Additional Information
Book Details
Abstract
This new edition of Economics for Business uses up-to-date case studies to examine the key issues facing the business world today. Looking at everything from the impact of the financial crisis to the operation of individual business, the 7th edition illustrates how economic theory relates to real business issues in a clear, accessible and engaging way designed to help students excel.
Looking for economics in action? Search online for the Sloman Economics News Site, a blog that’s updated several times a week with current affairs and topical stories, all linked to your textbook so you can explore the background to the issues more deeply.
John Sloman was Director of the Economics Network from its foundation in 1999 until 2012, and is now Visiting Fellow at the University of Bristol where the Network is based. John is also Visiting Professor at the University of the West of England, Bristol.
Dean Garratt is Principal Teaching Fellow in the Department of Economics at the University of Warwick.
Jon Guest is a National Teaching Fellow of the Higher Education Academy and a Principal Lecturer in the School of Economics, Finance and Accountancy at Coventry University. Jon is also an Associate of the Economics Network and a Lecturer on economics courses delivered to departments across the UK government.
Elizabeth Jones is a Principal Teaching Fellow and the Dean of Students in the Economics Department at the University of Warwick. Elizabeth is also a Lecturer on economics courses non-economists delivered to departments across the UK government.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Cover | Cover | ||
| Title Page | iii | ||
| Copyright Page | iv | ||
| About the authors | v | ||
| Brief contents | vii | ||
| Detailed contents | ix | ||
| Custom publishing | xv | ||
| Preface | xvi | ||
| Publisher’s acknowledgements | xxii | ||
| Part A Business and economics | 2 | ||
| Chapter 1 The business environment and business economics | 4 | ||
| 1.1 The business environment | 5 | ||
| 1.2 The structure of industry | 10 | ||
| 1.3 The determinants of business performance | 14 | ||
| Box 1.1 A perfect partnership | 6 | ||
| Box 1.2 The biotechnology industry | 9 | ||
| Summary | 15 | ||
| Review questions | 16 | ||
| Chapter 2 Economics and the world of business | 17 | ||
| 2.1 What do economists study? | 17 | ||
| 2.2 Business economics: the macroeconomic environment | 19 | ||
| 2.3 Business economics: microeconomic choices | 22 | ||
| Box 2.1 Looking at macroeconomic data | 21 | ||
| Box 2.2 What, how and for whom | 22 | ||
| Box 2.3 The opportunity costs of studying economics | 24 | ||
| Summary | 26 | ||
| Review questions | 26 | ||
| Appendix: Some techniques of economic analysis | 27 | ||
| Summary to appendix | 34 | ||
| Review questions to appendix | 34 | ||
| Chapter 3 Business organisations | 35 | ||
| 3.1 The nature of firms | 35 | ||
| 3.2 The firm as a legal entity | 39 | ||
| 3.3 The internal organisation of the firm | 41 | ||
| Box 3.1 Exploiting asymmetric information | 38 | ||
| Box 3.2 Managers and performance | 41 | ||
| Box 3.3 The changing nature of business | 45 | ||
| Summary | 46 | ||
| Review questions | 46 | ||
| Part end – additional case studies and relevant websites | 47 | ||
| Part B Business and markets | 48 | ||
| Chapter 4 The working of competitive markets | 50 | ||
| 4.1 Business in a competitive market | 50 | ||
| 4.2 Demand | 53 | ||
| 4.3 Supply | 55 | ||
| 4.4 Price and output determination | 58 | ||
| Box 4.1 UK house prices | 60 | ||
| Box 4.2 Stock market prices | 62 | ||
| Box 4.3 Controlling prices | 64 | ||
