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Copyright 2017 Cengage Learning. All Rights Reserved. May not be copied, scanned, or duplicated, in whole or in part. WCN 02-200-202
Preface xix 13 Best-Practice Tactics: Game Theory 446
...
About the Authors XXlll 13A Entry Deterrence and Accommodation
Games 497
14 Pricing Techniques and Analysis 508
PART I 14A The Practice of Revenue Management 545
INTRODUCTION 1
1 Introduction and Goals of the Firm 2
PARTV
2 Fundamental Economic Concepts 28
ORGANIZATIONAL ARCHITECTURE
AND REGULATION 557
PART II 15 Contracting, Governance, and
DEMAND AND FORECASTING 63 Organizational Form 558
15A Auction Design and Information
3 Demand Analysis 64
Economics 594
4 Estimating Demand 101
16 Government Regulation 623
4A Problems in Applying the Linear
17 Long-Term Investment Analysis 660
Regression Model 129
5 Business and Economic Forecasting 141
APPENDICES
6 Managing in the Global Economy 178
6A Foreign Exchange Risk Management 232 A The Time Value of Money A-1
B Differential Calculus Techniques
in Management B-1
PART Ill C Tables C-1
D Check Answers to Selected
PRODUCTION AND COST 235 End-of-Chapter Exercises D-1
7 Production Economics 236 Glossary G-1
7A Production Economics of Renewable and Index I-1
Exhaustible Natural Resources, Advanced Notes
Material 272
8 Cost Analysis 282 WEB APPENDICES
9 Applications of Cost Theory 307 A Consumer Choice Using Indifference
Curve Analysis
B International Parity Conditions
PART IV C Linear- Programming Applications
D Capacity Planning and Pricing against a
PRICING AND OUTPUT DECISIONS: Low-Cost Competitor: A Case Study of
STRATEGY AND TACTICS 333 Piedmont Airlines and People Express
10 Prices, Output, and Strategy: Pure and E Pricing of Joint Products and Transfer Pricing
Monopolistic Competition 334 F Decisions under Risk and Uncertainty
11 Price and Output Determination: G Maximization of Production Output Subject
Monopoly and Dominant Firms 384 to a Cost Constraint, Advanced Material
12 Price and Output Determination: H Long-Run Costs with a Cobb-Douglas
Oligopoly 411 Production Function, Advanced Material
••
VII
Preface xix Case Exercise: Designing a Managerial
About the Authors
... Incentives Contract
XXlll 23
Case Exercise: Shareholder Value of Renewable
Energy from Wind Power at Hydro Co.:
PART I Is RE < C? 24
INTRODUCTION 1 2 Fundamental Economic Concepts 28

Chapter Preview 28
1 Introduction and Goals of the Firm 2 Managerial Challenge: Why Charge
Chapter Preview 2 $25 per Bag on Airline Flights? 28
Managerial Challenge: How to Achieve 2-1 Demand and Supply: A Review 29
Sustainability: Southern Company 2-1a The Diamond-Water Paradox and the
Electric Power Generation 2 Marginal Revolution 31
1-1 What Is Managerial Economics? 4 2-1 b Marginal Utility and Incremental Cost
1-2 The Decision-Making Model 5 Simultaneously Determine Equilibrium
1-2a The Responsibilities of Management 5 Market Price 32
2-1c Individual and Market Demand Curves 33
What Went Right/What Went Wrong: 2-1d The Demand Function 34
Saturn Corporation 6 2-1e Import-Export Traded Goods 36
1-2b Moral Hazard in Teams 6
1-3 The Role of Profits 8 International Perspectives: Exchange Rate
1-3a Risk-Bearing Theory of Profit 8 Impacts on Demand: Cummins Engine
1-3b Temporary Disequilibrium Theory of Profit 9 Company 36
1-3c Monopoly Theory of Profit 9 2-1f Individual and Market Supply Curves 37
1-3d Innovation Theory of Profit 9 2-1g Equilibrium Market Price of Gasoline 38
1-3e Managerial Efficiency Theory of Profit 9 2-2 Marginal Analysis 43
1-4 Objective of the Firm 9 2-2a Total, Marginal, and Average Relationships 44
1-4a The Shareholder Wealth-Maximization 2-3 The Net Present Value Concept 48
Model of the Firm 10 2-3a Determining the Net Present Value of an
1-5 Separation of Ownership and Control: Investment 48
The Principal-Agent Problem 11 2-3b Sources of Positive Net Present Value
1-Sa Divergent Objectives and Agency Conflict 11 Projects 50
1-Sb Agency Problem 13 2-3c Risk and the NPV Rule 51
1-6 Implications of Shareholder Wealth 2-4 Meaning and Measurement of Risk 52
2-4a Probability Distributions 52
Maximization 15
2-4b Expected Values 53
What Went Right/What Went Wrong: Eli 2-4c Standard Deviation: An Absolute
Lilly Depressed by Loss of Prozac Patent 15 Measure of Risk 54
1-6a Caveats to Maximizing Shareholder Value 17 2-4d Normal Probability Distribution 54
1-6b Residual Claimants 19 2-4e Coefficient of Variation: A Relative
1-6c Goals in the Public Sector and Measure of Risk 56
Not-for-Profit Enterprises 19
What Went Right/What Went Wrong:
1-6d Not-for-Profit Objectives 20
1-6e The Efficiency Objective in
Long-Term Capital Management (LTCM) 56
Not-for-Profit Organizations 20 2-5 Risk and Required Return 57
Summary 21 Summary 59
Exercises 22 Exercises 59
•
IX
x Contents
Case Exercise: Revenue Management at 4-2 A Simple Linear Regression Model 105
American Airlines 61 4-2a Assumptions Underlying the Simple
Linear Regression Model 106
4-2b Estimating the Population Regression
PART II Coefficients 107
4-3 Using the Regression Equation to Make
DEMAND AND FORECASTING 63 Predictions 110
4-3a Inferences about the Population
3 Demand Analysis 64 Regression Coefficients 112
Chapter Preview 64 4-3b Correlation Coefficient 115
4-3c The Analysis of Variance 116
Managerial Challenge: Health Care
4-4 Multiple Linear Regression Model 118
Reform and Cigarette Taxes 64 4-4a Use of Computer Programs 118
3-1 Demand Relationships 66 4-4b Estimating the Population Regression
3-1 a The Demand Schedule Defined 66 Coefficients 118
3-1 b Constrained Utility Maximization and 4-4c Using the Regression Model to Make
Consumer Behavior 67 Forecasts 118
What Went Right/What Went Wrong: 4-4d Inferences about the Population
Chevy Volt 71 Regression Coefficients 119
3-2 The Price Elasticity of Demand 72 4-4e The Analysis of Variance 121
3-2a Price Elasticity Defined 73 s~m~ 122
3-2b Interpreting the Price Elasticity: The Exercises 122
Relationship between the Price Elasticity Case Exercise: Soft Drink Demand Estimation 126
and Sales Revenue 76
3-2c The Importance of Elasticity-Revenue
4A Problems in Applying the Linear
Relationships 82 Regression Model 129
3-2d Factors Affecting the Price Elasticity of 4A-1 Introduction 129
Demand 84 4A-1a Autocorrelation 129
4A-1b Heteroscedasticity 131
International Perspectives: Free Trade 4A -1c Specification and Measurement Errors 132
and the Price Elasticity of Demand: 4A-1d Multicollinearity 133
Nestle Yogurt 86 4A-1e Simultaneous Equation Relationships
3-3 The Income Elasticity of Demand 87 and the Identification Problem 133
3-3a Income Elasticity Defmed 87 4A-2 Nonlinear Regression Models 136
3-4 Cross Elasticity of Demand 90 4A-2a Semilogarithmic Transformation 136
3-4a Cross Price Elasticity Defined 90 4A-2b Double-Log Transformation 136
3-4b Interpreting the Cross Price Elasticity 90 4A-2c Reciprocal Transformation 137
3-4c Antitrust and Cross Price Elasticities 90 4A-2d Polynomial Transformation 137
3-4d An Empirical Illustration of Price, Summary 138
Income, and Cross Elasticities 92 Exercises 138
3-5 The Combined Effect of Demand
Elasticities 92 5 Business and Economic Forecasting 141
Summary 93 Chapter Preview 141
Exercises 94 Managerial Challenge: Excess Fiber Optic
Case Exercise: Polo Golf Shirt Pricing 97 Capacity at Global Crossing Inc. 141
Case Exercise: Fifty Years of Sales 5-1 The Significance of Forecasting 143
Maximization at Volkswagen 98 5-2 Selecting a Forecasting Technique 143
5-2a Hierarchy of Forecasts 143
4 Estimating Demand 101 5-2b Criteria Used to Select a Forecasting
Chapter Preview 101 Technique 144
5-2c Evaluating the Accuracy of Forecasting
Managerial Challenge: Demand for
Models 144
Whitman's Chocolate Samplers 101
4-1 Statistical Estimation of the Demand What Went Right/What Went Wrong:
Function 102 Crocs Shoes 144
~nec::iBc~tion of the Morlel
