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Economics for Business

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Develop an understanding of economics applied to the world of business.

Economics for Business, 9th Edition is the ideal textbook for students studying Economics as part of a Business Studies degree or diploma. Clear, engaging, and packed with useful features, the text introduces the key principles of economics, illustrating how they can be used to understand real business problems and aspects of the business environment.

The new, thoroughly updated edition reflects recent events that have shaken the business world. These include the Covid-19 pandemic, Brexit, and rampant inflation caused first by supply-chain problems after global lockdowns and then by the surge in energy and food prices following the invasion of Ukraine.

Each chapter includes topical examples, news stories, and case studies from real businesses to explain and illustrate key economic concepts, as well as activities, questions, and useful summaries to help you check your understanding.

Access the free student website which accompanies this book for additional learning support, including animated explainers of key economic models, extra case studies and answers to in-text questions.

Pair this text with MyLab®Economics

MyLab®is the teaching and learning platform that empowers you to reach every student. By combining trusted author content with digital tools and a flexible platform, MyLab Economics personalises the learning experience and improves results for each student.

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Author(s): John Sloman, Dean Garratt, Jon Guest, Elizabeth Jones
Edition: 9
Publisher: Pearson
Year: 2023

Language: English
Pages: 766
City: Harlow

Front Cover
Half Title
Title Page
Copyright Page
About the authors
Brief contents
Detailed contents
Preface
Publisher's acknowledgements
Part A BUSINESS AND ECONOMICS
1 The business environment and business economics
1.1 The business environment
1.2 The structure of industry
1.3 The determinants of business performance
Box 1.1 A Lidl success story
Box 1.2 The biotechnology industry
Summary
Review questions
2 Economics and the world of business
2.1 What do economists study?
2.2 Business economics: microeconomic choices
2.3 Business economics: the macroeconomic environment
2.4 Techniques of economic analysis
Box 2.1 What, how and for whom?
Box 2.2 The opportunity costs of studying economics
Box 2.3 Looking at macroeconomic data
Summary
Review questions
3 Business organisations
3.1 The nature of firms
3.2 The firm as a legal entity
3.3 The internal organisation of the firm
Box 3.1 Exploiting asymmetric information
Box 3.2 Managers, pay and performance
Box 3.3 The changing nature of business
Summary
Review questions
Additional Part A case studies on the Economics for Business student website
Websites relevant to Part A
Part B BUSINESS AND MARKETS
4 The working of competitive markets
4.1 Business in a competitive market
4.2 Demand
4.3 Supply
4.4 Price and output determination
Box 4.1 UK house prices
Box 4.2 Stock market prices
Box 4.3 Controlling prices
Summary
Review questions
5 Business in a market environment
5.1 Price elasticity of demand
5.2 The importance of price elasticity of demand to business decision making
5.3 Other elasticities
5.4 The time dimension of market adjustment
5.5 Dealing with uncertainty
Box 5.1 The measurement of elasticity
Box 5.2 Elasticity and the incidence of tax
Box 5.3 Adjusting to oil price shocks
Box 5.4 Bubble, bubble, toil and trouble
Summary
Review questions
Additional Part B case studies on the Economics for Business student website
Websites relevant to Part B
Part C BACKGROUND TO DEMAND
6 Demand and the consumer
6.1 Marginal utility theory
6.2 Demand under conditions of risk and uncertainty
6.3 The characteristics approach to analysing consumer demand
Box 6.1 Calculating consumer surplus
Box 6.2 The marginal utility revolution: Jevons, Menger, Walras
Box 6.3 Adverse selection in the insurance market
Box 6.4 Dealing with moral hazard and adverse selection
Summary
Review questions
Web appendix in the case studies section of the Economics for Business student website
7 Behavioural economics of the consumer
7.1 How does behavioural economics differ from standard theory?
7.2 Framing and the reference point for decisions
7.3 Caring about the pay-offs to others
7.4 Government policy to influence behaviour
Box 7.1 Choice overload
Box 7.2 The endowment effect
Box 7.3 The best made plans
Box 7.4 A simple experiment to test for social preferences
Summary
Review questions
8 Firms and the consumer
8.1 Estimating demand functions
8.2 Forecasting demand
8.3 Product differentiation
8.4 Marketing the product
8.5 Advertising
Box 8.1 The battle of the brands
Box 8.2 Different types of online advertising
Summary
Review questions
