Contents


The Economic Nature of Decisi Making ................................................................ 3–18
—The Nature of the Firm ...................................................................................................... 4
—The Variety of Managerial Settings in a Modern Firm ..................................................... 5
—Strategic and Tactical Decision-Making ........................................................................... 6
—The Nature of the Decision Problem ................................................................................ 8
—Dimensions of the Decision Problem ................................................................................ 8
—Multiple Goals ........................................................................................................ 8
—Multiple Strategies .................................................................................................. 8
—Marginal Changes ................................................................................................... 9
—Multiple Outcomes ................................................................................................. 9
—Risk ........................................................................................................................ 11
—Imperfect Knowledge .......................................................................................... 14
—The Time Dimension ........................................................................................... 15
—Entrepreneurial Decisions .................................................................................... 15
—What’s Ahead ................................................................................................................... 15
—Summary of Important Points ........................................................................................ 16
—Significant Terms ............................................................................................................. 17
2. The Goals of the Firm ................................................................................................. 19–38
—The Role of Modelling in Economic Analysis ................................................................. 19
—Eras of Managerial Behaviour Patterns ........................................................................... 20
—Alternative Premises ......................................................................................................... 22
—Choosing a Behavioural Premise ..................................................................................... 25
—Profit in the Short and Long Runs .................................................................................. 26
—An Object of Pursuit or an Indicator of Success ........................................................... 27
—Summary of Important Points ........................................................................................ 28
—Significant Terms ............................................................................................................. 29
—Questions for Discussion ................................................................................................ 29
—Appendix 2.1 .................................................................................................................... 30
—Economic Method and Modelling........................................................................ 30
—Understanding Economic Behaviour ................................................................... 30
—Model Method ...................................................................................................... 31
—Modern Modelling Procedures ............................................................................ 32
—Review .................................................................................................................. 35
—Appendix 2.2 .................................................................................................................... 36
—Managing for Quality Rather than Profitability ................................................... 36
3. The Analysis of Value and Risk ................................................................................ 39–52
—The Remoteness of the Long Run .................................................................................. 39
—A Marginal Decision Criterion for the Long Run............................................................ 40
—Attitudes Towards Risk ................................................................................................... 42
—Marginal Utility and Risk ................................................................................................. . 43
—Means of Dealing with Risk ............................................................................................ 46
—Allowing for Anticipated Inflation ................................................................................... 48
—Decision Making Under Uncertainty ............................................................................... 49
—What’s Ahead ................................................................................................................... 49
—Summary of Important Points ........................................................................................ 50
—Significant Terms ............................................................................................................. 50
—Questions for Discussion ................................................................................................ 50
4. Maximization and Optimization ................................................................................ 53–82
—A Revolution in Thought .................................................................................................. 53
—The Applicability of Marginal Analysis ............................................................................ 54
—The Marginal in Managerial Decision Making ................................................................ 55
—Calculus and the Marginal .........................................................................................57
—The Marginal as Decision Criterion ................................................................................. 59
—Multiple Independent Variables ........................................................................................ 63
—Multiple Goals and Optimization ..................................................................................... 66
—Optimization Using the Calculus .......................................................................... 66
—Optimization by Linear Programming ............................................................................. 69
—What’s Ahead ................................................................................................................... 70
—Summary of Important Points ........................................................................................ 70
—Significant Terms ............................................................................................................. 71
—Questions for Discussion ................................................................................................ 72
—Problems ........................................................................................................................... 72
—Appendix 4.1 .................................................................................................................... 74
—Linear Programming ............................................................................................ 74
—The Simplex Method ............................................................................................ 74
—Variables, Equations, and Inequalities .................................................................. 74
—A Linear Programming Computer Programme ................................................... 75
—Graphic Illustration .............................................................................................. 76
—Qualifications ........................................................................................................ 78
—The Dual Linear Programming Problem ............................................................. 79
—An Example .......................................................................................................... 80
