Chapter 1 Introduction

Economics

Economics is the study of decision making in the presence of scarcity.

物质的稀缺性迫使经济活动中的生产者和消费者都必须有所选择，而经济学就是研究这种选择的。

Managerial economics

Managerial economics is the application of economic analysis to managerial decision making.

1.1 Managerial Decision Making

Economic analysis helps managers develop strategies to achieve a firm’s objective—such as maximizing profit—in the presence of scarcity.

公司管理者们达成任务的程度受限于资源的稀缺性。

1. Profit

Profit = Revenue - Cost

• It is the job of the CEO (and other seniorexecutives) to ensure that all managerial functions are coordinated so that the firm makes as much profit as possible.

• The CEO is also often concerned with how a firm is positioned in a market relative to its rivals and competitive strategies like game theory.

为了实现公司的利润最大化，管理者对内需要各部门通力合作，对外需要与竞争对手展开博弈而并非一味的击败对手。

2. Trade-offs

Managers must focus on the trade-offs that directly or indirectly affect profits. Evaluating trade-offs often involves marginal reasoning: considering the effect of a small change. Key trade-offs include:

• How to produce
• What prices to charge

追求公司利润最大化时必然涉及取舍，权衡取舍的影响通常需考虑边际效应。

3. Other Decision Makers

Managers must understand how others make decisions, such as consumers, workers, managers of other firms, and governments.

• The decision makers are maximizers: they do the best they can with their limited resources. ( Rational Maximizers )
• They do not successfully maximize for psychological reasons. ( Behavioral economics )

Interactions between economic decision makers take place primarily in markets. A market is an exchange mechanism that allows buyers to trade with sellers.

市场中的交易者并非都是理性的。

4. Strategy

When interacting with a small number of rival firms, a manager uses a strategy—a battle plan that specifies the actions or moves that the manager will make to maximize the firm’s profit. One tool that is helpful in understanding and developing such strategies is game theory.

对于不完全竞争市场，可采用博弈论进行分析。

1.2 Economic Models

• A model is a description of the relationship between two or more variables.

• Economists use economic models to explain how managers and other decision makers make decisions and to explain the resulting market outcomes.
• Models allow managers to consider hypothetical situations—to use a what-if analysis—such as “What would happen if we raised our prices by 10%?” or “Would profit rise if we phased out one of our product lines?”
• Models help managers predict answers to what-if questions and to use those answers to make good decisions.

1. Simplifying Assumptions

A model is a simplification of reality. The objective in building a model is to include the essential issues, while leaving aside the many complications that might distract us or disguise those essential elements.

• An economic model is a simplification of reality that contains only its most important features.
• Economists make many assumptions to simplify their models.

2. Testing Theories

A good model is one that is a close enough approximation to be useful.

3. Positive and Normative Statements

• Positive Statement: A testable hypothesis about matters of fact such as cause-and-effect relationships. Positive does not mean that we are certain about the truth of our statement; it indicates only that we can test the truth of the statement.

• Normative Statement: A belief about whether something is good or bad. It cannot be tested because a value judgment cannot be refuted by evidence.
• A normative statement concerns what somebody believes should happen; a positive statement concerns what is or what will happen.

Positive statements是实证陈述，讲的是客观事实，可以理解为“是什么”。比如：“我国的税负比美国高。”
Normative statements是规范陈述，含有主观的价值判断，可以理解为“应该怎么样”。比如：“我国的税负太高了（应该低一点）。”
因此，经济学也可以按以上标准分为实证经济学（Positive Economics）和规范经济学（Normative Economics）。

1.3 Summary

**1.Managerial Decision Making. **
Economic analysis helps managers develop strategies to pursue their objectives effectively in the presence of scarcity. Various managers within a firm face different objectives and different constraints, but the overriding objective in most private-sector firms is to maximize profits. Making decisions subject to constraints implies making trade-offs. To make good managerial decisions, managers must understand how consumers, workers, other managers, and governments will act. Economic theories normally (but not always) assume that all decision makers attempt to maximize their well-being given the constraints they face.

**2. Economic Models. **
Managers use models based on economic theories to help make predictions and decisions, which they use to run their firms. A good model is simple to use and makes clear, testable predictions that are supported by evidence. Economists use models to construct positive hypotheses such as causal statements linking changes in one variable, such as income, to its effects, such as purchases of automobiles. These positive propositions can be tested. In contrast, normative statements, which are value judgments, cannot be tested.