Our approach in this text is to show linkages of economics with other business functions, while maintaining a focus on the heart of managerial economics-the microeconomic theory of the behavior of consumers and firms in competitive markets.When clearly understood and exemplified in actual business examples, this theory provides managers with a basic framework for making key business decisions about the allocation of their firm's scarce resources. In making these decisions, managers must essentially deal with the following questions listed in abridged form: