Business Economics, 3rd Edition PDF by N. Gregory Mankiw, Mark P. Taylor, and Andrew Ashwin

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Business Economics, Third Edition

By N. Gregory Mankiw, Mark P. Taylor, and Andrew Ashwin

Business Economics, Third Edition

Contents

About the authors vii

Preface viii

Acknowledgements x

Part 1 The Economic And Business Environment 1

1 What is business economics? 1

What is business economics? 1

Some key ideas in economics 4

2 Economics and business decision making 16

Economics: The science (or art) of decision making 16

Business decision making 19

Conclusion 23

3 the business environment 26

The transformation process 26

The PESTLE framework 30

Shareholder value and stakeholders 35

Conclusion 36

Part 2 Microeconomics: The Market System 41

4 Supply and demand: How markets work 41

The market forces of supply and demand 41

Markets and competition 43

Supply 44

Shifts versus movements along the

supply curve 46

Demand 49

Shifts versus movements along the demand curve 51

Demand and supply together 55

How prices allocate resources 69

5 Elasticity and its applications 74

Elasticity and its application 74

Price elasticity of supply 75

The price elasticity of demand 81

Other demand elasticities 88

Applications of supply and demand elasticity 98

6 taxes and subsidies 105

Introduction 105

Taxation and business 105

Conclusion 113

Part 3 Microeconomics: The Limitations Of Markets 119

7 Market failure 119

Introduction 119

Externalities 122

Using the demand curve to measure consumer surplus 123

Producer surplus 124

Government, business and externalities 131

Conclusion 135

8 The consumer and consumer behaviour 140

Introduction 140

Behavioural economics 151

Asymmetric information 153

Conclusion 156

PART 4 MICROECONOMICS: THE ECONOMICS OF FIRMS IN MARKETS 161

9 Costs and revenues in production 161

The costs of production 161

What are costs? 162

Production and costs 164

The various measures of cost 168

Conclusion 175

10 Business goals and behaviour 180

The goals of firms 180

Financial objectives 184

Break-even analysis 184

Non-financial objectives 193

11 Firm behaviour and the organization of industry 199

Isoquants and isocosts 199

Costs in the short run and in the long run 204

Economies and diseconomies of scale 207

12 Market structures: Perfect

competition 215

Competition and competitive markets 215

The supply curve in a competitive market 222

Conclusion: Behind the supply curve 227

13 Market structures: Monopoly 233

Introduction 233

The sources of monopoly power 235

How monopolies make production and pricing decisions 237

The welfare cost of monopoly 242

Price discrimination 244

Public policy towards monopolies 248

Conclusion: The prevalence of monopoly 251

14 Market structures: Imperfect or

monopolistic competition 257

The nature of monopolistic competition 257

Advertising and branding 261

Brand names 264

Contestable markets 265

Monopolistic competition and the welfare of society 266

15 Market structures: Oligopoly 271

Oligopoly 271

Interdependence, game theory and the

economics of competition 276

Public policies toward oligopolies 281

Conclusion 284

16 Corporate strategy and pricing policy 289

Introduction 289

Business strategy 289

Pricing strategies 297

Business forecasting 301

Sales forecasting 305

Qualitative data 310

PART 5 MICROECONOMICS: FACTOR MARKETS 315

17 Labour markets 315

The markets for the factors of production 315

The demand for labour 316

The supply of labour 321

The gig economy 325

The other factors of production: Land and capital 328

Imperfections in the labour market 331

The economics of discrimination 335

Conclusion 337

18 Financial markets 342

Sources of business finance 342

Financial institutions in the economy 346

Measuring the time value of money 349

Managing risk 351

Asset valuation 354

Savings and investments in the national income accounts 355

An overview of Islamic finance 360

Fintech 361

Conclusion 364

PART 6 INTRODUCTION TO MACROECONOMICS 369

19 The macroeconomic environment 369

Introduction 369

Key economic indicators 370

The components of GDP 373

Real versus nominal GDP 375

Inflation: Measuring the cost of living 377

Unemployment 381

The balance of payments 383

Conclusion 388

20 Aggregate demand and aggregate supply as a model to describe the economy 393

Introduction 393

Three key facts about economic fluctuations 394

Explaining short run economic fluctuations 395

The aggregate demand curve 397

The aggregate supply curve 401

Two causes of economic fluctuations 409

21 Government economic policy and the effect on business: Fiscal, monetary and supply side policy 417

Government economic policies 417

Monetary policy 418

The banking system 420

The central bank’s tools of monetary control 423

Fiscal policy 426

Supply side policies 433

How monetary policy influences aggregate demand 437

How fiscal policy influences aggregate demand 440

Conclusion 442

PART 7 GLOBAL BUSINESS AND ECONOMICS 447

22 The global economy 447

International trade 448

The principle of comparative advantage 452

The determinants of trade 455

The winners and losers from trade 456

Restrictions on trade 460

Criticisms of comparative advantage theory 467

Other theories of international trade 468

The prices for international transactions:

Real and nominal exchange rates 470

A model of exchange rate determination: Purchasing power parity 472

The single European market and the euro 475

Common currency areas and European monetary union 477

Fiscal policy and common currency areas 481

Brexit 484

Global business, culture and ethics 488

The costs and benefits of globalization 490

Business in emerging markets 492

Outsourcing 496

Foreign direct investment 497

23 Issues in global business and economics 502

The financial crisis 502

Austerity policies: Too far too quickly? 511

The productivity puzzle 515

Sustainability 518

Glossary 524

Index 531

Formulas 541

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