—Appendix 4.2 .................................................................................................................... 81
—Differentiation Rules ............................................................................................ 81
5. Modelling the Decision Context .............................................................................. 83–102
—Estimating a Model by Regression Analysis .................................................................... 84
—Simple Regression Models ............................................................................................... 84
—Multiple Regression Models ............................................................................................. 87
—Non-Linear Regression Models ....................................................................................... 87
—Multiplicative Models ....................................................................................................... 89
—Inferences about the Regression Model .......................................................................... 90
—The Existence and Strength of the Relationship ............................................................. 90
—The Significance of the Coefficients of the Independent Variables ............................... 92
—Problems with the Multiple Regression Context ............................................................ 93
—Multicollinearity .................................................................................................... 93
—Autocorrelation ..................................................................................................... 94
—Heteroskedasticity ................................................................................................ 95
—An Application ................................................................................................................. . 95
—Summary of Important Points ........................................................................................ 95
—Significant Terms ............................................................................................................. 99
—Questions for Discussion .............................................................................................. 100
—Appendix 5.1 .................................................................................................................. 101
—Simulation Modelling .......................................................................................... 101
6. Consumer Behaviour and Demand ...................................................................... 103–130
—Consumer Behaviour ...................................................................................................... 104
—The Theory of Demand ................................................................................................. 107
—Demand Curves and Demand Surfaces ........................................................................ 108
—VRML 3-D View ............................................................................................................. 112
—Normal and Inferior Goods ................................................................................ 113
—Substitutes and Complements ............................................................................ 114
—Demand and Revenue ........................................................................................ .114
—What's Ahead .................................................................................................................. 119
—Summary of Important Points ....................................................................................... 119
—Significant Terms ........................................................................................................... 120
—Questions for Discussion .............................................................................................. 121
—Appendix 6.1 .................................................................................................................. 122
—Preference and Indifference .............................................................................. 122
—The Horizontal Slice ........................................................................................... 122
—The Indifference Curve Map ............................................................................. 123
—The Marginal Rate of Substitution .................................................................... 125
—The Consumer’s Budget .................................................................................... 126
—The Optimal Combination of Goods ................................................................. 127
—Substitution and Income Effects ....................................................................... 128
7. Elasticity and Demand Specification .................................................................... 131–154
—Revenue and Elasticity ................................................................................................... 131

—Elasticity Formulae ......................................................................................................... 135
—Elasticity and Other Demand Determinants .................................................................. 136
—The Empirical Estimation of Demand ........................................................................... 138
—Specification Errors and the Identification Problem .................................................... 140
—The Identification Problem and Demand Elasticity ...................................................... 142
—Conclusion..................................................................................................................... 143
—Summary of Important Points ...................................................................................... 143
—Significant Terms ........................................................................................................... 144
—Questions for Discussion .............................................................................................. 145
—Appendix 7.1 .................................................................................................................. 146
—The Economic Tasks of Marketing ................................................................... 146 1—Appendix 7.2 ................................................................................................................ 151
8. Production in the Short Run.................................................................................. 155–184
—Production is the Central Function of the Enterprise .................................................. . 155
—Varieties of Production Activity ..................................................................................... 155
—Organizing Production ................................................................................................... 156
—Managerial Problems in the Production Process ......................................................... . 156
—Production Principles ..................................................................................................... 157
—The Relevant Questions ..................................................................................... 157
—The Production Function ............................................................................................... 157
—The Production Surface ................................................................................................ 158
—The Long and Short-Run Time Frames ........................................................................ 160
—The Vertical Slice Approach .......................................................................................... 160
—The Vertical Slice ........................................................................................................... 161
—The Governing Principle ................................................................................................ 162
—Total, Average and Marginal Products .......................................................................... 163
—The Productivities of Other Inputs ............................................................................... 166
—The Stages of Production .............................................................................................. 166
