Managerial Economics 12th Edition by Christopher Thomas,Charles Maurice

Exercise 1

Some managers are known for their reliance on "practical" decision-making rules and processes, and they can be quite skeptical of decision rules that seem too theoretical to be useful in practice. While it may be true that some theoretical methods in economics can be rather limited in their practical usefulness, there is an important corollary to keep in mind: "If it doesn't work in theory, then it won't work in practice." Explain the meaning of this corollary and give a real-world example ( Hint: see "Some Common Mistakes Managers Make").