Additional Part C case studies on the Economics for Business student website
Websites relevant to Part C
Part D BACKGROUND TO SUPPLY
9 Costs of production
9.1 The meaning of costs
9.2 Production in the short run
9.3 Costs in the short run
9.4 Production in the long run
9.5 Costs in the long run
Box 9.1 Should we ignore sunk costs?
Box 9.2 How vulnerable are you?
Box 9.3 Lights, camera, action
Box 9.4 Minimum efficient scale
Box 9.5 Fashion cycles
Summary
Review questions
10 Revenue and profit
10.1 Revenue
10.2 Profit maximisation
Box 10.1 Costs, revenue and profits
Box 10.2 Selling ice cream when I was a student
Box 10.3 Monarch's turbulence
Summary
Review questions
Additional Part D case studies on the Economics for Business student website
Websites relevant to Part D
Part E SUPPLY: SHORT-RUN DECISION MAKING BY FIRMS
11 Profit maximisation under perfect competition and monopoly
11.1 Alternative market structures
11.2 Perfect competition
11.3 Monopoly
11.4 Potential competition or potential monopoly? The theory of contestable markets
Box 11.1 A fast food race to the bottom
Box 11.2 E-commerce
Box 11.3 Premier league football: the Sky is the limit
Box 11.4 'It could be you'
Summary
Review questions
12 Profit maximisation under imperfect competition
12.1 Monopolistic competition
12.2 Oligopoly
12.3 Game theory
Box 12.1 OPEC
Box 12.2 Oligopoly and oligopsony
Box 12.3 The prisoners' dilemma
Box 12.4 The Hunger Games
Summary
Review questions
13 Alternative theories of the firm
13.1 Problems with traditional theory
13.2 Behavioural economics of the firm
13.3 Alternative maximising theories
13.4 Multiple aims
Box 13.1 How firms increase profits by understanding 'irrational' consumers
Box 13.2 Constraints on firms' pricing
Box 13.3 Stakeholder power
Summary
Review questions
Additional Part E case studies on the Economics for Business student website
Websites relevant to Part E
Part F SUPPLY: ALTERNATIVE STRATEGIES
14 An introduction to business strategy
14.1 What is strategy?
14.2 Strategic analysis
14.3 Strategic choice
14.4 Business strategy in a global economy
14.5 Strategy: evaluation and implementation
Box 14.1 Business strategy the Samsung way
Box 14.2 Hybrid strategy
Summary
Review questions
15 Growth strategy
15.1 Growth and profitability
15.2 Constraints on growth
15.3 Alternative growth strategies
15.4 Internal growth
15.5 External growth through merger
15.6 External growth through strategic alliance
15.7 Explaining external firm growth: a transaction costs approach
Box 15.1 Global merger activity
Box 15.2 How many firms does it take to make an iPhone?
Box 15.3 The day the world stopped
Summary
Review questions
16 The small-firm sector
16.1 Defining the small-firm sector
16.2 The survival, growth and failure of small businesses
16.3 Government assistance and the small firm
Box 16.1 Capturing global entrepreneurial spirit
Box 16.2 Hotel Chocolat
Summary
Review questions
17 Pricing strategy
17.1 Pricing and market structure
17.2 Alternative pricing strategies
17.3 Price discrimination
17.4 Multiple product pricing
17.5 Transfer pricing
17.6 Pricing and the product life cycle
Box 17.1 Personalised pricing in digital markets
Box 17.2 A quantity discount pricing strategy
Box 17.3 Selling goods separately or together? The impact of bundling
Summary
Review questions
Additional Part F case studies on the Economics for Business student website
Websites relevant to Part F
Part G THE FIRM IN THE FACTOR MARKET
18 Labour markets, wages and industrial relations
18.1 Market-determined wage rates and employment
18.2 Power in the labour market
18.3 Low pay and discrimination
18.4 The flexible firm and the market for labour
Box 18.1 What do post, airlines, bins, buses, rail, tube and universities have in common?
Box 18.2 UK tax credits
Box 18.3 New ways of working
Summary
Review questions
19 Investment and the employment of capital
19.1 The pricing of capital and capital services
19.2 The demand for and supply of capital services
19.3 Investment appraisal
19.4 Financing investment
19.5 The stock market
Box 19.1 Investing in roads
Box 19.2 The ratios to measure success
Box 19.3 Financing innovation
Summary
Review questions
Additional Part G case studies on the Economics for Business student website
Websites relevant to Part G
Part H THE RELATIONSHIP BETWEEN GOVERNMENT AND BUSINESS
20 Reasons for government intervention in the market
20.1 Markets and the role of government
20.2 Types of market failure
20.3 Government intervention in the market
20.4 The case for less government intervention
20.5 Firms and social responsibility
Box 20.1 Can the market provide adequate protection for the environment?
Box 20.2 A commons solution
Box 20.3 Deadweight loss from taxes on goods and services
Box 20.4 ESG scores
Summary
Review questions
21 Government and the firm
21.1 Competition policy
21.2 Policies towards research and development (R&D)