—The Equamarginal Principle ........................................................................................... 169
—Cost Minimization vs. Profit Maximization ................................................................... 169
—What’s Ahead ................................................................................................................. 172
—Summary of Important Points ...................................................................................... 172
—Significant Terms ........................................................................................................... 174
—Questions for Discussion .............................................................................................. 174
—Appendix 8.1 .................................................................................................................. 176
—The Horizontal-Slice Approach .......................................................................... 176
—The Horizontal Slice ........................................................................................... 176
—The Isoquant Map .............................................................................................. 177
—The Marginal Rate of Technical Substitution .................................................... 179
—The Capital Outlay Budget ................................................................................. 180
—The Optimal Resource Allocation Criterion ....................................................... 180
—The Equamarginal Principle ............................................................................... 182
—Stages of Production in Isoquant Analysis ....................................................... 183
—Extensions of Isoquant Analysis ........................................................................ 183
9. Production in the Long Run .................................................................................. 185–196
—The Long- and Short-Run Time Frames ...................................................................... 185
—Variable Proportions and Returns to Scale .................................................................... 186
—A Constant Capital-Labour Ratio ................................................................................... 186
—Returns to Scale ............................................................................................................. 187
—Scale and the Production Function ............................................................................... 188
—Changes in Technology, Entrepreneurship, Managerial Capacity ................................ 189
—The Empirical Estimation of Production Functions ..................................................... 191
—Managing Production ..................................................................................................... 193
—Summary of Important Points ...................................................................................... 193
—Significant Terms ........................................................................................................... 194
—Questions for Discussion .............................................................................................. 194
10. Costs in the Short Run ........................................................................................... 197–216
—The Inevitability of Costs .............................................................................................. 197
—Relevant Cost ................................................................................................................. 198
—Implicit Costs ..................................................................................................... 199
—Explicit Costs ..................................................................................................... 199
—Variable and Fixed Costs ................................................................................................ 201
—The Short and the Long Run ......................................................................................... 201
—Temporal Mismatching of Production and Costs ......................................................... 201
—Spill-over Costs .............................................................................................................. 202
—Economic Profit ............................................................................................................. 202
—The Cost-Production Nexus .......................................................................................... 203
—The Transition from the Production Function to the Cost Function .......................... 203
—Dropping the Assumptions ............................................................................................ 205
—The Law of Increasing Costs........................................................................................ 206
—Average Variable Cost..................................................................................................... 207
—Marginal Cost ................................................................................................................. 207
—Relationships among Total, Average and Marginal Cost ............................................... 208
—Relationships between Cost Functions and Product Functions ................................... 209
—Overhead Costs in the Short-Run ................................................................................. 209
—What’s Ahead .................................................................................................................. 211
—Summary of Important Points ....................................................................................... 211
—Significant Terms ........................................................................................................... 213
—Questions for Discussion .............................................................................................. 214
11. Costs in the Long Run ............................................................................................ 217–232
—The Short and the Long Run ......................................................................................... 218
—Overhead Costs .............................................................................................................. 218
—Costs in the Long Run ................................................................................................... 218
—The Long Run Average Cost Curve .............................................................................. 220
—Mathematical Specification and Empirical Estimation of Cost Functions ................... 223
—Data Requirements ......................................................................................................... 227
—Relevant Costs.................................................................................................... 227
—Identification of Output ..................................................................................... 228
—Selection of an Appropriate Time Period .......................................................... 228
—The Management of Costs ............................................................................................ 229
—Summary of Important Points ...................................................................................... 230
—Significant Terms ........................................................................................................... 231
—Questions for Discussion .............................................................................................. 231
12. The Competitive Environment .............................................................................. 233–252
—The Maximum-Competition Extreme ............................................................................ 234
—Short-Run Adjustment in the Competitive Industry ..................................................... 235
—The Operate vs. Shut-Down Criterion in the Short Run ............................................. 237
—Short-Run Industry Adjustment of the Competitive Industry ...................................... 238
—Long-Run Adjustments in the Competitive Industry .................................................... 240
