9781118041581

Product differentiation

entry barriers and, 323

monopolistic competition and, 336

oligopoly and, 379–380

Product safety, 468

Production

aluminum vs.steel in cars and

trucks, 214–215

auto parts and, 192

basic production concepts, 191–192

Cobb-Douglas function, 208–210

estimating production functions,

210–211

fixed inputs and, 192

fixed proportions and, 207–208

law of diminishing marginal

returns, 194–196

linear production function, 207

in long run, 198–207

long-run costs and, 242–244

marginal product and, 193–194

marginal rate of technical

substitution, 204–205

for maximum output, 726–729

measuring functions of, 207–211

at minimum cost, 729

multiple plants and, 211–212

multiple products and, 212–214

with one variable input, 192–198

optimal use of an input, 196–198

polynomial functions, 208

returns to scale and, 198–200

sales force allocation and, 190,

215–217

short-run and long-run

production, 192–196

short-run costs and, 237–242

Profit

analysis, 37–38

function, 38

maximization, 7–8, 45–47, 62–63

maximization with limited capacity,

234–237

Profit sharing, 604–605

Proprietary platform strategy,

413–414

Public decision, 16–18

Public goods

efficiency and, 471–473

pure public goods, 471

Public pricing, 479

Public project evaluation, 476–480

Punitive strategy, 423

Pure monopoly. SeeMonopoly

Pure public goods, 471

Pure selling problem, 94

Q

Quantity competition, oligopoly and,

360–366

Quantity-price contract, 646–648

Quotas, 306–309

R

R-squared statistic, 141–142

Random fluctuations, time-series

models and, 151

Real-life bidding, 691–693

Recession, 488, 530

Reflexive thinking, 405

Regression analysis, 133–150

adjusted R-squared, 142–143

Durbin-Watson statistic and, 150

equation specification and, 146

F-statistic and, 143–144

heteroscedasticity and, 150

interpreting regression statistics

and, 141–146

mean and, 134

multicollinearity and, 147

multiple regression, 139–140

omitted variables and, 147

ordinary least-squares regression,

133–140

potential problems in, 146–150

R-squared statistic, 141–142

sample variance and, 134

serial correlation and, 150

simultaneity and identification

and, 147–148

standard deviation and, 135

standard error of the

regression, 146

standard errors of the

coefficients, 144

t-statistic, 144–145

Regression using spreadsheets,

182–186

multiple regression, 184–186

simple regression, 182–184

Regulation

copyright system, 466

externalities and, 455–467

FDA drug approval, 446–447,

483–484

global warming and, 462–464

imperfect information and,

467–470

at least cost, 715–717

market failures and, 447–455

Microsoft antitrust case, 454–455

monopolies and, 448–453

patent system, 465–466

predatory pricing and, 450–451

regulatory reform and

deregulation, 466–467

Relevant costs

fixed and sunk costs, 231–234

opportunity costs and economic

profits, 227–231

profit maximization with limited

capacity, 234–237

Rent-seeking activity, monopolies

and, 449

Repeated competition, 401–402,

422–426

Repeated negotiation, 652–656

Reputation, 422, 424–425, 652–656

Research and development (R&D)

decisions regarding, 511–515

escalating investments in, 559–561

sequencing investments and,

562–563

Reservation prices, 632

Reserve prices, auctions and,

690–691

Resource control, entry barriers and,

323–324

Response accuracy, surveys and, 130

Response bias, surveys and, 130

Returns to scale, 198–200, 247–252

constant average cost and, 247

declining average cost and,

247–249

increasing average cost and, 249

minimum efficient scale and,

249–251

Revenues

analysis of, 31–36

equivalence theorem, 688

760 Index

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