Baye 7e Man. Economics & BS
Information Center
Feature Summary
Book Preface
Table of Contents
About the Author
Sample Case Study

Student Edition
Instructor Edition
Managerial Economics & Business Strategy, 7/e

Michael Baye, Indiana University - Bloomington

ISBN: 0073375969
Copyright year: 2010

Feature Summary

The seventh edition retains all of the class-tested features of previous editions that enhance students' learning experiences and make it easy to teach from this book.

As in previous editions, each chapter begins with a Headline that is based on a real-world economic problem—a problem that students should be able to address after completing the chapter. These Headlines are essentially hand-picked "mini-cases" designed to motivate students to learn the material in the chapter. Each Headline is answered at the end of the relevant chapter—when the student is better prepared to deal with the complications of real-world problems. Reviewers as well as users of previous editions praise the Headlines not only because they motivate students to learn the material in the chapter, but also because the answers at the end of each chapter help students learn how to use economics to make business decisions.

Learning Objectives
Each chapter includes learning objectives designed to enhance the learning experience.

Demonstration Problems
The best way to learn economics is to practice solving economic problems. So, in addition to the Headlines, each chapter contains many Demonstration Problems sprinkled throughout the text, along with detailed answers. This provides students with a mechanism to verify that they have mastered the material and reduces the cost to students and instructors of having to meet during office hours to discuss answers to problems.

Inside Business Applications
Each chapter contains boxed material (called Inside Business applications) to illustrate how theories explained in the text relate to a host of different business situations. As in previous editions, I have tried to strike a balance between applications drawn from the current economic literature and the popular press.

Calculus and Noncalculus Alternatives
Users can easily include or exclude calculus-based material without losing content or continuity. That's because the basic principles and formulae needed to solve a particular class of economic problems (e.g., MR = MC) are first stated without appealing to the notation of calculus. Immediately following each stated principle or formula is a clearly marked Calculus Alternative. Each of these calculus alternatives states the preceding principle or formula in calculus notation, and explains the relation between the calculus and non-calculus formula. More detailed calculus derivations are relegated to Appendices. Thus, the book is designed for use by instructors who want to integrate calculus into managerial economics and by those who do not require students to use calculus.

Key Terms and Marginal Definitions
Each chapter ends with a list of key terms and concepts. These provide an easy way for instructors to glean material covered in each chapter and for students to check their mastery of terminology. In addition, marginal definitions are provided throughout the text.

End-of-Chapter Problems
Three types of problems are offered. Highly structured but nonetheless challenging Conceptual and Computational Questions stress fundamentals. These are followed by Problems and Applications, which are far less structured and, like real-world decision environments, may contain more information than is actually needed to solve the problem. Many of these applied problems are based on actual business events. Additionally, the Time Warner case that follows Chapter 14 includes 14 problems called Memos that have a "real-world feel" and complement the text. All of these case-based problems may be assigned on a chapter-by-chapter basis as specific skills are introduced, or as part of a capstone experience. Solutions to all of the memos are contained online at Answers to selected end-of-chapter Conceptual and Computational Questions are presented at the end of the book; detailed answers to all problems—including Problems and Applications and the Time Warner case Memos, are available to instructors on the password-protected Web site.

Case Study
A case study in business strategy—Challenges at Time Warner—follows Chapter 14 and was prepared by Kyle Anderson, Michael Baye, and Dong Chen especially for this text. It can be used either as a capstone case for the course or to supplement individual chapters. The case allows students to apply core elements from managerial economics to a remarkably rich business environment. Instructors can use the case as the basis for an "open-ended" discussion of business strategy, or they can assign specific "memos" (contained at the end of the case) that require students to apply specific tools from managerial economics to the case. Teaching notes, as well as solutions to all of the memos, are provided on the Web site.

Instructors of managerial economics have genuinely heterogeneous textbook needs. Reviewers and users continue to praise the book for its flexibility, and assure us that sections or even entire chapters can be excluded without losing continuity. For instance, an instructor wishing to stress microeconomic fundamentals might choose to cover Chapters 2, 3, 4, 5, 8, 9, 10, 11, and 12. An instructor teaching a more applied course that stresses business strategy might choose to cover Chapters 1, 2, 3, 5, 6, 7, 8, 10, 11, and 13. Each may choose to include additional chapters (for example, Chapters 14 or the Time Warner case) as time permits. More generally, instructors can easily omit topics such as present value analysis, regression, indifference curves, isoquants, or reaction functions without losing continuity.

Online Resources at
A large assortment of student supplements for Managerial Economics and Business Strategy are available online at This includes data for the Time Warner case Memos, data needed for various end-of-chapter problems, spreadsheet versions of key tables in the text to enable students to see how key economic concepts—like marginal cost and profit maximization—can be implemented on standard spreadsheets, and spreadsheet macros that students can use to find the optimum price and quantity under a variety of market settings, including monopoly, Cournot oligopoly, and Stackelberg oligopoly. Plus, the Web site includes 10 additional full-length cases (in pdf format) that are described below.

To obtain an instructor login for this Online Learning Center, ask your local sales representative. If you're an instructor thinking about adopting this textbook, request a free copy for review.