.4 Bargaining 442 Bargaining Games 442 The Nash Bargaining Solution 442 Q&A 12.3 444 Using Calculus Maximizing the Nash Product 444 Mini‐Case Nash Bargaining over Coffee 444 Inefficiency in Bargaining 445 12.5 Auctions 445 Elements of Auctions 446 Bidding Strategies in Private‐Value Auctions 447 Mini‐Case Experienced Bidders 448 The Winner’s Curse 449 Managerial Implication Auction Design 450 Managerial Solution Dying to Work 450 Summary 451 Questions 452 Chapter 13 Strategies over Time 457 Managerial Problem Intel and AMD’s Advertising Strategies 457 13.1 Repeated Games 459 Strategies and Actions in Dynamic Games 459 Cooperation in a Repeated Prisoner’s Dilemma Game 460 Mini‐Case Tit‐for‐Tat Strategies in Trench Warfare 462 Implicit Versus Explicit Collusion 463 Finitely Repeated Games 464 13.2 Sequential Games 464 Stackelberg Oligopoly 465 Credible Threats 468 Q&A 13.1 469 13.3 Deterring Entry 470 Exclusion Contracts 470 Mini‐Case Pay‐for‐Delay Agreements 471 Limit Pricing 472 Mini‐Case Pfizer Uses Limit Pricing to Slow Entry 473 Q&A 13.2 473 Entry Deterrence in a Repeated Game 474 13.4 Cost and Innovation Strategies 475 Investing to Lower Marginal Cost 475 Learning by Doing 477 Raising Rivals’ Costs 477 Q&A 13.3 478 Mini‐Case Auto Union Negotiations 478 13.5 Disadvantages of Moving First 479 The Holdup Problem 479 Mini‐Case Venezuelan Nationalization 480 Managerial Implication Avoiding Holdups 481 Too‐Early Product Innovation 482 Mini‐Case Advantages and Disadvantages of Moving First 482 13.6 Behavioral Game Theory 483 Ultimatum Games 483 Mini‐Case GM’s Ultimatum 483 Levels of Reasoning 485 Managerial Implication Taking Advantage of ‐Limited Strategic Thinking 486 Managerial Solution Intel and AMD’s ‐Advertising Strategies 487 Summary 487 Questions 488 Appendix 13A A Mathematical Approach to Stackelberg Oligopoly 493 Chapter 14 Managerial Decision Making Under Uncertainty 494 Managerial Problem BP’s Risk and Limited Liability 494 14.1 Assessing Risk 496 Probability 497 Expected Value 498 Q&A 14.1 499 Variance and Standard Deviation 500 Managerial Implication Summarizing Risk 501 14.2 Attitudes Toward Risk 501 Expected Utility 501 Risk Aversion 502 Q&A 14.2 504 Using Calculus Diminishing Marginal Utility of Wealth 505 Mini‐Case Stocks’ Risk Premium 505 Risk Neutrality 506 Risk Preference 507 Mini‐Case Gambling 507 Risk Attitudes of Managers 508 14.3 Reducing Risk 509 Obtaining Information 509 Mini‐Case Bond Ratings 510 Diversification 511 Managerial Implication Diversify Your Savings 513 Insurance 514 Q&A 14.3 515 Mini‐Case Limited Insurance for Natural Disasters 516 14.4 Investing Under Uncertainty 518 Risk‐Neutral Investing 518 Risk‐Averse Investing 519 Q&A 14.4 519 14.5 Behavioral Economics and Uncertainty 520 Biased Assessment of Probabilities 520 Mini‐Case Biased Estimates 521 Violations of Expected Utility Theory 522 Prospect Theory 523 Managerial Implication Loss Aversion Contracts 525 Managerial Solution BP’s Risk and Limited Liability 525 Summary 526 Questions 527 Chapter 15 Asymmetric Information 532 Managerial Problem Limiting Managerial Incentives 532 15.1 Adverse Selection 535 Adverse Selection in Insurance Markets 535 Products of Unknown Quality 535 Q&A 15.1 538 Q&A 15.2 539 Mini‐Case Reducing Consumers’ Information 539 15.2 Reducing Adverse Selection 540 Restricting Opportunistic Behavior 540 Equalizing Information 541 Managerial Implication Using Brand Names and Warranties as Signals 543 Mini‐Case Discounts for Data 543 Mini‐Case Adverse Selection and Remanufactured Goods 545 15.3 Moral Hazard 545 Moral Hazard in Insurance Markets 546 Moral Hazard in Principal‐Agent Relationships 546 Mini‐Case Selfless or Selfish Doctors? 