| Summary | 65 | ||
| Review questions | 66 | ||
| Chapter 5 Business in a market environment | 68 | ||
| 5.1 Price elasticity of demand | 69 | ||
| 5.2 The importance of price elasticity of demand to business decision making | 71 | ||
| 5.3 Other elasticities | 74 | ||
| 5.4 The time dimension of market adjustment | 78 | ||
| 5.5 Dealing with uncertainty | 82 | ||
| Box 5.1 The measurement of elasticity | 72 | ||
| Box 5.2 Elasticity and the incidence of tax | 76 | ||
| Box 5.3 Adjusting to oil price shocks | 80 | ||
| Box 5.4 Don’t shoot the speculator | 84 | ||
| Summary | 85 | ||
| Review questions | 86 | ||
| Part end – additional case studies and relevant websites | 86 | ||
| Part C Background to demand | 88 | ||
| Chapter 6 Demand and the consumer | 90 | ||
| 6.1 Marginal utility theory | 91 | ||
| 6.2 Demand under conditions of risk and uncertainty | 95 | ||
| 6.3 The characteristics approach to analysing consumer demand | 104 | ||
| Box 6.1 Calculating consumer surplus | 93 | ||
| Box 6.2 The marginal utility revolution: Jevons, Menger, Walras | 94 | ||
| Box 6.3 Adverse selection in the insurance market | 101 | ||
| Box 6.4 Rogue traders | 102 | ||
| Summary | 110 | ||
| Review questions | 111 | ||
| Chapter 7 Demand and the firm | 112 | ||
| 7.1 Estimating demand functions | 112 | ||
| 7.2 Forecasting demand | 118 | ||
| Box 7.1 The demand for lamb | 116 | ||
| Summary | 121 | ||
| Review questions | 122 | ||
| Chapter 8 Products, marketing and advertising | 123 | ||
| 8.1 Product differentiation | 124 | ||
| 8.2 Marketing the product | 127 | ||
| 8.3 Advertising | 129 | ||
| Box 8.1 The battle of the brands | 125 | ||
| Box 8.2 Advertising and the long run | 134 | ||
| Summary | 136 | ||
| Review questions | 137 | ||
| Part end – additional case studies and relevant websites | 137 | ||
| Part D Background to supply | 138 | ||
| Chapter 9 Costs of production | 140 | ||
| 9.1 The meaning of costs | 140 | ||
| 9.2 Production in the short run | 142 | ||
| 9.3 Costs in the short run | 145 | ||
| 9.4 Production in the long run | 149 | ||
| 9.5 Costs in the long run | 155 | ||
| Box 9.1 The fallacy of using historic costs | 141 | ||
| Box 9.2 How vulnerable are you? | 146 | ||
| Box 9.3 UK competitiveness: moving to the next stage | 153 | ||
| Box 9.4 Minimum efficient scale | 156 | ||
| Box 9.5 Fashion cycles | 158 | ||
| Summary | 159 | ||
| Review questions | 160 | ||
| Chapter 10 Revenue and profit | 161 | ||
| 10.1 Revenue | 161 | ||
| 10.2 Profit maximisation | 165 | ||
| Box 10.1 Costs, revenue and profits | 165 | ||
| Box 10.2 Opportunity cost of capital in practice | 169 | ||
| Box 10.3 Selling ice cream when I was a student | 169 | ||
| Summary | 170 | ||
| Review questions | 170 | ||
| Part end – additional case studies and relevant websites | 171 | ||
| Part E Supply: short-run profit maximisation | 172 | ||
| Chapter 11 Profit maximisation under perfect competition and monopoly | 174 | ||
| 11.1 Alternative market structures | 174 | ||
| 11.2 Perfect competition | 178 | ||
| 11.3 Monopoly | 181 | ||
| 11.4 Potential competition or potential monopoly? The theory of contestable markets | 188 | ||
| Box 11.1 Concentration ratios | 177 | ||
| Box 11.2 E-commerce | 182 | ||
| Box 11.3 Windows cleaning | 186 | ||
| Box 11.4 ‘It could be you’ | 188 | ||
| Summary | 190 | ||
| Review questions | 191 | ||
| Chapter 12 Profit maximisation under imperfect competition | 192 | ||
| 12.1 Monopolistic competition | 192 | ||
| 12.2 Oligopoly | 196 | ||
| 12.3 Game theory | 205 | ||
| Box 12.1 Eating out in Britain | 194 | ||
| Box 12.2 Oligopolies: the good, the bad and the ugly | 202 | ||