—The Managerial Implications of Pure Competition ....................................................... 243
—Summary of Important Points ...................................................................................... 244
—Significant Terms ........................................................................................................... 245
—Questions for Discussion .............................................................................................. 245
—Appendix 12.1 ................................................................................................................ 247
—Price Changes in Competitive Markets ............................................................. 247
—Appendix 12.2 ................................................................................................................ 249
—Simulation Modelling of a Firm in a Competitive Market ................................. 249
13. Monopoly ................................................................................................................... 253–262
—Short-Run Adjustments by the Monopolist ................................................................... 254
—Long-Run Adjustment by the Monopolist ..................................................................... 258
—The Managerial Implications of Pure Monopoly .......................................................... 259
—Competition vs. Monopoly ............................................................................................ 259
—Summary of Important Points ...................................................................................... 259
—Significant Terms ........................................................................................................... 260
—Questions for Discussion .............................................................................................. 260
14. Monopolistic Competition ...................................................................................... 263–274
—Decision Making under Monopolistic Competition ...................................................... 264
—Short-Run Adjustments in the Monopolistically-Competitive Market.......................... 266
—Managerial Implications of Monopolistic Competition ................................................. 270
—What’s Ahead ................................................................................................................. 271
—Summary of Important Points ...................................................................................... 271
—Significant Terms ........................................................................................................... 272
—Questions for Discussion .............................................................................................. 273
15. Oligopolistic Competition ....................................................................................... 275–294
—Decision Making in Oligopoly ....................................................................................... 276
—Models of Oligopolistic Adjustment .............................................................................. 279
—Price Warfare ..................................................................................................... 280
—Extreme Price Rigidity ....................................................................................... 282
—Price-Leadership/Followership .......................................................................... 284
—The Managerial Implications of Oligopolistic Competition .......................................... 288
—The Societal Implications of Oligopolistic Behaviour and Industry Structure ............ 288
—Summary of Important Points ...................................................................................... 289
—Significant Terms ........................................................................................................... 289
—Questions for Discussion .............................................................................................. 290
—Appendix 15.1 ................................................................................................................ 292
16. Extending the Models .............................................................................................. 295–322
—Simple Models and Complex Realities ........................................................................... 295
—On Realism, Accuracy, and Specificity in Models ....................................................... 296
—Extensions of the Model of the Firm ............................................................................ 297
—Non-Price Determinants of Demand ................................................................. 297
—Non-Quantity Determinants of Costs ........................................................................... 298
—Multiple Markets ............................................................................................................ 298
—Modelling for Price Discrimination ............................................................................... 301
—Multiple Products ........................................................................................................... 302
—Jointly-Produced Products ............................................................................................ 303
—Increasing Size and Complexity .................................................................................... 304
—Transfer Pricing ............................................................................................................. 305
—What’s Ahead ................................................................................................................. 309
—Summary of Important Points ...................................................................................... 309
—Significant Terms ............................................................................................................ 311
—Questions for Discussion ............................................................................................... 311
—Appendix 16.1 ................................................................................................................ 313
—A Mathematical Model of Price Discrimination ................................................ 313
—Appendix 16.2 ................................................................................................................ 317
—Joint Products Produced in Variable Proportions ............................................. 317
17. Challenges to the Theory of the Firm ................................................................. 323–330
—Multiple Goals ................................................................................................................ 323
—Non-Marginal Decision Criteria ..................................................................................... 325
—An Assessment of Non-Marginal Pricing Practices ..................................................... 326
—Summary of Important Points ...................................................................................... 328
—Significant Terms ........................................................................................................... 328
—Questions for Discussion .............................................................................................. 328
18. Ethical Dimensions of Managerial Decisions ...................................................... 331–336
—Ethics in Management .................................................................................................... 331
—A Framework for Thinking about Ethics ...................................................................... 332
—Consequentialist Positions .............................................................................................. 333
—The Role of Justice in Ethics ........................................................................................ 334
—Ethical Orientations of Managerial Decision Makers ................................................... 334
—Social Responsibility ...................................................................................................... 335
19. The Role of the Government .................................................................................. 337-350
—Forms of Economic Systems ........................................................................................ 337