21.3 Policies towards training
Box 21.1 Expensive chips or are they?
Box 21.2 The R&D scoreboard
Box 21.3 The Apprenticeship Levy
Summary
Review questions
22 Government and the market
22.1 Environmental policy
22.2 Transport policy
22.3 Privatisation and regulation
Box 22.1 The economics of biodiversity
Box 22.2 Placing a price on CO2 emissions
Box 22.3 Road pricing in Singapore
Box 22.4 The right track to reform?
Summary
Review questions
Additional Part H case studies on the Economics for Business student website
Websites relevant to Part H
Part I BUSINESS IN THE INTERNATIONAL ENVIRONMENT
23 Globalisation and multinational business
23.1 Globalisation: setting the scene
23.2 What is a multinational corporation?
23.3 Trends in multinational investment
23.4 Why do businesses go multinational?
23.5 The advantages of MNC investment for the host state
23.6 The disadvantages of MNC investment for the host state
23.7 Multinational corporations and developing economies
Box 23.1 M&As and greenfield FDI
Box 23.2 Attracting foreign investment
Box 23.3 Grocers go shopping in the Eastern aisle
Summary
Review questions
24 International trade
24.1 Trading patterns
24.2 The advantages of trade
24.3 Arguments for restricting trade
24.4 The world trading system and the WTO
Box 24.1 Strategic trade theory
Box 24.2 Giving trade a bad name
Box 24.3 The Doha development agenda
Summary
Review questions
25 Trading blocs
25.1 Preferential trading
25.2 Preferential trading in practice
25.3 The European Union
25.4 The UK and Brexit
Box 25.1 Features of the European single market
Box 25.2 The Single Market Scoreboard
Summary
Review questions
Additional Part I case studies on the Economics for Business student website
Websites relevant to Part I
Part J THE MACROECONOMIC ENVIRONMENT
26 The macroeconomic environment of business
26.1 Introduction to the macroeconomic environment
26.2 Economic volatility and the business cycle
26.3 The circular flow of income
26.4 Unemployment
26.5 Inflation
26.6 Long-term economic growth
Box 26.1 Output gaps
Box 26.2 The duration of unemployment
Box 26.3 Output gaps and inflation
Box 26.4 The UK's stock of human capital
Summary
Review questions
Appendix: Measuring national income and output
Summary to appendix
Review questions to appendix
27 The balance of payments and exchange rates
27.1 The balance of payments account
27.2 The exchange rate
27.3 Exchange rates and the balance of payments
27.4 Fixed versus floating exchange rates
Box 27.1 Nominal and real exchange rates
Box 27.2 Dealing in foreign exchange
Box 27.3 The importance of international financial movements
Box 27.4 The euro/dollar see-saw
Summary
Review questions
28 The financial system, money and interest rates
28.1 The meaning and functions of money
28.2 The financial system
28.3 The supply of money
28.4 The demand for money
28.5 Equilibrium
28.6 Money, aggregate demand and inflation
Box 28.1 Financial intermediation
Box 28.2 Growth of banks' balance sheets
Box 28.3 Residential mortgages and securitisation
Box 28.4 Minsky's financial instability hypothesis
Summary
Review questions
29 Business activity, unemployment and inflation
29.1 The simple Keynesian model of business activity
29.2 Alternative perspectives on aggregate supply
29.3 Output, unemployment and inflation
29.4 Inflation rate targeting and unemployment
29.5 The volatility of private-sector spending
Box 29.1 Short-run aggregate supply
Box 29.2 The accelerationist hypothesis
Box 29.3 Confidence and spending
Summary
Review questions
Additional Part J case studies on the Economics for Business student website
Websites relevant to Part J
Part K MACROECONOMIC POLICY
30 Demand-side policy
30.1 Fiscal policy and the public finances
30.2 The use of fiscal policy
30.3 Monetary policy
30.4 Attitudes towards demand management
Box 30.1 The fiscal impulse
Box 30.2 The evolving fiscal frameworks in the European Union
Box 30.3 The operation of monetary policy in the UK
Box 30.4 Quantitative easing
Box 30.5 Monetary policy in the eurozone
Summary
Review questions
31 Supply-side policy
31.1 Supply-side problems
31.2 Market-orientated supply-side policies
31.3 Interventionist supply-side policies
31.4 Regional policy
Box 31.1 Measuring labour productivity
Box 31.2 Getting intensive with capital
Box 31.3 Apprenticeships and the economic arguments for intervention
Summary
Review questions
32 International economic policy
32.1 Global interdependence
32.2 International harmonisation of economic policies
32.3 European economic and monetary union
32.4 Alternative policies for achieving currency stability
Box 32.1 Trade imbalances in the USA and China
Box 32.2 Optimal currency areas
Box 32.3 The Tobin tax
Summary
Review questions
Additional Part K case studies on the Economics for Business student website
Websites relevant to Part K
Web appendix
Key ideas
Glossary
Index
Back Cover