1. Topic 1 Introduction to Managerial Economics 2009.Spring

2. Some Examples Boeing ’ s Struggle to Retain Market Leadership The Disney Corporation: Expansion of the Magic Kingdom In What Size Production Runs Should Toyota Produce Its Cars?

3. Relationships of Managerial Economics to Other Disciplines 傳統經濟學（理論） Theory of Consumer Behavior Theory of Firm Theory of Market Structure and Pricing 決策理論（分析方法） Numerical Analysis Statistical Estimation Forecasting Game Theory Optimization Risk Analysis 管理經濟學 （應用經濟理論與決策 方法解決企業問題） 提供企業最佳決策 企業管理（決策問題） Product Price and Output Make or Buy Production Technique Inventory Level Advertising Media and Intensity Labor Hiring and Training Investment and Financing

4. The Process of decision-making ¶Identify objectives ·Define the problem ¸Identify possible solutions ¹Select the best possible solution ºImplement the decision

5. Theory of the firm A theory indicating how a firm behaves and what its goals are Value of the firm The present value of the firm ’ s expected future cash flows

6. Present value of expected future profits (TR t - TC t ) (1+i) t where: TR t = the firm ’ s TR in year t TC t = the firm ’ s TC in year t i = the interest rate and t goes from 1 (next year) to n (the last year in the planning horizon) t=1 n

7. Principal-agent problem Occurs when owners can only imperfectly monitor the behavior of employees

8. Market demand curve Shows the amount of a commodity that buyers would like to purchase at various prices Demand Quantity Price

9. Market supply curve Shows the amount of a commodity that sellers would offer at various prices Supply Quantity Price

10. Market equilibrium price A price that can be maintained Supply Quantity Price Demand

11. Demand shifts: left Supply Quantity Price Demand

12. Demand shifts: right Supply Quantity Price Demand

13. Supply shifts: right Supply Quantity Price Demand

14. Supply shifts: left Supply Quantity Price Demand

15. See you Next Week Be Happy!!