4-1a C'dpyrTgh"t HH t;-3 Alternative ForecastinQ Techniaues 145
zo 1 r c.-e rrg-agttr.e~·rh'trl!J . ~II Rights Reserved. M~y not be copied, scanned, or duplicated, in whole or if?part. WCN 02-200-202
Contents xi
5-4 Deterministic Trend Analysis 145 6-5a Import-Export Flows and Transaction
5-4a Components of a Time Series 145 Demand for a Currency 192
5-4b Some Elementary Time-Series Models 146 6-5b The Equilibrium Price of the U.S. Dollar 193
5-4c Secular Trends 147 6-5c Speculative Demand, Government
5-4d Seasonal Variations 150 Transfers, and Coordinated Intervention 193
5-5 Smoothing Indicators 152 6-5d Short-Term Exchange Rate Fluctuations 194
5-5a Moving Averages 153 6-6 Determinants of Long-Run Trends in
5-5b First-Order Exponential Smoothing 155 Exchange Rates 195
5-6 Barometric Techniques 158 6-6a The Role of Real Growth Rates 195
5-6a Leading, Lagging, and Coincident 6-6b The Role of Real Interest Rates 198
Indicators 158 6-6c The Role of Expected Inflation 198
5-7 Survey and Opinion-Polling Techniques 159 6-7 Purchasing Power Parity 199
5-7a Forecasting Macroeconomic Activity 160 6-7a PPP Offers a Better Yardstick of
5-7b Sales Forecasting 161 Comparative Size of Business Activity 200
5-8 Macroeconometric Models 161 What Went Right/What Went Wrong:
5-Ba Advantages of Econometric Forecasting Big Box U.S. Retailers in China 202
Techniques 161 6-7b Relative Purchasing Power Parity 202
5-Bb Single-Equation Models 161 6-7 c Qualifications of PPP 203
5-Bc Multi-Equation Models 163 6-7d The Appropriate Use of PPP: An
5-Bd Consensus Forecasts: Livingston and Overview 204
Blue Chip Forecaster Surveys 164
What Went Right/What Went Wrong: GM,
5-9 Forecasting with Input-Output Tables 165
Toyota, and the Celica GT-S Coupe 205
International Perspectives: Long-Term 6-7e Trade-Weighted Exchange Rate Index 206
Sales Forecasting by General Motors 6-8 International Trade: A Managerial
in Overseas Markets 165 Perspective 209
5-10 Advanced Material: Stochastic 6-Ba Shares of World Trade and Regional
Time-series Analysis 166 Trading Blocs 209
Summary 169 6-Bb Comparative Advantage and Free Trade 211
Exercises 169 6-Bc Import Controls and Protective Tariffs 214
Case Exercise: Cruise Ship Arrivals in Alaska 173 6-Bd The Case for Strategic Trade Policy 215
Case Exercise: Lumber Price Forecast 174 6-Be Increasing Returns 218
Case Exercise: Forecasting in the Global 6-Bf Network Externalities 218
Financial Crisis 175 6-9 Free Trade Areas: The European Union
and NAFTA 219
6 Managing in the Global Economy 178 6-9a Optimal Currency Areas 219
Chapter Preview 178 6-9b Intraregional Trade 220
6-9c Mobility of Labor 220
Managerial Challenge: The Role of the 6-9d Correlated Macroeconomic Shocks 221
FX Rate in Assessing Foreign Business 6-10 Largest U.S. Trading Partners:
Opportunity 178 The Role of NAFTA 222
6-1 Introduction 181 6- lOa A Comparison of the EU and NAFTA 224
What Went Right/What Went Wrong: 6-1Ob Gray Markets, Knockoffs, and Parallel
Export Market Pricing at Toyota 181 Importing 225
6-2 Import-Export Sales and Exchange What Went Right/What Went Wrong:
Rates 182 Ford Motor Co. and Exide Batteries:
6-2a Foreign Exchange Risk 183 Are Country Managers Here to Stay? 226
International Perspectives: Collapse 6-11 Perspectives on the U.S. Trade Deficit 227
of Export and Domestic Sales Summary 229
at Cummins Engine 184 Exercises 230
6-3 Outsourcing 185 Case Exercise: Predicting the Long-Term
6-4 China Trade Blossoms 187 Trends in Value of the U.S. Dollar and
6-4a China Today 189 the Euro 231
6-5 The Market for U.S. Dollars as Foreign Case Exercise: Elaborate the Debate on
Copyr;§~<;\}.~~gage Learning. All Rights Reserved. May not b}~o~ied, scanned, or &~JJ,\n whole or in part. WCN 02-200-202 231
xii Contents
6A Foreign Exchange Risk Management 232 7-Bd Empirical Studies of the Cobb-Douglas
International Perspectives: Toyota and Production Function in Manufacturing 263
7-Be A Cross-Sectional Analysis of U.S.
Honda Buy U.S. Assembly Capacity 233
Manufacturing Industries 263
Summary 266
PART Ill Exercises 267
Case Exercise: The Production Function
PRODUCTION AND COST 235 for Wilson Company 2 70
7 Production Economics 236 7A Production Economics of Renewable and

Chapter Preview 236 Exhaustible Natural Resources, Advanced
Managerial Challenge: Green Power Material 272
Initiatives Examined: What Went 7A-1 Renewable Resources 272
Wrong in California's Deregulation 7A-2 Exhaustible Natural Resources 276
of Electricity? 236 Exercises 281
7- 1 The Production Function 238
7-1 a Fixed and Variable Inputs 239 8 Cost Analysis 282
7-2 Production Functions with One Chapter Preview 282
Variable Input 241 Managerial Challenge: Can a Leaner
7-2a Marginal and Average Product Functions 241 General Motors Compete Effectively? 282
7-2b The Law of Diminishing Marginal 8-1 The Meaning and Measurement of Cost 283
Returns 242 8-1 a Accounting versus Economic Costs 284
What Went Right/What Went Wrong: 8-1 b Three Contrasts between Accounting
Factory Bottlenecks at a Boeing and Economic Costs 284
Assembly Plant 243 8-2 Short-Run Cost and Product Functions 288
7-2c Increasing Returns with Network Effects 243 8-2a Average and Marginal Cost Functions 288
7-2d Producing Information Services under 8-3 Long-Run Cost Functions 293
Increasing Returns 245 8-3a Optimal Capacity Utilization: Three
7-2e The Relationship between Total, Concepts 293
Marginal, and Average Product 246 8-4 Economies and Diseconomies of Scale 294
7-3 Determining the Optimal Use of the 8-4a The Percentage of Learning 295
Variable Input 248 8-4b Diseconomies of Scale 298
7-3a Marginal Revenue Product 249 8-4c The Overall Effects of Scale Economies
7-3b Marginal Factor Cost 249 and Diseconomies 298
7-3c Optimal Input Level 249 International Perspectives: How Japanese
7-4 Production with Multiple Variable Inputs 250 Companies Deal with the Problems
7-4a Production (Output Constant) Isoquants 250 of Size 299
7-4b The Marginal Rate of Technical Summary 301
Substitution 252
Exercises 302
7-5 Determining the Optimal Combination Case Exercise: Cost Analysis of Patio Furniture 304
of Inputs 254
Case Exercise: Profit Margins on the
7-Sa Isocost Lines 255
Amazon Kindle 306
7-Sb Minimizing Cost Subject to an Output
Constraint 256
7-6 A Fixed Proportions Optimal 9 Applications of Cost Theory 307
Production Process 257 Chapter Preview 307
7-6a Production Processes and Process Rays 258 Managerial Challenge: How Exactly Have
7-7 Measuring the Efficiency of a Computerization and Infonnation
Production Process 259 Technology Lowered Costs at Chevron,
7-8 Returns to Scale 260 Timken, and Merck? 307
7-Ba Measuring Returns to Scale 261 9-1 Estimating Cost Functions 308
7-Bb Increasing and Decreasing Returns to 9-1a Issues in Cost Definition and
Scale 262 Measurement 309
7-Be ctAAi~~7Q~-Ll?.r~q~9J.~~J\Wk~d. ~Qf not be copied, sc~nJJa, o~tmUiJ,lg t<M>Irull.ct:pa\l.aW~W#§-200-202 309
•••
Contents XIII
9-1c The Form of the Empirical Cost-Output 10-3c The Power of Buyers and Suppliers 346
Relationship 310 10-3d The Intensity of Rivalrous Tactics 347
What Went Right/What Went Wrong: 10-3e The Myth of Market Share 351
I0-4 A Continuum of Market Structures 351
Boeing: The Rising Marginal Cost
10-4a Pure Competition 352
of Wide-Bodies 3II 10-4b Monopoly 353
9-1d Statistical Estimation of Short-Run 10-4c Monopolistic Competition 354
Cost Functions 312 10-4d Oligopoly 354
9-1 e Statistical Estimation of Long-Run I0-5 Price-Output Determination under
Cost Functions 313
Pure Competition 355
9-1f Determining the Optimal Scale of an 10-Sa Short Run 355
Operation 313 10-Sb Profit Maximization under Pure
9-1g Economies of Scale versus Economies Competition (Short Run): Adobe
ofScope 316 Corporation 358
9-1h Engineering Cost Techniques 316 10-Sc Long Run 359
9-1i The Survivor Technique 318 I 0-6 Price-Output Determination under
9-1j A Cautionary Tale 318
Monopolistic Competition 362