| Box 12.3 The prisoners’ dilemma | 207 | ||
| Box 12.4 The Hunger Games | 209 | ||
| Summary | 210 | ||
| Review questions | 211 | ||
| Part end – additional case studies and relevant websites | 212 | ||
| Part F Supply: alternative strategies | 214 | ||
| Chapter 13 An introduction to business strategy | 216 | ||
| 13.1 What is strategy? | 217 | ||
| 13.2 Strategic analysis | 220 | ||
| 13.3 Strategic choice | 225 | ||
| 13.4 Business strategy in a global economy | 227 | ||
| 13.5 Strategy: evaluation and implementation | 229 | ||
| Box 13.1 Business strategy the Samsung way | 218 | ||
| Box 13.2 Hybrid strategy | 227 | ||
| Summary | 229 | ||
| Review questions | 230 | ||
| Chapter 14 Alternative theories of the firm | 231 | ||
| 14.1 Problems with traditional theory | 231 | ||
| 14.2 Alternative maximising theories | 233 | ||
| 14.3 Multiple aims | 238 | ||
| Box 14.1 In search of long-run profits | 234 | ||
| Box 14.2 Stakeholder power | 240 | ||
| Summary | 240 | ||
| Review questions | 241 | ||
| Chapter 15 Growth strategy | 242 | ||
| 15.1 Growth and profitability | 242 | ||
| 15.2 Constraints on growth | 243 | ||
| 15.3 Alternative growth strategies | 245 | ||
| 15.4 Internal growth | 246 | ||
| 15.5 External growth through merger | 249 | ||
| 15.6 External growth through strategic alliance | 254 | ||
| 15.7 Explaining external firm growth: a transaction costs approach | 257 | ||
| Box 15.1 Global merger activity | 250 | ||
| Box 15.2 How many firms does it take to make an iPhone? | 256 | ||
| Box 15.3 The day the world stopped | 258 | ||
| Summary | 260 | ||
| Review questions | 261 | ||
| Chapter 16 The small-firm sector | 262 | ||
| 16.1 Defining the small-firm sector | 262 | ||
| 16.2 The survival, growth and failure of small businesses | 267 | ||
| 16.3 Government assistance and the small firm | 271 | ||
| Box 16.1 Capturing global entrepreneurial spirit | 264 | ||
| Box 16.2 Hotel Chocolat | 270 | ||
| Summary | 274 | ||
| Review questions | 275 | ||
| Chapter 17 Pricing strategy | 276 | ||
| 17.1 Pricing and market structure | 277 | ||
| 17.2 Alternative pricing strategies | 278 | ||
| 17.3 Price discrimination | 280 | ||
| 17.4 Multiple product pricing | 289 | ||
| 17.5 Transfer pricing | 290 | ||
| 17.6 Pricing and the product life cycle | 291 | ||
| Box 17.1 Easy pricing | 281 | ||
| Box 17.2 A quantity discount pricing strategy | 288 | ||
| Box 17.3 How do European companies set prices? | 292 | ||
| Summary | 293 | ||
| Review questions | 294 | ||
| Part end – additional case studies and relevant websites | 295 | ||
| Part G The firm in the factor market | 296 | ||
| Chapter 18 Labour markets, wages and industrial relations | 298 | ||
| 18.1 Market-determined wage rates and employment | 298 | ||
| 18.2 Power in the labour market | 304 | ||
| 18.3 Low pay and discrimination | 310 | ||
| 18.4 The flexible firm and the market for labour | 316 | ||
| Box 18.1 ‘Telecommuters’ | 301 | ||
| Box 18.2 Winters of discontent | 308 | ||
| Box 18.3 The Internet and labour mobility | 318 | ||
| Summary | 319 | ||
| Review questions | 320 | ||
| Chapter 19 Investment and the employment of capital | 321 | ||
| 19.1 The pricing of capital and capital services | 321 | ||
| 19.2 The demand for and supply of capital services | 323 | ||
| 19.3 Investment appraisal | 325 | ||
| 19.4 Financing investment | 331 | ||
| 19.5 The stock market | 335 | ||
| Box 19.1 Investing in roads | 326 | ||
| Box 19.2 The ratios to measure success | 328 | ||
| Box 19.3 Financing innovation | 333 | ||
| Summary | 338 | ||
| Review questions | 338 | ||
| Part end – additional case studies and relevant websites | 339 | ||
