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Economics McGraw-Hill Primis ISBN-10: 0-39-067001-4 ISBN-13: 978-0-39-067001-4 Text: Managerial Economics and Organizational Architecture, Fifth Edition Brickley-Smith-Zimmerman Course: ECO 305 Managerial Economics Instructor: Dr. Bruce Hartman Cal Maritime Business Administration McGraw-Hill/Irwin =>? Economics http://www.primisonline.com Copyright 2008 by The McGraw-Hill Companies, Inc. All rights reserved. Printed in the United States of America. Except as permitted under the United States Copyright Act of 1976, no part of this publication may be reproduced or distributed in any form or by any means, or stored in a database or retrieval system, without prior written permission of the publisher. This McGraw-Hill Primis text may include materials submitted to McGraw-Hill for publication by the instructor of this course. The instructor is solely responsible for the editorial content of such materials. 111 ECONGEN ISBN-10: 0-39-067001-4 ISBN-13: 978-0-39-067001-4 This book was printed on recycled paper. Economics Contents Brickley-Smith-Zimmerman Managerial Economics and Organizational Architecture, Fifth Edition I. Basic Concepts 2 2. Economists View of Behavior 2 3. Markets, Organizations, and the Role of Knowledge 46 II. Managerial Economics 90 4. Demand 90 5. Production and Cost 126 6. Market Structure 162 7. Pricing with Market Power 190 8. Economics of Strategy: Creating and Capturing Value 224 9. Economics of Strategy: Game Theory 265 10. Incentive Conflicts and Contracts 297 III. Designing Organizational Architecture 324 17. Divisional Performance Evaluation 324 IV. Applications of Organizational Architecture 358 21. Understanding the Business Environment: The Economics of Regulation 358 iii 1 Notes Brickley-Smith-Zimmerman: Managerial Economics and Organizational Architecture, Fifth Edition I. Basic Concepts 2. Economists View of Behavior 2 The McGraw-Hill Companies, 2009 Economists View of Behavior C H A P T E R 2 C H A P T E R O U T L I N E Economic Behavior: An Overview Economic Choice Marginal Analysis Opportunity Costs Creativity of Individuals Graphical Tools Individual Objectives Indifference Curves Opportunities and Constraints Individual Choice Changes in Choice Motivating Honesty at Merrill Lynch Managerial Implications Alternative Models of Behavior Only-Money-Matters Model Happy-Is-Productive Model Good-Citizen Model Product-of-the-Environment Model Which Model Should Managers Use? Decision Making under Uncertainty Risk Aversion Certainty Equivalent and Risk Premium Risk Aversion and Compensation Summary Appendix: Consumer Choice I n May 2002, Merrill Lynch agreed to pay $100 million to settle charges that its analysts had recommended stocks to clients that they privately thought were poor investments. Internal e-mails provided strong support for this claim leveled by the New York State attorney general. For example, InfoSpace, an Internet services company, was rated highly by analysts, yet privately the analysts suggested that it was a... View Full Document

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