9-2 Break-Even Analysis 319
9-2a Graphical Method 320
9-2b Algebraic Method 320 The Dynamics of Competition at
9-2c Some Limitations of Break-Even Analysis 323 Amazon.com 363
9-2d Doing a Break-Even versus a 10-6a Short Run 363
Contribution Analysis 323 10-6b Long Run 363
9- 2e A Limitation of Contribution Analysis 325 I 0-7 Selling and Promotional Expenses 365
9-2f Operating Leverage 325 10-7a Detennining the Optimal Level
9-2g Inherent Business Risk 327 of Selling and Promotional Outlays 366
Summary 327
10-7b Optimal Advertising Intensity 367
10-7c The Net Value of Advertising 368
Exercises 328
I 0-8 Competitive Markets under
Case Exercise: Cost Functions 329
Asymmetric Information 369
Case Exercise: Charter Airline Operating
10-Ba Incomplete versus Asymmetric
Decisions 330
Information 369
10-Bb Search Goods versus Experience Goods 370
PART IV 10-Bc Adverse Selection and the Notorious
Finn 370
PRICING AND OUTPUT DECISIONS: 10-Bd Insuring and Lending under Asymmetric
STRATEGY AND TACTICS 333 Information: Another Lemons Market 372
I 0-9 Solutions to the Adverse Selection
10 Prices, Output, and Strategy: Pure and Problem: Advanced Material 373
Monopolistic Competition 334 10-9a Mutual Reliance: Hostage Mechanisms
Chapter Preview 334 Support Asymmetric Information
Managerial Challenge: Resurrecting Exchange 373
10-9b Brand-Name Reputations as Hostages 374
Apple in the Tablet World 334
10-9c Price Premiums with Non-Redeployable
IO-I Introduction 335
Assets 376
I0-2 Competitive Strategy 336
Summary 378
What Went Right/What Went Wrong: Exercises 379
Xerox 337 Case Exercise: Netflix and Redbox Compete
10-2a Generic Types of Strategies 338 for Movie Rentals 381
10-2b Product Differentiation Strategy 338 Case Exercise: Saving Sony Music 382
10-2c Cost-Based Strategy 338
10-2d Information Technology Strategy 339 11 Price and Output Determination:
10-2e The Relevant Market Concept 341 Monopoly and Dominant Firms 384
I0-3 Porter's Five Forces Strategic Chapter Preview 384
Framework 341 Managerial Challenge: Dominant
10-3a The Threat of Substitutes 342 Microprocessor Company Intel
coJagJ4o1T\i~JJa,tt%trt?~f\\Wi'ights Reserved. May not be'3~ied, scanned, or AQ~ i~Q,~N&~n~f~l\OcN 02-200-202 384
xiv Contents
11-1 Monopoly Defined 385 12-2 Interdependencies in Oligopolistic

11-2 Sources of Market Power for a Industries 418
Monopolist 386 12-2a The Cournot Model 420
11 -2a Increasing Returns from Network 12-3 Cartels and Other Forms of Collusion 421
Effects 386 12-3a Factors Affecting the Likelihood of
What Went Right/What Went Wrong: Successful Collusion 423
12-3b Cartel Profit Maximization and the
Pilot Error at Palm 389
Allocation of Restricted Output 424
11-3 Price and Output Determination for a
Monopolist 390 International Perspectives: The OPEC
11-3a Spreadsheet Approach: Profit versus Cartel 426
Revenue Maximization for Polo Golf 12-3c Cartel Analysis: Algebraic Approach 431
Shirts 390 12-4 Price Leadership 433
11 -3b Graphical Approach 391 12-4a Barometric Price Leadership 433
11 -3c Algebraic Approach 392 12-4b Dominant Finn Price Leadership 434
11 -3d The Importance of the Price Elasticity 12-5 The Kinked Demand Curve Model 437
of Demand 393 12-6 Avoiding Price Wars 438
11-4 The Optimal Markup, Contribution What Went Right/What Went Wrong:
Margin, and Contribution Margin Good-Better-Best Product Strategy at
Percentage 395 Marriott Corporation and Kodak 441
11 -4a Gross Profit Margins 397
Summ~ 443
11 -4b Components of the Margin 397
Exercises 444
11 -4c Monopolists and Capacity Investments 398
11 -4d Limit Pricing 399 13 Best-Practice Tactics: Game Theory 446
11 -4e Using Limit Pricing to Hamper the Chapter Preview 446
Sales of Generic Drugs 400
Managerial Challenge: Large-Scale Entry
What Went Right/What Went Wrong: Deterrence of Low-Cost Discounters:
Pfizer Sustains Sales of Off-Patent
Southwest Airline/AirTran 446
Lipitor 401 13-1 Oligopolistic Rivalry and Game Theory 448
11-5 Regulated Monopolies 402
11 -Sa Electric Power Companies 402 What Went Right/What Went Wrong:
Nintendo's Wii U 448
What Went Right/What Went Wrong: 13-1a A Conceptual Framework for Game
The Public Service Company of Theory Analysis 449
New Mexico 402 13-1b Components of a Game 450
11-Sb Natural Gas Companies 403 13-1c Cooperative and Noncooperative Games 452
11-6 The Economic Rationale for Regulation 403 13-1d Other Types of Games 452
11-6a Natural Monopoly Argument 403 13-2 Analyzing Simultaneous Games 453
Summary 405 13-2a The Prisoner's Dilemma 453
Exercises 405 13-2b Dominant Strategy Defined 455
Case Exercise: Differential Pricing of 13-3 Nash Equilibrium Strategy Defined 457
Pharmaceuticals: The HIVI AIDS Crisis 409 13-3a Mixed Nash Equilibrium Strategy 460
Case Exercise: Limit Pricing as Strategic 13-4 The Escape from Prisoner's Dilemma 463
Entry Deterrence: Ace Inhibitor 410 13-4a Multiperiod Punishment and Reward
Schemes in Repeated Play Games 463
12 Price and Output Determination: 13-4b Unraveling and the Chain Store Paradox 464
Oligopoly 411 13-4c Mutual Forbearance and Cooperation
Chapter Preview 411 in Repeated Prisoner's Dilemma Games 466
13-4d Winning Strategies in Evolutionary
Managerial Challenge: Google's Android
Computer Tournaments: Tit for Tat 467
and Apple's iPhone Displace Nokia in
13-4e Bayesian Reputation Effects 467
Smart phones? 411 13-4f Price-Matching Guarantees 469
12-1 Oligopolistic Market Structures 413 13-5 Analyzing Sequential Games 471
12-1a Oligopoly in the United States: 13-Sa Industry Standards as Coordination
Relative Market Shares 413 Devices 471
Contents xv
13-Sb Importance of the Order of Play 473 14-2c Multiple-Product Pricing Decision 516
13-Sc A Sequential Coordination Game 474 14-2d Differential Pricing and the Price
13-Sd Subgame Perfect Equilibrium in Elasticity of Demand 517
Sequential Games 476 What Went Right/What Went Wrong:
13-6 Business Rivalry as a Self-Enforcing Two-Part Pricing at Disney World 522
Sequential Game 477 14-3 Differential Pricing in Target Market
13-6a First-Mover and Fast-Second Segments 522
Advantages 478 14-3a Direct Segmentation with "Fences" 523
13-7 Credible Threats and Commitments 480 14-3b Optimal Two-Part Tariffs 526
13-8 Mechanisms for Establishing
Credibility 481 Unlimited Data at Verizon Wireless 526
13-9 Replacement Guarantees 483 14-3c Couponing 527
13-9a Hostages Support the Credibility of
Commitments 484
13-9b Credible Commitments of Durable Price-Sensitive Customers Redeem 528
Goods Monopolists 485 14-3d Bundling 528
13-9c Planned Obsolescence 486 14-3e Price Discrimination 531
13-9d Post-Purchase Discounting Risk 487 14-4 Pricing in Practice 533
13-9e Lease Prices Reflect Anticipated Risks 489 14-4a Product Life Cycle Framework 533
14-4b Full-Cost Pricing versus Incremental
Summary 489
Contribution Analysis 535
Exercises 490 14-4c Pricing on the Internet 537
Case Exercise: International Perspectives: Summary 540
The Superjumbo Dilemma 495 Exercises 541
Case Exercise: Partitoning the Price of the
13A Entry Deterrence and Accommodation Chevy Volt 543
Games 497
13A-l Excess Capacity as a Credible 14A The Practice of Revenue Management 545
Threat 497 14A-1 A Cross-Functional Systems
13A-2 Precommitments Using Non- Management Process 546
Redeployable Assets 497 14A-2 Sources of Sustainable Price
13A-3 Customer Sorting Rules 500 Premiums 548
13A-3a A Role for Sunk Costs in Decision 14A-3 Revenue Management Decisions,
Making 501 Advanced Material 548
13A-3b Perfectly Contestable Markets 502 14A-3a Proactive Price Discrimination 549
13A-3c Brinkmanship and Wars of Attrition 503 14A-3b Capacity Reallocation 550
13A-4 Tactical Insights about Slippery 14A-3c Optimal Overbooking 553
Slopes 505 Summary 556
Exercises 556
Summary 506
Exercises 507
PARTV
14 Pricing Techniques and Analysis 508
ORGANIZATIONAL ARCHITECTURE
Chapter Preview 508
AND REGULATION 557
Managerial Challenge: Pricing the
