week 4

• Economics provides managers with a precise language with which to formulate the firm’s objectives.
• Economics can help the manager in pinpointing the constraints on which he has to act.
• Managers cannot reply on”feels” alone but must use economic analysis tools
• Single stage” decision problems occur when the decision

  maker selects one alternative at a given point in time
• A decision tree is a schematic representation of the manner in which a particular decision’s consequences are related to alternative decisions and to uncertain possible events.