—The Applicability of Managerial Decision Criteria ........................................................ 338
—Benefit-Cost Analysis ..................................................................................................... 338
—Points of Contact between the Firm and the Government........................................... 341
—Rationales for Governmental Involvement in the Market Economy ............................ 342
—The Maintenance of Competitive Conditions ................................................................ 342
—Rationales for Reallocation, Redistribution, and Stabilization ...................................... 344
—The Government’s Potential for Stabilizing the Economy ........................................... 344
—Summary of Important Points ...................................................................................... 345
—Significant Terms ........................................................................................................... 347
—Questions for Discussion .............................................................................................. 347
20. The Firm in Society ................................................................................................. 351–362
—The Firm’s Roles in Society .......................................................................................... 352
—The Firm’s Societal Contacts ........................................................................................ 353
—The Workings of Economic Mechanisms .................................................................... 355
—Opportunities and Threats to the Firm .......................................................................... 366
—Ethics and the Business Community ............................................................................. 357
—Summary of Important Points ...................................................................................... 358
—Significant Terms ........................................................................................................... 360
—Questions for Discussion .............................................................................................. 361
21. Reallocation of Resources by Government ......................................................... 363–374
—Public vs. Private Goods ............................................................................................... 364
—Social Goods Yielding Positive Spillovers ..................................................................... 365
—Spill-over Costs .............................................................................................................. 368
—Summary of Important Points ...................................................................................... 370
—Significant Terms ........................................................................................................... 372
—Questions for Discussion .............................................................................................. 372
22. International Commerce........................................................................................ 375–386
—Bases for Interregional Commerce ............................................................................... 377
—The Principle of Comparative Advantage ...................................................................... 377
—Qualifications to the Principle of Comparative Advantage ........................................... 379
—The International Dimension ......................................................................................... 380
—Currency Diversity......................................................................................................... 381
—The Cultural Dimension ................................................................................................. 382
—What’s Ahead ................................................................................................................. 383
—Summary of Important Points ...................................................................................... 383
—Significant Terms ........................................................................................................... 384
—Questions for Discussion .............................................................................................. 385
23. The Multinationalization of Enterprise ................................................................ 387–400
—The Location of Economic Activity .............................................................................. 388
—Opportunities in an Open Economy World ................................................................... 389
—Drives to Multinationalization ........................................................................................ 392
—Threats in an Open Economy ........................................................................................ 393
—What’s Ahead ................................................................................................................. 396
—Summary of Important Points ...................................................................................... 396
—Significant Terms ........................................................................................................... 398
—Questions for Discussion .............................................................................................. 399
24. Opportunities in Developing Economies.............................................................. 401–408
—Developing Economy Terminology ............................................................................... 401
—Risk Factors ................................................................................................................... 402
—The Role of Entrepreneurship ....................................................................................... 402
—The Cultural Environment.............................................................................................. 402
—Infrastructure ................................................................................................................. 403
—Capital Scarcity .............................................................................................................. 403
—Labour and Technology ................................................................................................. 404
—Trade and Development ................................................................................................. 404
—The Role of the Government ......................................................................................... 404
—Entrepreneurial Opportunities ........................................................................................ 405
—Summary of Important Points ...................................................................................... 405
—Significant Terms ........................................................................................................... 407
—Questions for Discussion .............................................................................................. 407
PART - II
25. History of International Trade ............................................................................ 409–418
—Chronology of Events .................................................................................................. 409
26. Absolute Advantage Theory of International Trade ......................................... 419–420
27. Comparative Advantage Theory of International Trade .................................. 421–426
—Origins of the Theory .................................................................................................. 421
—Examples ...................................................................................................................... 422
—More Complexities ....................................................................................................... 426
—Criticisms ..................................................................................................................... 426
28. Heckscher-Ohlin Model ........................................................................................ 427–432
—Features of the Model .................................................................................................. 427