Chevy Volt 508 15 Contracting, Governance, and
14-1 A Conceptual Framework for Proactive, Organizational Fonn 558
Systematic-Analytical, Value-Based Chapter Preview 558
Pricing 509 Managerial Challenge: Controlling the
What Went Right/What Went Wrong: Vertical: Microsoft WebTV versus
Zerex Anticorrosive Antifreeze 510 Google Fiber 558
14-2 Optimal Differential Price Levels 513 15-1 Introduction 559
14-2a Graphical Approach 513 15-2 The Role of Contracting in
14-2b Algebraic Approach 515 Cooperative Games 560
xvi Contents
15-2a Vertical Requirements Contracts 561 Case Exercise: Designing a Managerial

15-2b The Function of Commercial Incentive Contract 592
Contracts 562 Case Exercise: The Division of Investment
15-2c Incomplete Information, Incomplete Banking Fees in a Syndicate 593
Contracting, and Post-Contractual
Opportunism 565 15A Auction Design and Information
15-3 Corporate Governance and the Economics 594
Problem of Moral Hazard 565 15A-1 Optimal Mechanism Design 594
15A-1a Queue Service Rules 594
15A-2 First-Come, First-Served versus
Forecasting the Great Recession with
Last-Come, First-Served 595
Workouts and Rollovers 567
15A-2a Stratified Lotteries for Concerts 596
15-3a The Need for Governance
Mechanisms 568
15A-3 Auctions 597
15A-3a Types of Auctions 597
What Went Right/What Went Wrong: 15A-3b Winner's Curse in Asymmetric
Moral Hazard and Holdup at Enron Information Bidding Games 598
and WorldCom 569 15A-3c Information Revelation in
15-4 The Principal-Agent Model 569 Common-Value Auctions 600
15-4a The Efficiency of Alternative Hiring 15A-3d Bayesian Strategy with Open
Arrangements 569 Bidding Design 60 1
15-4b Creative Ingenuity and the Moral 15A-3e Strategic Underbidding in Private-
Hazard Problem in Managerial Value Auctions 603
Contracting 571 15A-3f Second-Highest Sealed-Bid
15-4c Formalizing the Principal-Agent Auctions: A Revelation Mechanism 605
Problem 573 15A-3g Revenue Equivalence of Alternative
15-4d Screening and Sorting Managerial Auction Types 607
Talent with Optimal Incentives 15A-3h Contractual Approaches to
Contracts 574 Asymmetric Information in Online
What Went Right/What Went Wrong: Auctions 609
Why Have Restricted Stock Grants 15A-4 Incentive-Compatible Revelation
Replaced Executive Stock Options at Mechanisms 611
Microsoft? 575 15A-4a Cost Revelation in Joint Ventures
and Partnerships 611
15-5 Choosing the Efficient Organizational
15A-4b Cost Overruns with Simple
Fonn 577
Profit-Sharing Partnerships 612
What Went Right/What Went Wrong: 15A -4c Clarke-Groves Incentive-Compatible
Cable Allies Refuse to Adopt Microsoft's Revelation Mechanism 614
WebTV as an Industry Standard 580 15A-4d An Optimal Incentives Contract 614
International Perspectives: Economies International Perspectives: Joint Venture
of Scale and International Joint in Memory Chips: IBM, Siemens, and
Ventures in Chip Making 581 Toshiba 615
15-6 Prospect Theory Motivates Full-Line 15A-4e Implementation of IC Contracts 616
Forcing 582 International Perspectives: Whirlpool's
15-7 Vertical Integration 584 Joint Venture in Appliances Improves
What Went Right/What Went Wrong: upon Maytag's Outright Purchase of
Dell Replaces Vertical Integration Hoover 617
with Virtual Integration 587 Summary 618
15-7a The Dissolution of Assets in a Exercises 619
Partnership 588 Case Exercise: Spectrum Auction 620
Summary 589 Case Exercise: Debugging Computer
Exercises 591 Software: Versioning at Intel 621
Case Exercise: Borders Books and
Amazon.com Decide to Do Business 16 Government Regulation 623
Together 592 Chapter Preview 623
••
Contents XVII
Managerial Challenge: Cap and Trade, What Went Right/What Went Wrong:
Deregulation, and the Coase Technology Licenses Cost Palm Its
Theorem 623 Lead in PDAs 652
16-1 The Regulation of Market Structure What Went Right/What Went Wrong:
and Conduct 624 Motorola: What They Didn't Know
16-1a Market Performance 625
Hurt Them 653
16-1b Market Conduct 625
16-7b Conclusion on Licensing 653
16-1c Contestable Markets 626
Summary 654
16-2 Antitrust Statutes and Their
Exercises 655
Regulatory Enforcement 627
Case Exercise: Do Luxury Good
16-2a The Sherman Act (1890) 627
16-2b The Clayton Act (1914) 627 Manufacturers Have a Legitimate
16-2c The Robinson-Patman Act (1936) 628 Interest in Minimum Resale Price
16-2d The Hart-Scott-Rodino Antitrust Maintenance: Leegin v. Kay's Kloset? 657
Improvement Act (1976) 629 Case Exercise: Microsoft Tying
16-3 Antitrust Prohibition of Selected Arrangements 658
Business Decisions 630 Case Exercise: Music Recording Industry
16-3a Collusion: Price Fixing 630 Consolidating 659
16-3b Mergers That Substantially Lessen
Competition 632 17 Long-Term Investment Analysis 660
16-3c Merger Guidelines (2010) 633 Chapter Preview 660
16-3d Monopolization 633
Managerial Challenge: Industrial
16-3e Wholesale Price Discrimination 635
Renaissance in America: Insourcing
16-3J Refusals to Deal 636
16-3g Resale Price Maintenance
of GE Appliances 660
Agreements 636 17-1 The Nature of Capital Expenditure
16-4 Command and Control Regulatory Decisions 661
Constraints: An Economic Analysis 63 7 17-2 A Basic Framework for Capital
16-4a The Deregulation Movement 639 Budgeting 662
What Went Right/What Went Wrong: 17-3 The Capital Budgeting Process 662
17-3a Generating Capital Investment
The Need for a Regulated
Projects 663
Clearinghouse to Control Counterparty
17-3b Estimating Cash Flows 663
Risk at AIG 639 17-3c Evaluating and Choosing the
16-5 Regulation of Externalities 640 Investment Projects to Implement 665
16-Sa Coasian Bargaining for Reciprocal
17-4 Estimating the Firm's Cost of
Externalities 641
16-Sb Qualifications of the Coase Theorem 642
Capital 668
17-4a Cost of Debt Capital 669
16-Sc Impediments to Bargaining 643
16-Sd Resolution of Externalities by
17-4b Cost of Internal Equity Capital 669
Regulatory Directive 644
17-4c Cost of External Equity Capital 671
16-Se Resolution of Externalities by Taxes
17-4d Weighted Cost of Capital 671
and Subsidies 645 17-5 Cost-Benefit Analysis 672
16-SJ Resolution of Externalities by Sale of 17-Sa Accept-Reject Decisions 673
Pollution Rights: Cap and Trade 647 17-5b Program-Level Analysis 674
16-6 Governmental Protection of Business 647 17-6 Steps in Cost-Benefit Analysis 674
16-6a Licensing and Permitting 647 17-7 Objectives and Constraints in
16-6b Patents 648 Cost- Benefit Analysis 676
16-7 The Optimal Deployment Decision: 17-8 Analysis and Valuation of Benefits
To License or Not 648 and Costs 677
16-7a Pros and Cons of Patent Protection 17-Ba Direct Benefits 677
and Licensure of Trade Secrets 649 17-Bb Direct Costs 677
17-Be Indirect Costs or Benefits and
Intangibles 677
Delayed Release at Aventis 650
xviii Contents
17-Bd The Appropriate Rate of Discount 678 D Check Answers to Selected

17-9 Cost-Effectiveness Analysis 679 End-of-Chapter Exercises D-1
17-9a Least-Cost Studies 679 Glossary G-1
17-9b Objective-Level Studies 680 Index I-1
Summary 680 Notes
Exercises 681
Case Exercise: Industrial WEB APPENDICES
Development Tax Relief and A Consumer Choice Using Indifference Curve
Incentives 684 Analysis
Case Exercise: Multigenerational Effects B International Parity Conditions
of Ozone Depletion and Greenhouse c Linear-Programming Applications
Gases 685 D Capacity Planning and Pricing against a Low-Cost
Case Exercise: Can Tidal Power Be Competitor: A Case Study of Piedmont Airlines
Harnessed in the Bay of Fundy 688 and People Express
E Pricing of Joint Products and Transfer Pricing
APPENDICES F Decisions under Risk and Uncertainty
A The Time Value of Money A-1 G Maximization of Production Output Subject to a
B Differential Calculus Techniques in Cost Constraint, Advanced Material
Management B-1 H Long-Run Costs with a Cobb-Douglas Production
c Tables C-1 Function, Advanced Material
ORGANIZATION OF THE TEXT
The 14th edition has been thoroughly updated with 45 new applications and dozens of new
figures and tables.
