Author Profile

Jeremy Stein is a Professor of Economics at Babson College, where he teaches graduate level courses in managerial economics, pricing, and competitiveness. He served as Chair of the Economics Division from 2005 to 2017. Between 2014 and 2020 he held a Visiting Professor position at the School of Business, Economics and Law, University of Gothenburg, Sweden, where he continues to hold the Honorary Visiting Professor title. Dr. Stein research and consulting have focused mainly on pricing, revenue management, and strategic cost management. His work explores the relationship between costs and customer’s value and the influence of this relationship on the firm's financial results and the sustainability of business models. Dr. Stein's work contributes to both theory, and practice, and his research has been published in a variety of academic journals including: The European Accounting Review, Advances in Management Accounting, Journal of Cost Management, Journal of Corporate Accounting and Finance, and Industrial Relations Journal. He has received several grants and awards for her work, most recently The Davis Educational Foundation grant for the project entitled "Containing Costs While Enhancing the Educational Mission: A Study of Best Practices for Small Private Colleges." Dr. Stein has extensive consulting and executive teaching experience. He has developed and delivered customized corporate training programs for many companies in the areas of tactical and strategic pricing, and in monetizing innovation with new revenue models such as subscriptions. His recent work has focused on how firms can create additional revenue streams by using new technologies and by shifting customer preferences toward use, and sharing as opposed to ownership economy. Dr. Stein also works with nonprofit organizations on the professionalization of their services with an emphasis on their revenue models and financial sustainability. He serves as a member of the Board of Directors, and the Treasurer of Cambridge Centre for Adult Education, the largest adult education provider in Boston. He is also a Board member of the Executive Education at the University of Gothenburg.

About The Book

Managerial Economics is a field of study that integrates economic principles with managerial decision-making processes. It serves as a bridge between economics and business management, offering insights and tools to help managers make informed choices in the face of scarce resources and dynamic market conditions. Essentially, it applies economic theories and methodologies to analyze and solve real-world business problems. In the realm of Managerial Economics, decision-makers assess the costs and benefits of alternative strategies, examine market trends, and consider the impact of various factors on business outcomes. By blending economic theories with practical business scenarios, Managerial Economics equips managers with the ability to optimize decision-making, maximise efficiency, and achieve organizational goals in a constantly evolving business environment. Managerial economics applies microeconomic theory and decision sciences to help firms optimize, price, and strategize within the complex, interconnected global economy. It bridges internal firm decisions (production, cost) with external factors (global competition, exchange rates, regulatory changes), enabling managers to navigate risks and enhance profitability in a volatile market.

Table of Contents

Preface
1.
INTRODUCTION TO
MANAGERIAL ECONOMICS ....................................................................1
1.1 Introduction
1.2 What Is Managerial Economics
1.3 Why Do Managers Need To Know Economics
1.4 Business Decisions and Economic Analysis
1.5 The Scope of Managerial Economics
1.6 Some Other Topics In Managerial Economics
1.7 The Gap Between Theory and Practice and The
Role of Managerial Economics
2.
THE NATURE AND SCOPE OF MANAGERIAL ECONOMICS...........17
2.1 Origin of Economics
2.2 The Scope of Managerial Economics
2.3 The Basic Process of Decision Making
2.4 Homo Economicus
2.5 The Theory of The Firm
2.6 The Nature and Function of Profits
2.7 Business Ethics
2.8 The International Framework of Managerial Economics
2.9 Managerial Economics In A More Risky, Crisis-Prone, and Sluggish Global Economy
2.10 Managerial Economics and The Internet
2.11 Summary
3.
OBJECTIVES OF BUSINESS FIRMS .......................................................43
3.1 Introduction
3.2 Profit As Business Objective
3.3 Theories of Profit: The Economists’ Perception and Sources of Profit
3.4 Problems In Profit Measurement
3.5 Profit Maximization As Business Object
3.6 Controversy Over Profit Maximization Objective: Theory Vs Practice
3.7 Alternative Objectives of Business Firms
3.8 A Reasonable Profit Target
3.9 Profit As Control Measure
4.
SOME DECISION RULES AND
TOOLS OF ANALYSIS...............................................................................69
4.1 Some Conventional Decision Rule
4.2 Some Tools of Analysis
5.
DEMAND, SUPPLY, AND MARKET EQUILIBRIUM..............................91
5.1 Demand
5.2 Supply
5.3 Market Equilibrium
5.4 Measuring The Value of Market Exchange
5.5 Changes In Market Equilibrium
5.6 Ceiling and Floor Prices
5.7 Summary
6.
MARGINAL ANALYSIS FOR OPTIMAL DECISIONS..........................137
6.1 Concepts and Terminology
6.2 Unconstrained Maximization
6.3 Constrained Optimization
6.4 Summary
7.
THEORY OF CONSUMER BEHAVIOR.................................................161
7.1 Basic Assumptions of Consumer Theory
7.2 Indifference Curves
7.3 The Consumer’s Budget Constraint
7.4 Utility Maximization
7.5 Individual Demand and Market Demand Curves
7.6 Corner Solutions
7.7 Summary
8.
ELASTICITY AND DEMAND.................................................................193
8.1 The Price Elasticity of Demand
8.2 Price Elasticity and Total Revenue
8.3 Factors Affecting Price Elasticity of Demand
8.4 Calculating Price Elasticity of Demand
8.5 Marginal Revenue, Demand, and Price Elasticity
8.6 Other Demand Elasticities
8.7 Summary
9.
DEMAND ESTIMATION AND FORECASTING...................................225
9.1 Direct Methods of Demand Estimation
9.2 Specification of The Empirical Demand Function
9.3 Estimating Demand For A Price-Setting Firm
9.4 Time-Series Forecasts of Sales and Price
9.5 Seasonal (Or Cyclical) Variation
9.7 Summary
10.
MANAGERIAL DECISIONS IN
COMPETITIVE MARKETS......................................................................249
10.1 Characteristics of Perfect Competition
10.2 Demand Facing A Price-Taking Firm
10.3 Profit Maximization In The Short Run
10.4 Profit Maximization In The Long Run
10.5 Summary
Bibliography...............................................................................................283
Index...........................................................................................................313