—Theoretical Development of the Model ....................................................................... 427
—Original Publication ...................................................................................................... 428
—The 2 × 2 × 2 Model .................................................................................................... 428
—Extensions .................................................................................................................... 428
—Assumptions of the Model ............................................................................... 429
—Both Countries have Identical Production Technology ............................................... 429
—Production Output must have Constant Return to Scale ............................................ 429
—The Technologies used to Produce the Two Commodities Differ .............................. 429
—Labour Mobility within Countries ................................................................................ 430
—Capital Mobility within Countries ................................................................................ 430
—Capital Immobility between Countries ......................................................................... 430
—Labour Immobility between Countries ........................................................................ 431
—Commodities have the Same Price Everywhere .......................................................... 431
—Perfect Internal Competition ....................................................................................... 431
29. Terms of Trade ....................................................................................................... 433–434
—Two Country Model CIE Economics .......................................................................... 433
—Multi-Commodity Multi-Country Model ...................................................................... 433
—Other Terms-of-Trade Calculations ............................................................................ 434
—Limitations ................................................................................................................... 434
30. Gains from International Trade .......................................................................... 435–438
—Basic Assumptions ....................................................................................................... 435
—Gains from Specialization ............................................................................................ 438
31. Balance of Payment .............................................................................................. 439–446
—Relation between National Income and Balance of Payments .................................... 439
—Balance of Trade and Balance of Payments ................................................................ 440
—Structure of Balance of Payment Accounting ............................................................. 440
—Current Account ............................................................................................... 442
—Capital Account ................................................................................................ 442
—Other Items in the Balance of Payments ......................................................... 443
—Autonomous and Accommodating Items .................................................................... 444
—Disequilibrium in Balance of Payments ....................................................................... 444
—Economic Factors ............................................................................................ 444
—Political Factors ................................................................................................ 445
—Social Factors .................................................................................................. 446
32. The Foreign Exchange Market ............................................................................ 447–460
—Exchange Rate ............................................................................................................. 447
—Currency Value ............................................................................................................. 447
—Currency Appreciation ................................................................................................. 448
—Currency Depreciation ................................................................................................. 448
—Arbitrage ...................................................................................................................... 449
—Spot Exchange Rate ..................................................................................................... 449
—Forward Exchange Rate .............................................................................................. 449
—Hedging ........................................................................................................................ 450
—Participants in the FOREX ........................................................................................... 450
—1. Importers and Exporters .............................................................................. 450
—2. International Investors, Banks, Arbitrageurs, etc. ....................................... 450
—Investment Concerns—International or Domestic ..................................................... 451
—1. Rate of Return.............................................................................................. 451
—2. Risk .............................................................................................................. 451
—3. Liquidity ....................................................................................................... 452
—Foreign Exchange Market ............................................................................................ 452
—Market Size and Liquidity ............................................................................................ 452
—Banks........................................................................................................................... 453
—Commercial Companies ............................................................................................... 453
—Central Banks ............................................................................................................... 453
—Investment Management Firms ................................................................................... 454
—Hedge Funds ................................................................................................................ 454
—Retail Forex Brokers .................................................................................................... 454
—Trading Characteristics ................................................................................................ 454
—Factors Affecting Currency Trading ........................................................................... 455
—Economic Factors........................................................................................................ 456
—Political Conditions ...................................................................................................... 456
—Market Psychology ...................................................................................................... 456
—Algorithmic Trading in Forex ...................................................................................... 457
—Financial Instruments .................................................................................................. 457
—Spot .................................................................................................................. 457
—Forward Transaction ....................................................................................... 457
—Futures ............................................................................................................. 458
—Swap................................................................................................................. 458
—Options ............................................................................................................. 458
—The Difference between Spot and Futures in FOREX................................................ 458