| Part H The relationship between governmentand business | 340 | ||
| Chapter 20 Reasons for government intervention in the market | 342 | ||
| 20.1 Markets and the role of government | 342 | ||
| 20.2 Types of market failure | 343 | ||
| 20.3 Government intervention in the market | 354 | ||
| 20.4 The case for less government intervention | 359 | ||
| 20.5 Firms and social responsibility | 360 | ||
| Box 20.1 Can the market provide adequate protection for the environment? | 348 | ||
| Box 20.2 The tragedy of the commons | 352 | ||
| Box 20.3 Deadweight loss from taxes on goods and services | 357 | ||
| Box 20.4 The Body Shop | 365 | ||
| Summary | 366 | ||
| Review questions | 367 | ||
| Chapter 21 Government and the firm | 368 | ||
| 21.1 Competition policy | 368 | ||
| 21.2 Policies towards research and development (R&D) | 376 | ||
| 21.3 Policies towards training | 380 | ||
| Box 21.1 From paper envelopes to canned mushrooms: the umpire strikes back | 374 | ||
| Box 21.2 The R&D Scoreboard | 378 | ||
| Box 21.3 Radical changes to apprenticeships | 384 | ||
| Summary | 386 | ||
| Review questions | 387 | ||
| Chapter 22 Government and the market | 388 | ||
| 22.1 Environmental policy | 388 | ||
| 22.2 Transport policy | 400 | ||
| 22.3 Privatisation and regulation | 407 | ||
| Box 22.1 A Stern rebuke about climate change inaction | 390 | ||
| Box 22.2 Trading our way out of climate change | 398 | ||
| Box 22.3 Road pricing in Singapore | 406 | ||
| Box 22.4 The right track to reform? | 410 | ||
| Summary | 412 | ||
| Review questions | 414 | ||
| Part end – additional case studies and relevant websites | 414 | ||
| Part I Business in the international environment | 416 | ||
| Chapter 23 Globalisation and multinational business | 418 | ||
| 23.1 Globalisation: setting the scene | 418 | ||
| 23.2 What is a multinational corporation? | 421 | ||
| 23.3 Trends in multinational investment | 423 | ||
| 23.4 Why do businesses go multinational? | 426 | ||
| 23.5 The advantages of MNC investment for the host state | 431 | ||
| 23.6 The disadvantages of MNC investment for the host state | 433 | ||
| 23.7 Multinational corporations and developing economies | 434 | ||
| Box 23.1 M&As and greenfield FDI | 424 | ||
| Box 23.2 Location. Location. Location. | 432 | ||
| Box 23.3 Grocers go global | 436 | ||
| Summary | 437 | ||
| Review questions | 438 | ||
| Chapter 24 International trade | 439 | ||
| 24.1 Trading patterns | 439 | ||
| 24.2 The advantages of trade | 443 | ||
| 24.3 Arguments for restricting trade | 446 | ||
| 24.4 The world trading system and the WTO | 450 | ||
| Box 24.1 Strategic trade theory | 446 | ||
| Box 24.2 Giving trade a bad name | 450 | ||
| Box 24.3 The Doha Development Agenda | 452 | ||
| Summary | 453 | ||
| Review questions | 454 | ||
| Chapter 25 Trading blocs | 455 | ||
| 25.1 Preferential trading | 456 | ||
| 25.2 Preferential trading in practice | 457 | ||
| 25.3 The European Union | 458 | ||
| Box 25.1 Beyond bananas | 461 | ||
| Box 25.2 The Internal Market Scoreboard | 463 | ||
| Summary | 464 | ||
| Review questions | 464 | ||
| Part end – additional case studies and relevant websites | 465 | ||
| Part J The macroeconomic environment | 466 | ||
| Chapter 26 The macroeconomic environment of business | 469 | ||
| 26.1 Introduction to the macroeconomic environment | 470 | ||
| 26.2 Economic growth | 471 | ||
| 26.3 Unemployment | 478 | ||
| 26.4 Inflation | 482 | ||
| 26.5 The business cycle and key macroeconomic variables | 489 | ||
| 26.6 The circular flow of income | 490 | ||
| Box 26.1 Output gaps | 475 | ||
| Box 26.2 The duration of unemployment | 482 | ||
