The Economics of Managerial Decisions, Global Edition

Cover
Title Page
Copyright Page
Dedication
About the Authors
Brief Contents
Contents
Preface
Chapter 1: Managerial Economics and Decision Making
	Managers at Sears Holdings Use Opportunity Cost to Make Tough Decisions
	Introduction
	1.1. Managerial Economics and Your Career
	1.2. Firms and Their Organizational Structure
		Definition of a Firm
		The Legal Organization of Firms
	1.3. Profit, Accounting Cost, and Opportunity Cost
		Goal: Profit Maximization
		Total Revenue
		Accounting Cost and Opportunity Cost
		Decision Snapshot: Sunk Costs in the Stock Market
		Decision Snapshot: Opportunity Cost at Singing the Blues Blueberry Farm
		Comparing Accounting Cost and Opportunity Cost
		Using Opportunity Cost to Make Decisions
		Solved Problem: Resting Energy’s Opportunity Cost
	1.4. Marginal Analysis
		The Marginal Analysis Rule
		Using Marginal Analysis
		Solved Problem: How to Respond Profitably to Changes in Marginal Cost
	Revisiting How Managers at Sears Holdings Used Opportunity Cost to Make Tough Decisions
	Summary: The Bottom Line
	Key Terms and Concepts
	Questions and Problems
	MyLab Economics Auto-Graded Excel Projects
	Appendix: The Calculus of Marginal Analysis
		A. Review of Mathematical Results
		B. Marginal Benefit and Marginal Cost
		C. Maximizing Total Surplus
		D. Maximizing Total Surplus: Example
	Calculus Questions and Problems
Chapter 2: Demand and Supply
	Managers at Red Lobster Cope with Early Mortality Syndrome
	Introduction
	2.1. Demand
		Law of Demand
		Demand Curve
		Factors That Change Demand
		Decision Snapshot: Demand for the Cadillac Escalade
		Changes in Demand: Demand Function
		Solved Problem: Demand for Lobster Dinners
	2.2. Supply
		Law of Supply
		Supply Curve
		Factors That Change Supply
		Changes in Supply: Supply Function
		Solved Problem: The Supply of Gasoline-Powered Cars and the Price of Hybrid Cars
	2.3. Market Equilibrium
		Equilibrium Price and Equilibrium Quantity
		Demand and Supply Functions: Equilibrium
		Solved Problem: Equilibrium Price and Quantity of Plush Toys
	2.4. Competition and Society
		Total Surplus
		Consumer Surplus
		Producer Surplus
		Solved Problem: Total Surplus, Consumer Surplus, and Producer Surplus in the Webcam Market
	2.5. Changes in Market Equilibrium
		Use of the Demand and Supply Model When One Curve Shifts: Demand
		Use of the Demand and Supply Model When One Curve Shifts: Supply
		Use of the Demand and Supply Model When Both Curves Shift
		Demand and Supply Functions: Changes in Market Equilibrium
		Solved Problem: Demand and Supply for Tablets Both Change
	2.6. Price Controls
		Price Ceiling
		Price Floor
		Solved Problem: The Effectiveness of a Minimum Wage
	2.7. Using the Demand and Supply Model
		Predicting Your Costs
		Predicting Your Price
	Revisiting How Managers at Red Lobster Coped with Early Mortality Syndrome
	Summary: The Bottom Line
	Key Terms and Concepts
	Questions and Problems
	MyLab Economics Auto-Graded Excel Projects
Chapter 3: Measuring and Using Demand
	Managers at the Gates Foundation Decide to Subsidize Antimalarial Drugs
	Introduction
	3.1. Regression: Estimating Demand
		The Basics of Regression Analysis
		Regression Analysis
		Regression Results: Estimated Coefficients and Estimated Demand Curve
		Solved Problem: Regression Analysis at Your Steak Chain
	3.2. Interpreting the Results of Regression Analysis
		Estimated Coefficients
		Fit of the Regression
		Solved Problem: Confidence Intervals and Predictions for the Demand for Doors
	3.3. Limitations of Regression Analysis
		Specification of the Regression Equation
		Functional Form of the Regression Equation
		Solved Problem: Which Regression to Use?
