Chapter 1 - Introduction to economic decision making. In this chapter, we begin our study of managerial economics by stressing decision-making applications. In the first section, we introduce seven decision examples, all of which we will analyze in detail later in the text.
Managerial Economics, 8e William F. Samuelson ● Stephen G. Marks Chapter one Introduction to Economic Decision Making Copyright © 2015 John Wiley & Sons, Inc. All rights reserved The crucial step in tackling almost all important business and government decisions begins with a single question: What is the alternative? ~Anonymous Copyright © 2015 John Wiley & Sons, Inc. All rights reserved SEVEN EXAMPLES OF MANAGERIAL DECISIONS Multinational Production and Pricing Market Entry Building a New Bridge A Regulatory Problem BP and Oil Exploration Risks An R & D Decision Wooing David Letterman Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Six steps to decision making Step 1: Define the Problem Step 2: Determine the Objective Step 3: Explore the Alternatives Step 4: Predict the Consequences Models Step 5: Make a Choice Step 6: Perform Sensitivity Analysis Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Figure 1.1 The Basic Steps in decision making Copyright © 2015 John Wiley & Sons, Inc. All rights reserved Private and Public decisions: An Economic View Business Behavior — Maximizing Value Lower Drug Prices in Africa Public Decisions Behavioral Economics Things to Come Copyright © 2015 John Wiley & Sons, Inc. All rights reserved 1.3 Figure 1.2 topics in managerial economics Copyright © 2015 John Wiley & Sons, Inc. All rights reserved ... Public Decisions Behavioral Economics Things to Come Copyright © 2 015 John Wiley & Sons, Inc. All rights reserved 1. 3 Figure 1. 2 topics in managerial economics Copyright © 2 015 John Wiley & Sons, Inc. All rights reserved... Perform Sensitivity Analysis Copyright © 2 015 John Wiley & Sons, Inc. All rights reserved Figure 1. 1 The Basic Steps in decision making Copyright © 2 015 John Wiley & Sons, Inc. All rights reserved... question: What is the alternative? ~Anonymous Copyright © 2 015 John Wiley & Sons, Inc. All rights reserved SEVEN EXAMPLES OF MANAGERIAL DECISIONS Multinational Production and Pricing Market Entry