| Box 26.3 Inflation or deflation | 488 | ||
| Summary | 493 | ||
| Review questions | 494 | ||
| Appendix: Measuring national income and output | 495 | ||
| Summary to appendix | 498 | ||
| Review questions to appendix | 498 | ||
| Chapter 27 The balance of payments and exchange rates | 499 | ||
| 27.1 The balance of payments account | 499 | ||
| 27.2 The exchange rate | 503 | ||
| 27.3 Exchange rates and the balance of payments | 508 | ||
| 27.4 Fixed versus floating exchange rates | 509 | ||
| Box 27.1 Nominal and real exchange rates | 506 | ||
| Box 27.2 Dealing in foreign exchange | 507 | ||
| Box 27.3 The importance of international financial movements | 508 | ||
| Box 27.4 The euro/dollar seesaw | 513 | ||
| Summary | 515 | ||
| Review questions | 516 | ||
| Chapter 28 Banking, money and interest rates | 517 | ||
| 28.1 The meaning and functions of money | 518 | ||
| 28.2 The financial system | 518 | ||
| 28.3 The supply of money | 533 | ||
| 28.4 The demand for money | 541 | ||
| 28.5 Equilibrium | 542 | ||
| Box 28.1 Financial intermediation | 520 | ||
| Box 28.2 Growth of banks’ balance sheets | 524 | ||
| Box 28.3 Residential mortgages and securitisation | 528 | ||
| Box 28.4 Credit, money and Minsky’s financial instability hypothesis | 538 | ||
| Summary | 544 | ||
| Review questions | 545 | ||
| Chapter 29 Business activity, employment and inflation | 546 | ||
| 29.1 The simple Keynesian model of business activity | 547 | ||
| 29.2 Aggregate demand, output and inflation | 550 | ||
| 29.3 Money, aggregate demand and inflation | 554 | ||
| 29.4 The relationship between inflation and unemployment: the short run | 556 | ||
| 29.5 Inflation rate targeting and unemployment | 562 | ||
| 29.6 Business cycles | 566 | ||
| Box 29.1 Mind the gap | 557 | ||
| Box 29.2 Household sector balance sheets | 568 | ||
| Summary | 573 | ||
| Review questions | 575 | ||
| Part end – additional case studies and relevant websites | 575 | ||
| Part K Macroeconomic policy | 578 | ||
| Chapter 30 Demand-side policy | 580 | ||
| 30.1 Fiscal policy | 580 | ||
| 30.2 Monetary policy | 588 | ||
| 30.3 Attitudes towards demand management | 598 | ||
| Box 30.1 The financial crisis and the UK fiscal policy yo-yo | 584 | ||
| Box 30.2 The evolving fiscal frameworks in the UK and Eurozone | 587 | ||
| Box 30.3 The daily operation of monetary policy | 592 | ||
| Box 30.4 Quantitative easing | 595 | ||
| Box 30.5 Monetary policy in the eurozone | 596 | ||
| Summary | 601 | ||
| Review questions | 602 | ||
| Chapter 31 Supply-side policy | 603 | ||
| 31.1 Supply-side problems | 603 | ||
| 31.2 Market-orientated supply-side policies | 607 | ||
| 31.3 Interventionist supply-side policies | 614 | ||
| 31.4 Regional policy | 615 | ||
| Box 31.1 Getting intensive with physical capital | 605 | ||
| Box 31.2 UK human capital | 608 | ||
| Box 31.3 Labour productivity | 611 | ||
| Box 31.4 EU regional policy | 617 | ||
| Summary | 618 | ||
| Review questions | 618 | ||
| Chapter 32 International economic policy | 619 | ||
| 32.1 Global interdependence | 619 | ||
| 32.2 International harmonisation of economic policies | 622 | ||
| 32.3 European economic and monetary union | 624 | ||
| 32.4 Alternative policies for achieving currency stability | 632 | ||
| Box 32.1 Doctor, the world has caught a cold! | 620 | ||
| Box 32.2 Optimal currency areas | 628 | ||
| Box 32.3 The Tobin tax | 634 | ||
| Summary | 636 | ||
| Review questions | 637 | ||
| Part end – additional case studies and relevant websites | 637 | ||
| Web appendix W:1 | 639 | ||
| Key ideas K:1 | 643 | ||
| Glossary G:1 | 647 | ||
| Index I:1 | 663 |