	3.4. Elasticity
		The Price Elasticity of Demand
		Decision Snapshot: Advertising and the Price Elasticity of Demand
		Income Elasticity and Cross-Price Elasticity of Demand
		Solved Problem: The Price Elasticity of Demand for a Touch-Screen Smartphone
	3.5. Regression Analysis and Elasticity
		Using Regression Analysis
		Using the Price Elasticity of Demand
		Using the Income Elasticity of Demand Through the Business Cycle
	Revisiting How Managers at the Gates Foundation Decided to Subsidize Antimalarial Drugs
	Summary: The Bottom Line
	Key Terms and Concepts
	Questions and Problems
	MyLab Economics Auto-Graded Excel Projects
	Case Study: Decision-Making Using Regression
	Appendix: The Calculus of Elasticity
		A. Price Elasticity of Demand for a Linear and a Log-Linear Demand Function
		B. Total Revenue Test
		C. Income Elasticity of Demand and Cross-Price Elasticity of Demand
	Calculus Questions and Problems
Chapter 4: Production and Costs
	Pizza Hut Managers Learn That Size Matters
	Introduction
	4.1. Production
		Production Function
		Short-Run Production Function
		Long-Run Production Function
		Solved Problem: Marginal Product of Labor at a Bicycle Courier Service
	4.2. Cost Minimization
		Cost-Minimization Rule
		Generalizing the Cost-Minimization Rule
		Solved Problem: Cost Minimization at a Construction Firm
	4.3. Short-Run Cost
		Fixed Cost, Variable Cost, and Total Cost
		Average Fixed Cost, Average Variable Cost, and Average Total Cost
		Marginal Cost
		Decision Snapshot: Input Price Changes and Changes in the Marginal Cost of an Eiffel Tower Tour
		Competitive Return
		Shifts in Cost Curves
		Decision Snapshot: Changes in Input Prices and Cost Changes at Shagang Group
		Solved Problem: Calculating Different Costs at a Caribbean Restaurant
	4.4. Long-Run Cost
		Long-Run Average Cost
		Economies of Scale, Constant Returns to Scale, and Diseconomies of Scale
		Solved Problem: Long-Run Average Cost
	4.5. Using Production and Cost Theory
		Effects of a Change in the Price of an Input
		Economies and Diseconomies of Scale
	Revisiting How Pizza Hut Managers Learned That Size Matters
	Summary: The Bottom Line
	Key Terms and Concepts
	Questions and Problems
	MyLab Economics Auto-Graded Excel Projects
	Appendix: The Calculus of Cost
		A. Marginal Product
		B. Cost Minimization
		C. Marginal Cost and the Marginal/Average Relationship
	Calculus Questions and Problems
Chapter 5: Perfect Competition
	Burger King Managers Decide to Let Chickens Have It Their Way
	Introduction
	5.1. Characteristics of Competitive Markets
		Defining Characteristics of Perfect Competition
		Perfectly Competitive Markets
		Solved Problem: The Markets for Fencing and Cell Phones
	5.2. Short-Run Profit Maximization in Competitive Markets
		Marginal Analysis
		Using Marginal Analysis to Maximize Profit
		Decision Snapshot: Marginal Analysis at the American Cancer Society
		Changes in Costs
		Amount of Profit
		Shutting Down
		Decision Snapshot: Lundberg Family Farms Responds to a Fall in the Price of Rice
		The Firm’s Short-Run Supply Curve
		Decision Snapshot: A Particleboard Firm Responds to a Fall in the Price of an Input
		The Short-Run Market Supply Curve
		Solved Problem: Amount of Profit and Shutting Down at a Plywood Producer
	5.3. Long-Run Profit Maximization in Competitive Markets
		Long-Run Effects of an Increase in Market Demand
		Change in Technology
		Solved Problem: The Long Run at a Plywood Producer
	5.4. Perfect Competition
		Applying Marginal Analysis
		Optimal Long-Run Adjustments
	Revisiting How Burger King Managers Decided to Let Chickens Have It Their Way
	Summary: The Bottom Line
	Key Terms and Concepts
	Questions and Problems
	MyLab Economics Auto-Graded Excel Projects
	Appendix: The Calculus of Profit Maximization for Perfectly Competitive Firms
		A. Marginal Revenue
		B. Maximizing Profit
		C. Maximizing Profit: Example
	Calculus Questions and Problems
Chapter 6: Monopoly and Monopolistic Competition
	Premature Rejoicing by the Managers at KV Pharmaceutical
	Introduction
	6.1. A Monopoly Market
		Defining Characteristics of a Monopoly Market
		Demand and Marginal Revenue for a Monopoly
		Decision Snapshot: Is Delta Airlines a Monopoly?