550 Q&A 15.3 550 15.4 Using Contracts to Reduce Moral Hazard 551 Fixed‐Fee Contracts 551 Contingent Contracts 553 Mini‐Case Sing for Your Supper 555 Q&A 15.4 555 15.5 Using Monitoring to Reduce Moral Hazard 557 Hostages 557 Mini‐Case Capping Oil and Gas Bankruptcies 558 Managerial Implication Efficiency Wages 559 After‐the‐Fact Monitoring 560 Managerial Solution Limiting Managerial Incentives 560 Summary 561 Questions 562 Chapter 16 Government and Business 567 Managerial Problem Licensing Inventions 567 16.1 Market Failure and Government Policy 569 The Pareto Principle 569 Cost‐Benefit Analysis 570 16.2 Regulation of Imperfectly Competitive Markets 570 Regulating to Correct a Market Failure 571 Q&A 16.1 573 Mini‐Case Natural Gas Regulation 574 Regulatory Capture 576 Applying the Cost‐Benefit Principle to Regulation 576 16.3 Antitrust Law and Competition Policy 577 Mergers 579 Mini‐Case Are Monopoly Mergers Harmful? 580 Predatory Actions 580 Vertical Relationships 580 Mini‐Case Piping Up about Exclusive Dealing 582 16.4 Externalities 582 The Inefficiency of Competition with ‐Externalities 583 Reducing Externalities 585 Mini‐Case Pulp and Paper Mill Pollution and Regulation 587 Q&A 16.2 588 Mini‐Case Why Tax Drivers 589 The Coase Theorem 590 Managerial Implication Buying a Town 592 16.5 Open‐Access, Club, and Public Goods 592 Open‐Access Common Property 593 Mini‐Case Spam 594 Club Goods 594 Mini‐Case Piracy 595 Public Goods 595 16.6 Intellectual Property 598 Patents 598 Q&A 16.3 599 Managerial Implication Trade Secrets 600 Copyright Protection 601 Managerial Solution Licensing Inventions 601 Summary 603 Questions 604 Chapter 17 Global Business 609 Managerial Problem Responding to Exchange Rates 609 17.1 Reasons for International Trade 611 Comparative Advantage 611 Q&A 17.1 614 Managerial Implication Brian May’s Comparative Advantage 614 Increasing Returns to Scale 615 Mini‐Case Barbie Doll Varieties 616 17.2 Exchange Rates 617 Determining the Exchange Rate 617 Exchange Rates and the Pattern of Trade 618 Managerial Implication Limiting Arbitrage and Gray Markets 618 Managing Exchange Rate Risk 619 17.3 International Trade Policies 620 Quotas and Tariffs in Competitive Markets 620 Mini‐Case Russian Food Ban 622 Q&A 17.2 625 Rent Seeking 626 Noncompetitive Reasons for Trade Policy 627 Mini‐Case Dumping and Countervailing Duties for Solar Panels 629 Trade Liberalization and the World Trading System 630 Trade Liberalization Problems 631 17.4 Multinational Enterprises 632 Becoming a Multinational 633 Mini‐Case What’s an American Car? 633 International Transfer Pricing 634 Q&A 17.3 635 Mini‐Case Profit Repatriation 637 17.5 Outsourcing 638 Managerial Solution Responding to Exchange Rates 640 Summary 641 Questions 642 Answers to Selected Questions 646 Definitions 658 References 663 Sources for Managerial Problems, Mini‐Cases, and Managerial Implications 669 Index 679 Credits 703 Managerial Economics and Strategy uses real-Ưworld issues and examples to illustrate how economic principles impact business decisions. Emphases on agency and contract theory, managerial behavioral economics, game theory, and pricing are especially valuable to future managers. In-text examples and boxed miniƯ-cases use actual data to illustrate the use of basic economic models, while Q & As pose important managerial or economic problems and demonstrate a step-by-step approach to solving them