Managerial Econmics Brickley, Smith, Zimmerman Chapter 3 Answers

Managerial Economics and Organizational Architecture

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Chapter 03 - Markets, Organizations, And The Role Of Knowledge CHAPTER 3 MARKETS, ORGANIZATIONS, AND THE ROLE OF KNOWLEDGE CHAPTER SUMMARY This chapter answers three primary questions: How do market systems work? What are the relative advantages of market systems compared to central planning in large economies? Why do we observe so much economic activity conducted within firms in market economies? In addition to covering the basic principles of exchange and supply-and-demand analysis, the chapter introduces two concepts that are critical to the subsequent development in the book: specific knowledge and contracting costs . The chapter also makes the important point that individuals have incentives to choose value-maximizing organizational arrangements. An appendix presents the basics of present value analysis and the valuation of common stock. It also discusses the concept of stock market efficiency. This appendix provides useful background material (for example, when instructors want to discuss the stock market reactions to events). CHAPTER OUTLINE G OALS OF E CONOMIC S YSTEMS P ROPERTY R IGHTS AND E XCHANGE IN A M ARKET E CONOMY Dimensions of Property Rights Managerial Application: Patent for Managerial Application: Property Rights Insecurity in Columbia Gains from Trade Managerial Application: While Animosity between the Governments of Venezuela and the U. S. Grow, So Does Trade Managerial Application: Strategic Business Planning—Ignoring Economics of Trade Academic Application: Gains from Trade B ASICS OF S UPPLY AND D EMAND The Price Mechanism Managerial Application: Shifts in Demand, Quantity, and Price at the PGA Tournament Linear Supply and Demand Prices as Social Coordinators Managerial Application: Supply of Online Resumes Bogs Down Employers Measuring the Gains from Trade Government Intervention Price Controls Price Floors Academic Application: Labor Unions and Minimum Wage Laws Externalities and the Coase Theorem 3-1
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Chapter 03 - Markets, Organizations, And The Role Of Knowledge Academic Application: Property Rights in Russia Academic Application: The Coase Theorem and the “Fable of the Bees” Managerial Application: Property Rights Help Make Niger Greener M ARKETS VERSUS C ENTRAL P LANNING General versus Specific Knowledge Managerial Application: Topic-Specific Search Engines Managerial Application: The Dynamic Nature of Specific Knowledge Managerial Application: Use of Specific Knowledge at Apple Computer Knowledge Creation Academic Application: Markets versus Central Planning in Russia Managerial Application: Converting IT Wetware into Software Specific Knowledge and the Economic System Managerial Application: Fiat—Using Specific Knowledge about Developing Markets Incentives in Markets Managerial Application: Japan, Computers, and Industrial Policy C ONTRACTING C OSTS AND E XISTENCE OF F IRMS Contracting Costs in Markets Academic Application: Herbert Simon on Organizations and Markets Contracting Costs within Firms Efficient Organization
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Managerial Econmics Brickley, Smith, Zimmerman Chapter 3 Answers

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