		Solved Problem: The Relationship Among the Price Elasticity of Demand, Marginal Revenue, and Price
	6.2. Monopoly Profit Maximization
		Profit Maximization for a Monopoly
		Decision Snapshot: Profit-Maximizing Range of Prices for Tires
		Comparing Perfect Competition and Monopoly
		Barriers to Entry
		Solved Problem: Merck’s Profit-Maximizing Price, Quantity, and Economic Profit
	6.3. Dominant Firm
		Dominant Firm’s Profit Maximization
		Decision Snapshot: How a Technology Firm Responds to Changes in the Competitive Fringe
		Solved Problem: The Demand for Shoes at a Dominant Firm
	6.4. Monopolistic Competition
		Defining Characteristics of Monopolistic Competition
		Short-Run Profit Maximization for a Monopolistically Competitive Firm
		Long-Run Equilibrium for a Monopolistically Competitive Firm
		Solved Problem: J-Phone’s Camera Phone
	6.5. The Monopoly, Dominant Firm, and Monopolistic Competition Models
		Using the Models in Managerial Decision Making
		Applying the Monopolistic Competition Model
	Revisiting Premature Rejoicing by the Managers at KV Pharmaceutical
	Summary: The Bottom Line
	Key Terms and Concepts
	Questions and Problems
	MyLab Economics Auto-Graded Excel Projects
	Appendix: The Calculus of Profit Maximization for Firms with Market Power
		A. Marginal Revenue Curve
		B. Elasticity, Price, and Marginal Revenue
		C. Maximizing Profit
		D. Maximizing Profit: Example
	Calculus Questions and Problems
Chapter 7: Cartels and Oligopoly
	Managers at Major Publishers Read the e-Writing on the e-Wall
	Introduction
	7.1. Cartels
		Cartel Profit Maximization
		Instability of a Cartel
		Solved Problem: Potential Profit from a Cellular Telephone Cartel
	7.2. Tacit Collusion
		Price Visibility
		Decision Snapshot: A Contract in the Market for Propane
		Preannouncements
		Precommitments
		Price Leadership
		Solved Problem: Price Leadership in the Market for Insulin
	7.3. Four Types of Oligopolies
		Cournot Oligopoly
		Decision Snapshot: South Africa’s Impala Platinum as a Cournot Oligopolist
		Chamberlin Oligopoly
		Stackelberg Oligopoly
		Bertrand Oligopoly
		Comparing Oligopoly Models
		Solved Problem: Coca-Cola Reacts to PepsiCo
	7.4. Cartels and Oligopoly
		Using Cartel Theory and Tacit Collusion for Managerial Decision Making
		Using Types of Oligopolies for Managerial Decision Making
	Revisiting How Managers at Major Publishers Read the e-Writing on the e-Wall
	Summary: The Bottom Line
	Key Terms and Concepts
	Questions and Problems
	MyLab Economics Auto-Graded Excel Projects
	Appendix: The Calculus of Oligopoly
		A. Cournot Oligopoly
		B. Stackelberg Oligopoly
	Calculus Questions and Problems
Chapter 8: Game Theory and Oligopoly
	Managers at Pfizer Welcome a Competitor in the Market for Lipitor
	Introduction
	8.1. Basic Game Theory and Games
		Elements of a Game
		A Sample Game
		Nash Equilibrium
		A Dilemma
		Decision Snapshot: An Advertising Game
		Repeated Games
		Decision Snapshot: TragoCo and Boca-Cola Play a Repeated Game
		Dominated Strategies
		Solved Problem: Games Between Two Smartphone Producers
	8.2. Advanced Games
		Multiple Nash Equilibria
		Mixed-Strategy Nash Equilibrium
		Solved Problem: Custom’s Flower of the Day
	8.3. Sequential Games
		An Entry Game
		Decision Snapshot: Game Tree Between Disney and Warner Brothers
		Commitment and Credibility
		Solved Problem: A Pharmaceutical Company Uses Game Theory to Make an Offer
	8.4. Game Theory
		Using Basic Games for Managerial Decision Making
		Using Advanced Games for Managerial Decision Making
		Using Sequential Games for Managerial Decision Making
		Solved Problem: Is a Threat Credible?