We continue to expand the review of microeconomic fundamentals in Chapters 2 and
3, employing a wide-ranging discussion of the equilibrium price of crude oil and gasoline
as well as the marginal analysis of long-lasting lightbulbs. This new emphasis supports
the use of the book for pre-experience MA in Management and specialized MS programs
in business schools.
The text is structured, like many others, around demand, production, cost and pric-
ing theory in context, but the difference here is the context. We believe students are
motivated to learn analytical tools by first becoming immersed in and motivated by
deep fact situation contexts. Consequently, in each of the first 12 chapters we teach
the students why a new technique is important by first demonstrating what it can be
used to accomplish in business practice. Only then, do we delve into the theory that
applies.
Another distinctive feature of the book is the extensive treatment in Chapter 6 of
global business, import-export trade, exchange rates, free trade areas, and trade policy.
There is more comprehensive material on applied game theory in Chapters 13, 13A, 15,
15A, and the Web Appendix Case Study than in any other managerial economics text-
book. And a unique treatment of revenue (yield) management appears in Chapter 14A.
Part V includes the hot topics of corporate governance, information economics, auction
design, and the choice of organizational architecture. Chapter 16 on Regulation includes
an extensive discussion of market mechanisms for addressing externalities. Chapter 17
now leads off with a capital budgeting decision by GE to return appliance manufacturing
to the United States.
By far the most distinctive feature of the book is its 300 boxed examples, Managerial
Challenges, What Went Right/What Went Wrong explorations of corporate practice,
and mini-case examples on every other page demonstrating what each analytical concept
is used for in practice. This list of concept applications is highlighted on the inside front
and back covers.
STUDENT PREPARATION
The text is designed for use by upper-level undergraduates and first-year graduate stu-
dents in business schools, departments of economics, and professional schools of man-
agement, public policy, and information science as well as in executive training
programs. Students are presumed to have a background in the basic principles of micro-
economics, although Chapter 2 offers an extensive review of those topics. No prior
work in statistics is assumed; development of all the quantitative concepts employed is
self-contained. The book makes occasional use of elementary concepts of differential
•
XIX
xx Preface
calculus. In all cases where calculus is employed, at least one alternative approach, such as
graphical, algebraic, or tabular analysis, is also presented. Spreadsheet applications have
become so prominent in the practice of managerial economics that we now address
optimization in that context.
PEDAGOGICAL FEATURES OF THE

14TH EDITION
The 14th edition of Managerial Economics makes extensive use of pedagogical aids to
enhance individualized student learning. The key features of the book are:
1. Managerial Challenges. Each chapter opens with a Managerial Challenge (MC) illumi-
nating a real-life problem faced by managers that is closely related to the topics covered
in the chapter. Instructors can use the discussion questions following each MC to
"hook" student interest at the start of the class or in conjunction with MindTap preclass
preparation assignments.
2. What Went Right/What Went Wrong. This feature allows students to relate
business mistakes and triumphs to what they have just learned, and helps build
that elusive goal of managerial insight.
3. Extensive Use of Boxed Examples. More than 300 real-world applications and
examples derived from actual corporate practice are highlighted throughout the
text. These applications help the analytical tools and concepts to come alive
and thereby enhance student learning. They are listed on the inside front and
back covers to highlight the prominence of this feature of the book.
4. Sustainability and the Environment Symbol. A wind vane symbol highlights
numerous passages that address environmental effects and sustainability issues
throughout the book.
5. Exercises. Each chapter contains a large problem analysis set. Check answers to
selected problems color-coded in blue type are provided in Appendix D at the
end of the book. Problems that can be solved using Excel are highlighted with an
Excel icon. The book's Web site (www.cengage.com/economics/mcguigan) has
answers to all the other textbook problems.
6. Case Exercises. Most chapters include mini-cases that extend the concepts and
tools developed into a deep fact situation context of a real-world company, allow-
ing the students to practice what they encounter on every other page in the 300
boxed examples and applications.
7. Chapter Glossaries. In the margins of the text, new terms are defined as they are
introduced. The placement of the glossary terms next to the location where the
term is first used reinforces the importance of these new concepts and aids in
later studying.
8. International Perspectives. Throughout the book, special International Perspec-
tives sections that illustrate the application of managerial economics concepts
to an increasingly global economy are provided. A globe symbol highlights this
internationally relevant material.
9. Point-by-Point Summaries. Each chapter ends with a detailed, point-by-point
summary of important concepts from the chapter.
10. Diversity of Presentation Approaches. Important analytical concepts are
presented in several different ways, including tabular, spreadsheet, graphical, and
algebraic analysis to individualize the learning process.
•
Preface XXI
ANCILLARY MATERIALS
A complete set of ancillary materials is available to adopters to supplement the text,
including the following:
Instructor's Manual and Test Bank

The instructor's manual and test bank that accompany the book contain suggested
answers to the end-of-chapter exercises and cases. The authors have taken great care to
provide an error-free manual for instructors to use. The manual is available to instruc-
tors on the book's Web site. The test bank, containing a large collection of true-false,
multiple-choice, and numerical problems, is available to adopters and is also available
on the Web site in Word format, as well as on the IRCD.
MindTap
MindTap is an extensive online learning system that includes the ebook, assignments
that bring course concepts to life, supplemental readings, video and discussions ques-
tions, and practice and apply exercises. This cloud-based platform integrates learning
applications ("apps,) into an easy-to-use and easy-to-access tool that supports a person-
alized learning experience. MindTap combines student learning tools-readings, multi-
media, activities and assessments-into a singular Learning Path that guides students
through the course.
Mindtap Support Web Site

When you adopt Managerial Economics: Applications, Strategy, and Tactics, 14e, you and
your students will have access to a rich array of teaching and learning resources that you
won't find anywhere else. Located at www.CengageBrain.com, this outstanding site features
additional instructor and student resources.
PowerPoint Presentation
Available on the product companion Web site, this comprehensive package provides an
excellent lecture aid for instructors. These slides cover many of the most important
topics from the text, and they can be customized by instructors to meet specific course
needs.
ACKNOWLEDGMENTS
A number of reviewers, users, and colleagues have been particularly helpful in providing
us with many worthwhile comments and suggestions at various stages in the development
of this and earlier editions of the book. Included among these individuals are:
William Beranek, J. Walter Elliott, William J. Kretlow, William Gunther, J. William
Hanlon, Robert Knapp, Robert S. Main, Edward Sussna, Bruce T. Allen, Allen Moran,
Edward Oppermann, Dwight Porter, Robert L. Conn, Allen Parkman, Daniel Slate, Richard
L. Pfister, J. P. Magaddino, Richard A. Stanford, Donald Bumpass, Barry P. Keating, John
Wittman, Sisay Asefa, James R Ashley, David Bunting, Amy H. Dalton, Richard D. Evans,
Gordon V. Karels, Richard S. Bower, Massoud M. Saghafi, John C. Callahan, Frank Falero,
Ramon Rabinovitch, D. Steinnes, Jay Damon Hobson, Clifford Fry, John Crockett, Marvin
Frankel, James T. Peach, Paul Kozlowski, Dennis Fixler, Steven Crane, Scott L. Smith,
Edward Miller, Fred Kolb, Bill Carson, Jack W. Thornton, Changhee Chae, Robert
B. Dallin, Christopher J. Zappe, Anthony V. Popp, Phillip M. Sisneros, George Brower,
xxii Preface
Carlos Sevilla, Dean Bairn, Charles Callahan, Phillip Robins, Bruce Jaffee, Alwyn du Plessis,
Darly Winn, Gary Shoesmith, Richard J. Ward, William H. Hoyt, Irvin Grossack, William
Simeone, Satyajit Ghosh, David Levy, Simon Hakim, Patricia Sanderson, David P. Ely, Albert
A. O'Kunade, Doug Sharp, Arne Dag Sti, Walker Davidson, David Buschena, George
M. Radakovic, Harpal S. Grewal, Stephen J. Silver, Michael J. O'Hara, Luke M. Froeb, Dean
Waters, Jake Vogelsang, Lynda Y. de la Vifia, Audie R Brewton, Paul M. Hayashi, Lawrence
B. Pulley, Tim Mages, Robert Brooker, Carl Emomoto, Charles Leathers, Marshall Medoff,
Gary Brester, Stephan Gohmann, L. Joe Moffitt, Christopher Erickson, Antoine El Khoury,
Steven Rock, Rajeev K. Goel, LeeS. Redding, Paul J. Hoyt, Bijan Vasigh, Cheryl A. Casper,
Semoon Chang, Kwang Soo Cheong, Barbara M. Fischer, John A. Karikari, Francis
D. Mummery, Lucjan T. Orlowski, Dennis Proffitt, and Steven S. Shwiff.
People who were especially helpful in the preparation of the 14th edition include
Robert F. Brooker, Kristen E. Collett-Schmitt, Simon Medcalfe, Dr. Paul Stock, Shahab
Dabirian, James Leady, Stephen Onyeiwu, and Karl W. Einoff. A special thanks to
B. Ramy Elitzur of Tel Aviv University for suggesting the exercise on designing a manage-
rial incentive contract and to Bob Hebert, Business Librarian at Wake Forest School of
Business, for his tireless pursuit of reference material.
