The document outlines the key topics covered in a textbook on managerial economics including: the nature and scope of managerial economics, the theory of the firm, profit measurement, reasons for variation in profits among firms, the role of business in society, and the structure and objectives of the textbook. The chapter sections will discuss concepts such as expected value maximization, business versus economic profit, and the social responsibility of business.

1. MANAGERIAL
ECONOMICS

2. Nature and Scope
of Managerial
Economics

3. OVERVIEW
 How Is Managerial Economics
Useful?
 Theory of the Firm
 Profit Measurement
 Why Do Profits Vary among
Firms?
 Role of Business in Society
 Structure of this Text

4. Chapter 1
KEY CONCEPTS
 Managerial economics
 theory of the firm
 expected value maximization
 value of the firm
 present value
 Optimize
 business profit
 normal rate of return

5. How Is Managerial
Economics Useful?
 Evaluating Choice Alternatives
 Identify ways to efficiently
achieve goals.
 Specify pricing and production
strategies.
 Provide production and
marketing rules to help maximize
net profits.
 Making the Best Decision
 Managerial economics can be
used to efficiently meet
management objectives.
 Managerial economics can be
used to understand logic of
company, consumer, and
government decisions.

7. Theory of the
Firm
 Expected Value Maximization
 Owner-managers maximize short-run
profits.
 Primary goal is long-term expected
value maximization.
 Constraints and the Theory of the
Firm
 Resource constraints.
 Social constraints
 Limitations of the Theory of the
Firm
 Alternative theory adds perspective.
 Competition forces efficiency.
 Hostile takeovers threaten inefficient
managers.

9. Profit
Measurement
 Business Versus Economic
Profit
 Business (accounting) profit
reflects explicit costs and
revenues.
 Economic profit.
 Profitabove a risk-adjusted
normal return.
 Considers cash and noncash
items.
 Variability of Business
Profits
 Business profits vary widely.

10. Why Do Profits
Vary Among
Firms?
 Disequilibrium Profit
Theories
 Rapid growth in
revenues.
 Rapid decline in costs.
 Compensatory Profit
Theories
 Better, faster, or
cheaper than the
competition is

11. Role of Business in
Society
 Why Firms Exist
 Business is useful in
satisfying consumer wants.
 Business contributes to
social welfare
 Social Responsibility of
Business
 Serve customers.
 Provide employment
opportunities.
 Obey laws and regulations.

13. Structure of this
Text
 Objectives
 Understand usefulness of
economics in describing
managerial behavior.
 Understand how
economics can be used
to improve managerial
decisions.
 Appreciate vital role of
business in society.