	Revisiting How Managers at Pfizer Welcomed a Competitor in the Market for Lipitor
	Summary: The Bottom Line
	Key Terms and Concepts
	Questions and Problems
	MyLab Economics Auto-Graded Excel Projects
Chapter 9: A Manager’s Guide to Antitrust Policy
	The Managers of Sea Star Line Walk the Plank
	Introduction
	9.1. Overview of U.S. Antitrust Policy
		The Monopoly Problem
		The Sherman Act, 1890
		The Clayton Act, 1914
		The Federal Trade Commission Act, 1914
		Sanctions for Antitrust Violations
		Recent Antitrust Cases
		Solved Problem: A Perfectly Competitive Market Versus a Monopoly Market
	9.2. The Sherman Act
		Sherman Act Section 1: Restraint of Trade
		Sherman Act Section 2: Monopolization and Attempt to Monopolize
		Solved Problem: Going, Going, Gone: Price Fixing in the Market for Fine Art
	9.3. The Clayton Act
		Clayton Act Section 2: Price Discrimination
		Clayton Act Section 3: Conditional Sales
		Clayton Act Section 7: Mergers
		Solved Problem: The Business Practices Covered in the Clayton Act
	9.4. U.S. Merger Policy
		Economic Effects of Horizontal Mergers
		Antitrust Merger Policy
		Decision Snapshot: The XM/Sirius Satellite Radio Merger
		Solved Problem: Mergers in the Office-Supply Market
	9.5. International Competition Laws
		European Union Laws
		Chinese Laws
		Worldwide Competition Laws
		Solved Problem: Gazprom Gas Prices Create Indigestion in the European Union
	9.6. Antitrust Policy
		Using the Sherman Act and the Clayton Act
		Using International Competition Laws
		Antitrust Advice for Managers
	Revisiting How the Managers of Sea Star Line Walked the Plank
	Summary: The Bottom Line
	Key Terms and Concepts
	Questions and Problems
	MyLab Economics Auto-Graded Excel Projects
	Case Study: Student Athletes and the NCAA
Chapter 10: Advanced Pricing Decisions
	Managers at the Turtle Bay Resort Think Kama’aina Pricing Is Par for the Course
	Introduction
	10.1. Price Discrimination
		First-Degree Price Discrimination
		Second-Degree Price Discrimination
		Third-Degree Price Discrimination
		Decision Snapshot: American Airlines Identifies a Customer Type
		Solved Problem: Price Discrimination at Warner Brothers: That’s All, Folks!
	10.2. Peak-Load Pricing
		Long-Run Capacity Decision
		Short-Run Pricing and Quantity Decisions
		Decision Snapshot: Peak-Load Pricing by the Minneapolis–St. Paul Metropolitan Airport
		Solved Problem: Peak-Load Pricing
	10.3. Nonlinear Pricing
		Two-Part Pricing
		All-or-Nothing Offers
		Decision Snapshot: Nonlinear Pricing at the 55 Bar
		Commodity Bundling
		Solved Problem: Movie Magic
	10.4. Using Advanced Pricing Decisions
		Managerial Use of Price Discrimination
		Managerial Use of Peak-Load Pricing
		Managerial Use of Nonlinear Pricing
	Revisiting How the Managers at Turtle Bay Resort Came to Think Kama’aina Pricing Is Par for the Course
	Summary: The Bottom Line
	Key Terms and Concepts
	Questions and Problems
	MyLab Economics Auto-Graded Excel Projects
	Appendix: The Calculus of Advanced Pricing Decisions
		A. Third-Degree Price Discrimination
		B. Two-Part Pricing
	Calculus Questions and Problems
Chapter 11: Decisions About Vertical Integration and Distribution
	Why Would Walgreens Boots Alliance Purchase Wholesaler AmerisourceBergen?
	Introduction
	11.1. The Basics of Vertical Integration
		Markets Versus Vertical Integration
		Types of Vertical Integration
		Transfer Prices and Taxes
		Solved Problem: Vertical Integration
	11.2. The Economics of Vertical Integration
		Synergies
		Costs of Using a Market: Transaction Costs, the Holdup Problem, and Technological Interdependencies
		Decision Snapshot: PepsiCo Reduces Transaction Costs
		Costs of Using Vertical Integration
		Decision Snapshot: Pilgrim’s Pride and the Limits of Vertical Integration
		Solved Problem: IBM Avoids a Holdup Problem
	11.3. Vertical Integration and Market Structure
		Vertical Integration with Competitive Distributors
		Vertical Integration with a Monopoly Distributor
		Solved Problem: Price and Quantity with Competitive Distributors and a Monopoly Distributor
	11.4. Vertical Integration and Distribution
		Using the Economics of Vertical Integration for Managerial Decision Making
		Using Vertical Integration and Market Structure for Managerial Decision Making Within a Firm
	Revisiting Why Walgreens Boots Alliance Would Purchase Wholesaler AmerisourceBergen
	Summary: The Bottom Line
	Key Terms and Concepts
	Questions and Problems
	MyLab Economics Auto-Graded Excel Projects
Chapter 12: Decisions About Production, Products, and Location
	Managers at Freeport-McMoRan Dig Deep to Make a Decision
	Introduction
	12.1. Joint Production
		Fixed Proportions
		Variable Proportions
		Solved Problem: A Refinery Responds to an Increase in the Profit from Gasoline
	12.2. The Multi-Plant Firm
		Marginal Cost for a Multi-Plant Firm
		Profit Maximization for a Multi-Plant Firm
		Solved Problem: Can Producing Too Many Cookies Hurt Your Firm’s Profit?