We are also indebted to Wake Forest University and the University of Louisville for the
support they provided and owe thanks to our faculty colleagues for the encouragement and
assistance provided on a continuing basis during the preparation of the manuscript. We wish
to express our appreciation to the members of the Cengage Learning staff for their help in
the preparation and promotion of this book, especially Chris Rader. We are grateful to the
Literary Executor of the late Sir Ronald A. Fisher, F.R.S.; to Dr. Frank Yates, F.R.S.; and to
Longman Group, Ltd., London, for permission to reprint Table III from their book Statistical
Tables for Biological, Agricultural, and Medical Research (6th ed., 1974).
James R. McGuigan
R. Charles Moyer
Frederick H. deB. Harris
James R. McGuigan
James R. McGuigan owns and operates his own numismatic investment firm. Prior to this
business, he was Associate Professor of Finance and Business Economics in the School of
Business Administration at Wayne State University. He also taught at the University of
Pittsburgh and Point Park College. McGuigan received his undergraduate degree from
Carnegie Mellon University. He earned an M.B.A. at the Graduate School of Business at
the University of Chicago and his Ph.D. from the University of Pittsburgh. In addition to
his interests in economics, he has coauthored books on financial management.
His research articles on options have been published in the Journal of Financial and
Quantitative Analysis.
R. Charles Moyer
R. Charles Moyer earned his B.A. in Economics from Howard University and his M.B.A.
and Ph.D. in Finance and Managerial Economics from the University of Pittsburgh.
Professor Moyer is Dean Emeritus and Professor of Finance and Entrepreneurship at
the College of Business, University of Louisville. Previously, he was GMAC Chair of
Finance and Dean, Babcock Graduate School of Management, Wake Forest University.
He was also Professor of Finance and Chairman of the Department of Finance at Texas
Tech University. Professor Moyer also has taught at the University of Houston, Lehigh
University, and the University of New Mexico, and spent a year at the Federal Reserve
Bank of Cleveland. Professor Moyer has taught extensively abroad in Germany, France,
and Russia. In addition to this text, Moyer has coauthored two other financial management
texts. He has been published in many leading journals, including Financial Management,
Journal of Financial and Quantitative Analysis, Journal of Finance, Financial Review, Journal
of Financial Research, International Journal of Forecasting, Strategic Management Journal and
Journal of Economics and Business. Professor Moyer is a member of the Board of Directors
of Capitala Finance Corporation, US W orldMeds, and Summit Biosciences.
Frederick H. deB. Harris

Frederick H. deB. Harris is Professor of Managerial Economics and Finance at the School of
Business, Wake Forest University. His specialties are pricing tactics and capacity planning.
Professor Harris has taught managerial economics core courses and B.A., B.S., M.S., M.B.A.,
and Ph.D. electives in business schools and economics departments in the United States,
Germany, France, Italy, and Australia. He has won two school-wide Professor of the Year
teaching awards and two Researcher of the Year awards. Other recognitions include Out-
standing Faculty by Inc. magazine (1998), Most Popular Courses by Business Week Online
2000-2001, and Outstanding Faculty by BusinessWeek's Guide to the Best Business Schools,
5th to 9th eds., 1997-2004.
Professor Harris has published widely in leading journals, including the Review of Eco-
nomics and Statistics, Journal of Financial and Quantitative Analysis, Journal of Operations
Management, Journal of Industrial Economics, Journal of Banking and Finance, Journal of
Business Ethics, and Journal of Financial Markets. From 1988 through 1993, Professor
Harris served on the Board of Associate Editors of the Journal of Industrial Economics .
•••
XXIII
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Glenquhargen. They were all nimble-footed, and the panic with
which they were now actually seized gave wings to their speed, and
rendered a matter of no regard the rocks and other impediments
over which they were flying. Their pursuer was not more speedy, but
much longer winded, and the rage which then impelled him was not
less potent than their terror. He possessed a fund of physical ability
which was almost inexhaustible, and he had sworn not to drop the
pursuit till he had “smashed the hale set,” so that from the length of
the race the poor wights had but a small chance of safety. At length
the top of Glenquhargen, then Cairnkinnow, and next Gowkthorn,
were reached, without any loss or advantage to either party. From
the latter of these places, the ground declines nearly the whole way to
Drumlanrig, and the soldiers, with the start in their favour, flew on
with a glimmering of hope that now they could scarcely be overtaken.
Their hope was realised, but not without such overstraining as had
nearly proved equally fatal with the vengeance from which they fled.
Leaning forward almost to the ground, and staggering like drunkards
from excess of fatigue, they at last reached the western staircase
which leads into the court of the castle. Behind them Glenmannow
rushed on also with abated speed, but with indignation as hot as
ever. He still bore upon his shoulder the ponderous car limb; his face
was literally bathed in perspiration; and the wild expression of his
eyes, and the foam which was beginning to appear at each corner of
his mouth, rendered him a true personification of Giant Madness
broken from his chains.
The two dukes, who had been informed of their approach by some
servants who observed them descending the opposite heights, were
waiting to receive them within the balustrade which runs along that
side of the castle; but on marking the fury of Glenmannow, Duke
James deemed it prudent to retire with the exhausted soldiers until
the storm should be passed; for while his tenant remained in that
mood of mind, he dared not, absolute as was his authority, to come
into his presence. His brother of Buccleuch was therefore left to bear
the first brunt of the salutation, who, on Glenmannow’s approach,
called out, “What is the matter? What is to do?” Glenmannow,
without regarding this interrogatory further than by darting upon
him a wild and fierce look, sprang up stairs, and rushed past him into
the court of the castle. But here his progress was stopped; for among
the several doors which lead from thence to every part of the castle,
he knew not by which his enemies had entered. One, however, was
known to him, and along that passage he rapidly hastened, until he
at length arrived in the kitchen. There he was equally at fault, and
there his pursuit was ended; for the smiles of the sonsy cook, and the
fondlements of the various servants who thronged around him,
succeeded in restoring his mind to a degree of calmness and repose.
The cook eased his shoulder of the car limb, with the intention of
repaying herself for the trouble by using it as fuel; others divested
him of his bonnet; and all, with many words, prevailed upon him at
last to assume a chair. After a moment’s silence, in which he seemed
to be lost in reflection, “Ay, ay,” said he, “I see through a’ this noo. It
has been a trick o’ the juke’s makin’ up.” Then, with a serious air, he
added, “But it was dangerous though; for if I had gotten a haud o’
thae chaps, wha kens what I might hae done!”
The duke, on being informed of this change wrought upon his
tenant, and having learnt from the soldiers the way in which he had
been deprived of his breakfast, ordered him a plentiful refreshment,
and afterwards sent for him into the presence of himself and of
Buccleuch. The breach between them was speedily healed; and
Glenmannow, nothing poorer for his race, returned shortly
afterwards with a servant on horseback, who was dispatched to
convey to headquarters the poor grenadier who had been so roughly
handled in the affray.
Mally, with a humanity and forgiveness which the soldier had little
right to expect, had succeeded in removing him from the spot where
he was cast down, into the house, and having there laid him upon a
bed, tended him with such kindness and care, that, by the time of
Glenmannow’s return, he was so far recovered as to be able to sit
upon the horse sent to remove him. Glenmannow, after Mally had
wrapped round him a pair of blankets, bore him out in his arms, and
placed him behind the servant, who in this manner conducted him in
safety to Drumlanrig.
