The last 25 years have witnessed an unprecedented increase in competition in both national and world markets. In this competitive environment, managers must make increasingly complex business decisions that will determine whether the firm will prosper or even survive. Today, economic analysis is more important than ever as a tool for decision making.OBJECTIVES OF THIS BOOKThe aims of this textbook are to illustrate the central decision problems man- agers face and to provide the economic analysis they need to guide these decisions. It was written with the conviction that an effective managerial economics textbook must go beyond the nuts and bolts of economic analysis; it should also show how practicing managers use these economic methods. Our experience teaching managerial economics to undergraduates, M.B.A.s, and executives alike shows that a focus on applications is essential.