	12.3. Location Decisions
		Changes in Costs from Adding Plants
		The Effect of Transportation Costs on Location Decisions
		Decision Snapshot: Quaker Oats’ Location Decision
		Decision Snapshot: Walgreens and CVS Compete for Your Drug Prescription
		The Effect of Geographic Variation in Input Prices on Location Decisions
		Solved Problem: A Department Store Pays for Transportation
	12.4. Decisions About Product Quality
		Solved Problem: Flower Quality
	12.5. Optimal Inventories
		Economic Order Quantity Model
		General Optimal Inventory Decisions
		Solved Problem: How a Decrease in Demand Affects the Economic Order Quantity
	12.6. Production, Products, and Location
		Joint Production of an Input
		Transportation Costs, Plant Size, and Location
	Revisiting How Managers at Freeport-McMoRan Had to Dig Deep to Make a Decision
	Summary: The Bottom Line
	Key Terms and Concepts
	Questions and Problems
	MyLab Economics Auto-Graded Excel Projects
	Appendix: The Calculus of Multi-Plant Profit-Maximization and Inventory Decisions
		A. Production Decisions at a Multi-Plant Firm
		B. Economic Order Quantity Inventory Model
	Calculus Questions and Problems
Chapter 13: Marketing Decisions: Advertising and Promotion
	Heads Up for Advertising Decisions at Riddell
	Introduction
	13.1. Profit-Maximizing Advertising by a Firm
		Advertising and Profit Maximization
		Choosing Advertising Media
		Decision Snapshot: PepsiCo Allocates Its Advertising Dollars
		Solved Problem: Marginal Benefit from Automobile Advertising
	13.2. Optimal Advertising by an Industry
		Industry-Wide Advertising as a Public Good
		Challenges of Industry-Wide Advertising
		Solved Problem: The National Football League’s Advertising Problem
	13.3. False Advertising
		When Can False Advertising Be Successful?
		What Are the Penalties for False Advertising?
		Solved Problem: Advertising for Skechers Shape-Ups Gets the Boot
	13.4. Resale Price Maintenance and Product Promotion
		The Effect of Resale Price Maintenance
		Profit Maximization with Resale Price Maintenance
		Resale Price Maintenance and Antitrust Policy
		Decision Snapshot: Amazon.com Markets Its Kindle
		Solved Problem: Profit-Maximizing Resale Price Maintenance for Designer Shoes
	13.5. International Marketing: Entry and Corruption Laws
		Entering a Foreign Market
		U.S. Anticorruption Law: The Foreign Corrupt Practices Act
		Decision Snapshot: JPMorgan “Sons and Daughters” Program
		U.K. Bribery Act
		Solved Problem: Legal or Illegal?
