Economics for Managers, Global Edition

Paul G Farnham  
Total pages
October 2014
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Economics for Managers, Global Edition
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For one semester MBA Managerial Economics courses


Economics for Managers presents the fundamental ideas of microeconomics and macroeconomics and integrates them from a managerial decision-making perspective in a framework that can be used in a single-semester course.


To be competitive in today’s business environment, managers must understand how economic forces affect their business and the factors that must be considered when making business decisions.  This is the only book that provides business students and MBAs with a thorough and applied understanding of both micro- and macroeconomic concepts in a way non-economics majors can understand.


The third edition retains all the same core concepts and straightforward material on micro- and macroeconomics while incorporating new case material and real-world examples that relate to today’s managerial student.


Part 1, Microeconomics Analysis: Focuses on how individual consumers and businesses interact with each other in a market economy.

Part 2, Macroeconomics Analysis:
Looks at the aggregate behavior of different sectors of the economy to determine how changes in behavior influence the overall level of economic activity.

Part 3, Integration of Frameworks:
Touches back on those principles learned in Parts I & II and emphasizes that changes in the macro environment affect individual firms and industries through the microeconomic factors of demand, production, cost, and profitability.


Straightforward Mathematics: Students are dissatisfied when their MBA economics courses are taught from a traditional and mathematical perspective, which is why you’ll find no calculus in this text, only basic algebra and graphs. The algebraic examples are kept to a minimum and used only after the basic concepts are covered.


Chapter Opening Cases for Analysis: Each chapter begins with a Case for Analysis section that includes a case drawn from the current news media that illustrates issues in the chapter. The topic in the case is then directly tied to the chapter material. The chapter concludes by reviewing how the chapter material relates to the introductory case, allowing students to go from concrete examples, to the relevant economic theory, and then back to how they apply in the real-world. For example:


  • Chapter 1 - The case on the global automobile industry includes a discussion of the microeconomic factors influencing competition among the major players in the industry and the impact of macroeconomic changes on the entire industry. 
  • Chapter 2 — This chapter updates the case on the copper industry that introduces the concepts of demand and supply and shows the extreme volatility of prices in a competitive industry.  The current discussion highlights the issues of the global demand for copper, the particular influence of China, and the problem of copper thefts due to its high price.

 Managerial Decision-Making Perspective: This text has developed a perspective that speaks directly to those students who will be making the decisions for their respective firm or industry. With this in mind, Economics for Managers, illustrates, in a direct and succinct outline throughout the text, the implications that both micro- and macroeconomics will have on those decisions. 

  • Managerial Rule of Thumb: Highlighted in this feature are shortcuts for using specific concepts and brief descriptions of important issues for managers.

Cases:  This edition features cases such as The iPhone in China, Changing Market Power for Eastman Kodak Co., and Strong Headwinds for McDonald’s.


Material on Global Issues: The updated material on global issues provides students with real-world examples that explain the decisions and influence foreign and domestic policymakers have on the competitive strategies of managers and firms. This material includes:

  • A focus on the U.S. economy and international issues from 2010 to 2012.
  • Analyses of the weakness in the Chinese economy, the worsening situation in Europe, and capital flows among industrialized and emerging economies.
  • A discussion of the euro zone situation including the banking, sovereign debt, and growth crises and the impact of the euro crisis on managerial decision making.

New to this Edition

This edition has been completely revised to update the industry cases and examples in the microeconomics section and the data and analysis in the macroeconomic and international economics sections.

  • Twelve of the sixteen chapters have entirely new cases, while the cases in the remaining four chapters have been updated extensively.
  • New cases include: Micro- and Macro-Economic Influences in the Global Automobile Industry; Procter & Gamble’s Pricing Strategies; The iPhone in China; Changing Market Power for Eastman Kodak Co.; Airline Pricing Strategies:  Will They Start Charging for the Use of the Lavatories?; Mixed Signals on the U.S. Economy in Summer 2012; The Chairman’s Quandary; and Strong Headwinds for McDonald’s.
  • Linkage to the marketing literature, particularly in Chapter 4, Techniques for Understanding Consumer Demand and Behavior, and Chapter 10. Pricing Strategies for the Firm, has been increased.
  • The macroeconomics section of the text has been completely rewritten, given the changes in the macro economy since 2008 when the second edition was drafted.
  • The macroeconomic data in the tables have been updated to 2011, and the data in the figures show trends from 2000 — 2012.
  • The macroeconomics discussion, which makes extensive use of Federal Reserve Monetary Policy Reports to the Congress and reports and analyses by the Congressional Budget Office, includes recent policy issues such as the impact of the American Recovery and Reinvestment Act of 2009, the fiscal cliff debates in 2012, and the Federal Reserve’s use of nontraditional policy tools to stimulate the economy.
  • An extensive discussion of the situation in the European Union from 2010 to 2012, which includes the banking, sovereign debt, and growth crises and the impact of these events on managerial decision making, is presented.

Table of Contents

1. Managers and Economics  
2. Demand, Supply, and Equilibrium Prices  
3. Demand Elasticities  
4. Techniques for Understanding Consumer Demand and Behavior  
5. Production and Cost Analysis in the Short Run  
6. Production and Cost Analysis in the Long Run  
7. Market Structure: Perfect Competition  
8. Market Structure: Monopoly and Monopolistic Competition  
9. Market Structure: Oligopoly  
10. Pricing Strategies for the Firm  

11. Measuring Macroeconomic Activity  
12. Spending by Individuals, Firms, and Governments on Real Goods and Services 13. The Role of Money in the Macro Economy  
14. The Aggregate Model of the Macro Economy  
15. International and Balance of Payments Issues in the Macro Economy  

16. Combining Micro and Macro Analysis for Managerial Decision Making