Managerial Economics, 2nd Edition   Errata

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Errata

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I apologize for these mistakes.  Please, if you find more errata, tell me and I'll post them on this page.  For easy reference, I have marked the month in which the errata was posted here.

Chapter 1: Introduction

 Page 5: sixth paragraph The relation between the marginal and average values depends on whether the average value is decreasing, constant, or increasing with respect to the driver.  [Correction: replace "marginal" with "average".] 9/03

Chapter 3: Elasticity

 Page 60: Table 3.1 [Correction: replace "Bain and McKenzie (1999)" with "Ahmed Rushdie, as cited in Bain and McKenzie (1999)"] 3/04 Page 76: Figure 3.3 Vertical axis is not marked correctly (the value of 5 should be where the two demand curves intersect and the value of 4.5 should be where the value of 5 is now). 7/02 Page 89: Question 3(b) "What will be the percentage difference in quantity demanded between the two stations?” [Correction: insert "percentage".] 5/06

Chapter 5: Competitive Markets

 Page 161: right margin box "1. calculate the percentage change in the quantity demanded” [Correction: insert "change".] 7/02

Chapter 7: Costs

 Page 224: sixth paragraph "Conventional accounting statements ignore the opportunity cost of equity capital, hence a company that issues more debt will report a lower profit than one that borrows less."  [Correction: replace "higher" with "lower"] 7/03

Chapter 8: Monopoly

 Page 298: 2nd paragraph, last line "which states that the profit-maximizing advertising-sales ratio is the incremental margin multiplied by the advertising elasticity."  [Correction: delete the remainder of the paragraph.] 8/01 Figure 8.1 "At 1.2 million units, the marginal benefit exceeds the marginal cost."  [Correction: replace "1.4" with "1.2".] 10/03 Page 298: left column, last line. "which states that the profit-maximizing advertising-sales ratio is the incremental margin multiplied by the advertising elasticity."  [Correction: delete "and multiplied by the sales."] 10/03

Chapter 9: Pricing Policy

 Page 302: equation (9.2) [Correction: replace "0.45" with "1/2.2".] 3/04

End: Answers to Progress Checks and Selected Review Questions

 Page 527: Chap. 1, Answer to Review Question 5 (a) Average price per minute = (210+120 x 4)/5 = Y138 per minute. (b) Price of marginal minute = Y120. 7/02 Page 551: Chap. 14, Answer to Review Question 7 (a) A movie producer that owns a theater is vertically integrated downstream into the exhibition business. 11/03

Chapter 3:  Quantitative Demand Analysis

 Pages 62-63:  Last paragraph, line 3. "Hence, a change in price will affect expenditure through the price itself as well as through the related effect on quantity demanded."  [Correction: delete the remainder of the paragraph.] 12/98

Chapter 4:  Supply

 Pages 131:  Question 10(b) "Is supply more or less elastic in the long run than in the short run?"  [Correction: change "demand" to "supply".] 02/01

Chapter 5:  Competitive Markets

 Page 164: First paragraph, line 2. "If the short-run marginal cost curve is steep, then the price reduction will not induce the seller to cut back operations by very much.  By contrast, if the short-run marginal cost curve is gentle, then the price reduction will have a relatively larger impact.  [Corrections: change "lead" to "not induce", change "substantially" to "by very much", change "smaller" to "larger". 02/01 Page 173:  Question 8, line 9. "The price elasticity of the demand for wastepaper has been estimated to be -0.07."  [Correction: change "0.07" to "-0.07"]. 12/98 Page 173:  Question 9, line 5. "The elasticities of the supply with respect to price and labor wages are 0.62 and -0.05, respectively.  [Correction: change "0.05" to "-0.05".] 12/98 Page 174:  Question 10(b), line 6. "(ii) shift the demand curve down by \$18,000 since buyers now pay the commission."  [Correction:  change "up" to "down".] 12/98