—Speculation ................................................................................................................... 459
33. Financial Market ................................................................................................... 461–466
—Definition ..................................................................................................................... 462
—Types of Financial Markets ......................................................................................... 462
—Raising Capital.............................................................................................................. 462
—Lenders........................................................................................................................ 463
—Borrowers .................................................................................................................... 464
—Derivative Products ..................................................................................................... 464
—Currency Markets ........................................................................................................ 464
—Analysis of Financial Markets ..................................................................................... 465
—Financial Markets in Popular Culture .......................................................................... 465
34. Purchasing Power Parity....................................................................................... 467–472
—Explanation ................................................................................................................... 468
—Relative PPP ................................................................................................................. 468
—PPP Equalization and the Law of One Price ................................................................ 469
—Big Mac Index.............................................................................................................. 469
—West and Central African Franc .................................................................................. 469
—Need for PPP Adjustments to GDP ............................................................................. 469
—Difficulties ................................................................................................................... 470
—Range and Quality of Goods ........................................................................................ 470
—Difficulties with PPP Comparisons in Welfare Economics ......................................... 471
35. International Monetary Fund .............................................................................. 473–482
—Fast Facts on the IMF ................................................................................................. 473
—IMF Activities .............................................................................................................. 474
—IMF Governance and Organization ............................................................................. 475
—How the IMF Promotes Global Economic Stability .................................................... 475
—Why is Economic Stability Important? ........................................................................ 475
—How the IMF Helps ..................................................................................................... 476
—Surveillance ...................................................................................................... 476
—Technical Assistance ........................................................................................ 477
—Lending ............................................................................................................. 477
—How the IMF Helps to Resolve Economic Crises ....................................................... 477
—Why do Economic Crises Occur? ............................................................................... 477
—How IMF Lending Helps ............................................................................................. 478
—Resolving External Debt Crises ................................................................................... 479
—How the IMF Helps Poor Countries ............................................................................ 479
—What can be Done to Reduce Poverty? ...................................................................... 479
—The Role of the IMF .................................................................................................... 480
—Lending ............................................................................................................. 480
—Technical Assistance ........................................................................................ 481
—Surveillance ...................................................................................................... 481
36. World Trade Organization .................................................................................... 483–496
—GATT Rounds of Negotiations .................................................................................... 484
—From Geneva to Tokyo .................................................................................... 484
—Uruguay Round ................................................................................................ 484
—Doha Round ..................................................................................................... 485
—Mission, Functions and Principles ............................................................................... 486
—Functions ......................................................................................................... 486
—Principles of the Trading System ................................................................................ 486
—Formal Structure.......................................................................................................... 487
—Highest Level: Ministerial Conference .............................................................. 487
—Second Level: General Council ........................................................................ 487
—Third Level: Councils for Trade ...................................................................... 488
—Fourth Level: Subsidiary Bodies ...................................................................... 488
—Other Committees ............................................................................................ 489
—Trade Negotiations ....................................................................................................... 489
—Dispute Settlement ....................................................................................................... 490
—Accession and Membership ......................................................................................... 491
—Members and Observers .............................................................................................. 492
—Agreements .................................................................................................................. 492
—Agreement on Agriculture (AoA) ................................................................................. 492
—Domestic Support ............................................................................................ 493
—Market Access.................................................................................................. 493
—Export Subsidies .............................................................................................. 493
—Criticism ........................................................................................................... 493
—SPS and Genetically Modified Organisms (GMOs) .................................................... 493
—Criticism ........................................................................................................... 494
—Agreement on Technical Barriers to Trade (TBT) ...................................................... 494

The economic concepts presented in Managerial Economics show the reader how to use commonsense to understand business and solve managerial problems. This innovative text helps to develop and sharpen economic intuition - an invaluable skill that helps readers as managers or future managers to decide which products to produce, costs to consider, and prices to charge, as well as the best hiring policy and the most effective style of organization.