	13.6. Marketing and Promotional Decisions
		Industry-Wide Advertising
		Resale Price Maintenance
		Foreign Marketing Issues
	Revisiting Heads Up for Advertising Decisions at Riddell
	Summary: The Bottom Line
	Key Terms and Concepts
	Questions and Problems
	MyLab Economics Auto-Graded Excel Projects
	Appendix: The Calculus of Advertising
		A. Profit-Maximizing Amount of Advertising with a Single Advertising Medium
		B. Profit-Maximizing Amount of Advertising with Two or More Advertising Media
	Calculus Questions and Problems
Chapter 14: Business Decisions Under Uncertainty
	Embezzlement Makes Managers at a Nonprofit See Red
	Introduction
	14.1. Basics of Probability
		Relative Frequency
		Decision Snapshot: Probability of Success at a New Branch
		Expected Value
		Subjective Probability
		Solved Problem: Expected Customers at a Car Dealership
	14.2. Profit Maximization with Random Demand and Random Cost
		Expected Profit Maximization with Random Demand
		Expected Profit Maximization with Random Cost
		Expected Profit Maximization with Random Demand and Random Cost
		Solved Problem: Profit Maximization for a Vineyard
	14.3. Optimal Inventories with Random Demand
		The Inventory Problem
		Profit-Maximizing Inventory
		Solved Problem: Profit-Maximizing Inventory of Pastry Rings
	14.4. Minimizing the Cost of Random Adverse Events
		Minimizing the Cost of Undesirable Outcomes
		Expected Marginal Benefit from Avoiding Undesirable Outcomes
		Marginal Cost of Avoiding Undesirable Outcomes
		Optimal Accident Avoidance
		Decision Snapshot: Patent Search at a Pharmaceutical Firm
		The Role of Marginal Analysis in Minimizing the Cost of Accidents
		Solved Problem: Safety at an Energy Firm
	14.5. The Business Decision to Settle Litigation
		Basic Economic Model of Settlements: Parties with Similar Assessments
		Decision Snapshot: Actavis Versus Solvay Pharmaceuticals
		Parties with Different Assessments
		Solved Problem: To Settle or Not To Settle, That Is the Question
	14.6. Risk Aversion
		Insurance
		Risk Aversion and Diversification
		Risk Aversion and Litigation
		Solved Problem: Merck Takes Advantage of Risk Aversion
	14.7. Making Business Decisions Under Uncertainty
		Maximizing Profit with Random Demand and Random Cost
		Optimal Inventories with Uncertainty About Demand
		Making Business Decisions to Settle Litigation
	Revisiting How Embezzlement Made Managers at a Nonprofit See Red
	Summary: The Bottom Line
	Key Terms and Concepts
	Questions and Problems
	MyLab Economics Auto-Graded Excel Projects
	Case Study: Decision Making with Final Offer Arbitration
Chapter 15: Managerial Decisions About Information
	Auctions Float the Navy’s Boat
	Introduction
	15.1. Intellectual Property
		Patents and Trade Secrets
		Copyrights
		Trademarks
		Solved Problem: Patent Infringement
	15.2. Value of Forecasts
		Random Demand Model
		Factors Affecting the Value of Forecasts
		Solved Problem: Value of a Forecast
	15.3. Auctions
		Types of Auctions
		Bidding Strategy
		Decision Snapshot: Strategy in an English Auction of a U.S. Silver Dollar
		Expected Revenue
		Solved Problem: The San Francisco Giants Strike Out
	15.4. Asymmetric Information
		Adverse Selection
		Moral Hazard
		Solved Problem: Adverse Selection and Insurance Companies
	15.5. Decisions about Information
		Value of Forecasts for Different Time Periods
		Managing the Winner’s Curse When Selling a Product
		Incentives and the Principal–Agent Problem
	Revisiting How Auctions Float the Navy’s Boat
	Summary: The Bottom Line
	Key Terms and Concepts
	Questions and Problems
	MyLab Economics Auto-Graded Excel Projects
Chapter 16: Using Present Value to Make Multiperiod Managerial Decisions
	Why Did Ziosk’s Managers Give Their Tablets to Chili’s for Free?
	Introduction
	16.1. Fundamentals of Present Value
		Calculating Future Values
		Calculating Present Values
		Valuing a Stream of Future Payments
		Future and Present Value Formulas
		Solved Problem: Choosing a Loan Repayment Schedule
	16.2. Evaluating Investment Options
		Net Present Value and the Net Present Value Rule
		Extensions to the Net Present Value Rule
		Decision Snapshot: Salvage Value at a Car Rental Firm
		Decision Snapshot: Depreciation Allowance: Should a Tax Firm Take It Now or Later?
		Selection of the Discount Rate
		Risk and the Net Present Value Rule
		Solved Problem: Investment Decision for an Electric Car Maker
	16.3. Make-or-Buy Decisions
		Make-or-Buy Basics
		Make-or-Buy Net Present Value Calculations
		Solved Problem: A Make-or-Buy Decision with Learning by Doing
	16.4. Present Value and Net Present Value
		Valuing Financial Assets
		Using the Net Present Value Rule in the Real World
		The Effect of Tax Shields on Net Present Value
	Revisiting Why Ziosk’s Managers Gave Their Tablets to Chili’s for Free
	Summary: The Bottom Line
	Key Terms and Concepts
	Questions and Problems
	MyLab Economics Auto-Graded Excel Projects
	Case Study: Analyzing Predatory Pricing as an Investment
Answer Key to Chapters
Answer Key to Calculus Appendices
Index