This is the last exploit of a remarkable kind which I have been able
to glean respecting Glenmannow. He lived to a pretty long age, yet
his life was abridged within its natural period by imprudently taxing
his great strength beyond its actual capability. A high dyke was in the
course of being built, from the heights on the left of the Nith into the
channel of the river, about four miles above Drumlanrig, on the way
to Sanquhar, and in order to resist the force of the current, the
largest stones that could be moved were built into the dyke at its
termination. One in particular, which lay near the place, was deemed
excellently fitted for that purpose, but its weight rendered it
unmanageable. Glenmannow undertook to lift it into its place, and in
reality did so; but in the effort he injured his breast and spine, and
brought on a lingering disorder, of which he died in less than a
twelvemonth afterwards, in the year 1705. I am not aware of his
having left any descendants to perpetuate and spread his name; one
thing at least is certain, that in the present day none such are to be
found in that district which was the principal scene of his exploits,
and where still is cherished to such a degree his singular yet honest
renown.—Traits of Scottish Life, and Pictures of Scenes and
Character.
MY GRANDMOTHER’S PORTRAIT.
By Daniel Gorrie.
In picture galleries, or in private apartments, portraits seldom

receive much attention from visitors, unless they happen to have
known the originals, or to be aware that the pictures are the
productions of distinguished artists. And yet, whether we have
known the originals or not, and apart altogether from the general
artistic merit of the works, there are many portraits which have a
wonderful effect in giving the mind a reflective and inquisitive turn.
Portraits of this description may occasionally be seen in retired
country houses of modest dimensions, where one need scarcely
expect to find specimens of the highest class of art. Faces we may
there observe, silently depending from the walls, on which strongly-
pronounced character is depicted in spite of every artistic defect, and
through the deep lines of which the record of a stirring or painful life
seems to struggle earnestly for utterance. People are too much in the
habit of regarding every person as commonplace and uninteresting
who has not managed somehow to make a noise in the world; but in
these “counterfeit presentments” of men and women who have died
in comparative obscurity, known only to their own circle of friends,
we may see much that strangely moves our hearts, and makes us long
to learn what their history has been.
Let the reader look in fancy on that old portrait hanging before me
there on the wall. To me it is no dead picture, but rather does it seem
the living embodiment of a maternal grandmother—a heroic old
dame, who never lost heart whatever might betide, and of whom that
image is now almost the sole remaining relic. Even a stranger could
scarcely fail to note with curious interest that small round face with
nose and chin attenuated by years—those peering eyes, where a
twinkle of youth yet breaks through the dim of eld—that wrinkled
brow, shaded with a brown frontage-braid of borrowed hair—and
that compact little head, encased in a snow-white cap with its broad
band of black ribbon. The least skilful artist could hardly have failed
in depicting the features; but the old familiar expression is also there,
preserved as in amber, and the aged face is pleasantly blended in my
mind with memories of early days. Detached incidents in her life,
which she was fond of frequently relating to her grandchildren, who
eagerly clustered around her, listening to the oft-told tale, recur to
me with considerable freshness after the lapse of many years.
At the time when that portrait was taken, Mrs Moffat—as I shall
name her—was well-nigh eighty years of age. For about the half of
that period she had led a widowed life. Her husband, who witnessed
many stirring scenes on sea and shore, had been a surgeon in the
Royal Navy, and she was left “passing rich with forty pounds a year”
of government pension.
There was one remarkable incident in his history to which she
frequently recurred. Samuel Moffat obtained an appointment as
surgeon on board the ill-fated Royal George; but before the time set
apart for her leaving port, he found that the smell of the fresh paint
of the new vessel created a feeling of nausea, which would have
rendered him unfit for duty; and by his good fortune in getting
transferred, on this account, to another man-of-war, he escaped the
sad fate that befell so many hapless victims—
When Kempenfelt went down
With twice four hundred men.
A striking incident of this kind naturally made a deep impression on

his own mind, and it also formed a prominent reminiscence in the
memory of his faithful partner during the long remainder of her life.
The earlier period of Mrs Moffat’s widowhood was passed in
Edinburgh; but when death and marriage had scattered her family,
she followed one of her married daughters to the country, and took
up her abode in a neat poplar-shaded cottage on the outskirts of a
quiet village, situated in a fertile and beautiful valley of the county
that lies cradled in the twining arms of the Forth and the Tay. That
cottage, with its garden behind, and pretty flower-borders in front,
and with its row of poplar and rowan-trees, through which the
summer breeze murmured so pleasantly, comes up vividly before my
mind’s eye at this moment. Beautiful as of yore the valley smiles
around, with its girdling ridges belted with woods, and dotted with
pleasant dwellings; and away to westward, shutting in the peaceful
scene from the tumult of the great world, rise the twin Lomond hills,
glorious at morn and eve, when bathed in the beams of the rising and
setting sun. The good old lady, who had spent a large portion of her
life in “Auld Reekie,” when narrow Bristo Street and Potterrow and
the adjoining courts were inhabited by the better class of citizens,
took kindly to the country cottage, and she was fond of the garden
and flowers. With a basket on her arm, she trotted about the garden,
apparently very busy, but doing little after all. In autumn, after a
gusty night, one of her first morning occupations was to gather up
the fallen ruddy apples, which she preserved for the special
gratification of her grandchildren. Many a time and oft were they
debarred from touching the red berries of the rowan-trees, which
look as tempting in children’s eyes as did the forbidden fruit in those
of Mother Eve. The girls were even enjoined not to make necklaces of
these clustering red deceivers.
In that retired village there were, in those days, a good many well-
to-do people, who had not found it very difficult to make money out
of a generous soil. The different families lived on very sociable terms,
and during the winter season there were rounds of tea-parties,
winding up with cold suppers and hot toddy. Teetotalism was a thing
unknown in that district and in those days, though I shall do the
good folks the justice of saying that they knew the virtues of
moderation. To all those winter gatherings of the local gentry, Mrs
Moffat invariably received an invitation. They could not do without
her, relishing as they did her ready wit and hearty good-humour. She
was, in sooth, the life of every party. On such occasions she displayed
all the artless buoyancy of youth, as if she had never endured the
agonies of bereavement, or borne the burdens of life. She was then
the very image of “Old Delight,” and her aged face renewed its youth
in the sunshine of joy. Some of the knowing lairds tried by bantering
and otherwise to draw her out, and her quick cutting repartees were
followed by explosions of mirth. It seemed marvellous that such a
well of sunny mirth should be encased in that tiny frame. Indeed, it
was nothing unusual for the hearty old lady to treat the company to a
“canty” song at these village parties, and touches of melody still
lingered about the cracks of her voice. When bothered overmuch to
sing another song after she had already done enough, she generally
met the request with a solitary stanza to this effect:—
There was a wee mannie an’ a wee wifie,
And they lived in a vinegar bottle;
“And O,” says the wee mannie to the wee wifie,
“Wow, but oor warld is little, is little!
Wow, but oor warld is little!”
Rare encounters of wit and amusing banter occasionally took place

between her and a strange eccentric humorist of a lawyer of the old
school, who frequently visited the village from a neighbouring
country town. Old Bonthron was the name by which he was
familiarly known.
It may readily be imagined that, when old Mr Bonthron and Mrs
Moffat met in the same company, the fun would grow “fast and
furious,” and such certainly was the case. I have seen the hearty old
humorist take the equally hearty old lady on his knee, and dandle her
there like a child, greatly to their own delight and to the infinite
amusement of the company. There will be less genial and boisterous
mirth now-a-days, I should imagine, in that sequestered village.
Such was Mrs Moffat in her lightsome hours, when friends met
friends; but her grandchildren were as much delighted with her
when, in graver mood, she recalled early recollections, told them
pleasant little stories, and narrated graphically what to her were
eventful incidents in her life.
I can still remember some of the pleasant pictures she gave us of
her early days. She was born in the town of Dalkeith, which is
beautiful for situation, being planted in the midst of the richest
woodland scenery, and she imprinted in our hearts vivid impressions
of the delighted feelings with which, in the days of her girlhood, she
looked through the gate of the Duke’s great park, and saw the long
winding avenue and the greensward traversed by nibbling sheep, and
the magnificent trees whose “shadowing shroud” might cover a
goodly company at their rural feast in the noontide of a summer’s
day. She described the rustic seats and summer-houses on the banks
of a brook, that wandered at its own sweet will through the wooded
grounds—regions and resorts of joyance, where the children of the
town, through the kindness of the then reigning Duke of Buccleuch,
were permitted to spend the livelong summer’s day, thus enabling
them to store their memories with pleasing recollections, which
might come back upon them in their declining days, like visions of
beauty from lands of old romance. There was a pathetic story about a
family of larks that had their nest in the Duke’s Park, which she
recited to us over and over again, by way of inculcating the virtue of
treating kindly all the creatures of God. Her story was, that some of
the young rascals of Dalkeith had caught the mother-bird in the nest,
and had carried off her and the whole family of young ones at one fell
swoop. The male bird, thus deprived at once of mate and family, took
up his melancholy station near the nest, and mourned his loss with
plaintive pipe for two days, at the end of which time the broken-
hearted warbler died. This affecting incident, told with much
seriousness and feeling, was not unproductive of good effect upon
the young listeners. Cities and towns being still to us mysteries of
which we had only a vague conception, it pleased us much to hear
her tell how the bells of Dalkeith tolled children to bed, and how little
boys walked through the streets at night, calling “Hot pies for
supper!” It struck us that at whatever hour the bell tolled, we should
have liked to remain out of bed till the pies went round.