Chapter 8:  Monopoly

 Page 254: 2nd paragraph, line 4. "illegal for another person to copy or manufacture the Office 97 application suite." [Correction: change  "operating system" to "application suite".] 12/98 Page 260: 3rd paragraph, line 4. "The marginal revenue is \$70 per unit. The marginal cost is also \$70 per unit." [Correction: change "\$80" to "\$70".] 12/98 Page 263: 2nd paragraph 2, line 3: "Specifically, the two curves cross at a scale of about 1.5 million units, and the new profit-maximising price is around \$137."  [Correction: change "\$125" to "\$137".] 12/98 Page 263: Figure 8.2, legend, line 2: "The new profit-maximising price is around \$137."  [Correction: change "\$125" to "\$137".] 12/98 Page 268: 1st paragraph, line 4. "The profit-maximizing level of advertising expenditure is \$60 x 0.05 x 1.4 million = \$4.2 million." [Correction: change "\$130" to "\$60", and "\$9.1 million" to "\$4.2 million".] 12/98

Chapter 9:  Pricing Policy

 Pages 290-291: last paragraph, last line: "Since sales fall less than proportionately with the increase in price, Mercury's total revenue will increase, specifically, by 0.1%."  [Correction: change "1%" to "0.1%".] 12/98 Page 306: last paragraph, line 5: "The difference between the Japanese and American prices is \$200, which far exceeds the \$30 freight cost." [Correction: change "\$150" to "\$200".] 12/98 Page 322:  fifth paragraph, line 1 "With the small bottle reduced to 4.9 ounces, a family's buyer surplus from the small bottle will fall be area hmkb, or (49.4 + 50)/2 x 0.1 = 4.97 cents.  Hence, Jupiter can raise the price of the 10-ounce bottle and still attract families to buy the 10-ounce bottle.  Specifically, Jupiter can raise the price by 4.97 cents, which increases its margin by 4.97 cents.        The net effect of these changes is to raise Jupiter's profit by a total of (4.97 x 100,000) - (0.08 x 100,000) = \$4890.  [Correction: change "0.497" to "4.97" and "\$417" to "\$4890".] 3/99

Chapter 10:  Strategic Thinking

 Page 359:  second paragraph, line 4: "By contrast, if Sharon's management does activate the rights, there will be 1,800,000 remaining shares, and Hilda must pay \$1.38 x 1,800,000 = \$2.484 million."  [Correction: change "1,900,000" to "1,800,000".] 12/98 Page 367: Question 2(b): "The payoffs in (a) assumed that the two films were competitors.  Now suppose that the publicity surrounding one movie will increase the demand for the other film. Specifically, each studio will sell 70,000 more tickets if both open on the same day."  [Correction: change "So, the total number of tickets for the two movies will be largest" to "Specifically, each studio will sell 70,000 more tickets".] 12/98 Page 367:  Question 3, second paragraph, line 2: "Each of four ferries makes 20 round trips (40 trips total) a day carrying 40 cars."  [Correction: change "two" to "20" and "four" to "40".] 12/98

Chapter 11:  Externalities

 Page 406:  Math Supplement, third paragraph, line 1: "Over the interval [0, 5], the vertical sum of the individual marginal benefits is"  [Correction: change "[5, 10]" to "[0, 5]".] 12/98

Answers to Progress Checks and Selected Review Questions

 Page 516:  2A: "The theater must cut its price by \$5 from \$7.50 to \$2.50."  [Correction: change "\$3" to "\$5".] 12/98 Page 524:  5H(c) [Correction to price axis: change "1.20" to "1.25".] 10/99 Page 529:  10(a): "The marginal cost of identifying some expenses ..."  [Correction: change "benefit" to "cost".] 12/98 Page 529:  10(b): "The marginal cost of identifying some expenses ..."  [Correction: change "benefit" to "cost".] 12/98 Page 536:  2, line 4: "Since the sum of the marginal costs exceeds the marginal benefits, the intermediary could make money."  [Correction:  change "revenue" to "benefits".] 12/98