On winter evenings, beside the good old lady’s cottage fire, she was
often constrained to recount her famous voyage to London, in which
she wellnigh suffered shipwreck. The war-vessel on board of which
her husband acted as surgeon had arrived in the Thames. He could
not then obtain leave of absence, and as they had not met for many
long months, she determined—protracted as the passage then was
from Leith to London—to make an effort to see her husband, and to
visit the great metropolis. Steamers had not, at that period, come
into existence, and the clipper-smacks that traded between Leith and
London, and took a few venturesome passengers on their trips,
dodged along the Scotch and English coasts for days and weeks, thus
making a lengthened voyage of what is now a brief and pleasant sail.
It was considered a bold and hazardous undertaking, in those days,
for any lady to proceed alone on such a voyage. This, however, she
did, as she was gifted with a wonderful amount of pluck, leaving her
family in the charge of some friends till she returned.
The vessel had scarcely left the Firth of Forth, and got out into the
open sea, when the weather underwent a bad turn, and soon they
had to encounter all the fury of a severe storm, which caused many
shipwrecks along the whole eastern seaboard. With a kind of placid
contentment—nay, even with occasional glee—would she describe
the protracted miseries and hardships they endured, having run
short of supplies, and every hour expecting the vessel to founder. It
was three weeks after leaving Leith until the smack was, as she
described it, towed up the Thames like a dead dog, without either
mast or bowsprit—a hapless and helpless hulk. However, she
managed to see her husband, and the happiness of the meeting
would be considered a good equivalent for the mishaps of the voyage.
She saw, in the great metropolis, the then Prince of Wales—the “First
Gentleman in Europe,” and used to relate, with considerable gusto
(old ladies being more rough-and-ready then than now), how the
Prince, as he was riding in St James’s Park, overheard a hussar in the
crowd exclaiming, “He’s a d——d handsome fellow!” and
immediately lifting his hat, his Royal Highness replied, “Thank you,
my lad; but you put too much spice in your compliments!” That
London expedition was a red-letter leaf in Mrs Moffat’s biography,
and it was well thumbed by us juveniles. Her return voyage was
comparatively comfortable, and much more rapid; but she never saw
her husband again, as he died at sea, and was consigned to the deep.
Even more interesting than the London trip were all the stories
and incidents connected with her only son—our uncle who ought to
have been, but who was dead before any of us were born. Through
the kindness and influence of Admiral Greig of the Russian navy, he
obtained a commission in the Russian service at an unusually early
age—Russia and Britain being at that time in close alliance. Neither
the Russian navy nor army was in the best condition, and the
Emperor was very desirous to obtain the services of British officers,
Scotsmen being preferred. Mrs Moffat loved her son with all the
warmth of her kindly nature, and when he had been about a year or
two in the Russian service, the news spread through Edinburgh one
day, that a Russian man-of-war was coming up the Firth to Leith
roads. I have heard the good lady relate the eventful incidents of that
day with glistening eyes and tremulous voice.
The tidings were conveyed to her by friends who knew that she had
some reason to be interested in the news. She had received no
communication from her son for some time, as the mails were then
very irregular, and letters often went amissing; and, filled with the
hope that he might be on board the Russian vessel that was
approaching the roads, she immediately hurried off for Leith,
whither crowds of people were already repairing, as a Russian war-
vessel in the Forth was as great a rarity then as it is now. Before she
arrived at the pier, the vessel had anchored in the roads, and the
pier, neither so long nor so commodious as it is now, was thronged
with people pressing onwards to get a sight of the stranger ship.
Nothing daunted by the crowd, Mrs Moffat squeezed herself forward,
at the imminent risk of being seriously crushed. A gentleman who
occupied a “coigne of vantage,” out of the stream of the crowd,
observed this slight-looking lady pressing forward with great
eagerness. He immediately hailed her, and asked, as she appeared
very much interested, if she expected any one, or had any friends on
board. She replied that she half expected her son to be with the
vessel. The gentleman, who was to her a total stranger, but who must
have been a gentleman every inch, immediately took her under his
protection, and having a telescope in his hand, he made
observations, and reported progress.
One of the ship’s boats had been let down, and he told her that he
observed officers in white uniform rapidly descending. Mrs Moffat’s
eagerness and anxiety were now on the increase. The boat put off
from the ship, propelled by sturdy and regular strokes, cutting the
water into foam, which sparkled in the sunshine. When the boat had
approached midway between the ship and the shore, Mrs Moffat
asked her protector if he could distinguish one officer apparently
younger than the others.
“Yes,” he replied; “there is one who seems scarcely to have passed
from boyhood to manhood.”
Her eager impatience, with hope and fear alternating in her heart,
seemed now to agitate her whole frame, and the bystanders, seeing
her anxiety, appeared also to share in her interest.
At last the boat, well filled with officers, shot alongside the pier,
the crowd rushing and cheering, as it sped onward to the upper
landing-place. It was with great difficulty that the gentleman could
restrain the anxious mother from dashing into the rushing stream of
people. When the crowd had thinned off a little, they made their way
up the pier, and found that the officers had all left the boat and gone
into the Old Ship Inn—probably because they had no desire of being
mobbed. Mrs Moffat immediately went to the inn, and requested an
attendant to ask if one of the officers belonged to Scotland, and if so,
to be good enough to mention his name.
“Yes—Moffat!” was the cheery response, and in a short time
mother and son were locked in each other’s arms in the doorway of
the Old Ship.
With a glee, not unmingled with tender regrets, she used to tell
how, when she and the spruce young officer were proceeding up
Leith Walk together to Edinburgh, an old woman stopped them, and,
clapping him kindly on the shoulder, said—“Ay, my mannie, ye’ll be a
captain yet!” This prophecy of the old woman certainly met its
fulfilment.
After staying a few days in the old home near the Meadows, young
Moffat again took his departure, never more to see his affectionate
mother, or the bald crown of Arthur Seat rising by the side of the
familiar Firth. He joined the army (changes of officers from the navy
to the army being then frequent in the Russian service), and
reenacted his part honourably in many memorable scenes. Still do I
remember the tender and tearful care with which his old mother
opened up the yellow letters, with their faded ink-tracings, which
contained descriptions of the part he played in harassing the French,
during their disastrous retreat after the burning of Moscow. One of
these letters, I recollect, commenced thus—“Here we are, driving the
French before us like a flock of sheep;” and in others he gave painful
descriptions of their coming up to small parties of French soldiers
who were literally glued by the extreme frost to the ground—quite
stiff and dead, but still in a standing attitude, and leaning on their
muskets. Poor wretches! that was their sole reward for helping to
whet the appetite of an insatiable ambition. In those warlike times,
young Moffat grew into favour, and gained promotion. He received a
gold-hilted sword from the Emperor for distinguished service, but he
succumbed to fatigue, and died on foreign soil. The gold-headed
sword and his epaulets, which he had bequeathed to a favourite
sister, fell into the hands of harpies in London, and to this day have
never reached Scotland.
In the quiet village Mrs Moffat spent her declining days in peace
and sweet content, and she now sleeps in the village churchyard, till
the last spring that visits the world shall waken inanimate dust to
immortal life.
THE BAPTISM.
By Professor Wilson.
It is a pleasant and impressive time, when, at the close of divine

service, in some small country church, there takes place the gentle
stir and preparation for a baptism. A sudden air of cheerfulness
spreads over the whole congregation; the more solemn expression of
all countenances fades away; and it is at once felt that a rite is about
to be performed which, although of a sacred and awful kind, is yet
connected with a thousand delightful associations of purity, beauty,
and innocence. Then there is an eager bending of smiling faces over
the humble galleries—an unconscious rising up in affectionate
curiosity—and a slight murmuring sound, in which is no violation of
the Sabbath sanctity of God’s house, when, in the middle passage of
the church, the party of women is seen, matrons and maids, who
bear in their bosoms, or in their arms, the helpless beings about to be
made members of the Christian communion.
There sit, all dressed becomingly in white, the fond and happy
baptismal group. The babies have been intrusted, for a precious
hour, to the bosoms of young maidens, who tenderly fold them to
their yearning hearts, and with endearments taught by nature, are
stilling, not always successfully, their plaintive cries. Then the proud
and delighted girls rise up, one after the other, in sight of the whole
congregation, and hold up the infants, arrayed in neat caps and long
flowing linen, into their fathers’ hands. For the poorest of the poor, if
he has a heart at all, will have his infant well dressed on such a day,
even although it should scant his meal for weeks to come, and force
him to spare fuel to his winter fire.
And now the fathers were all standing below the pulpit, with grave
and thoughtful faces. Each has tenderly taken his infant into his toil-
hardened hands, and supports it in gentle and steadfast affection.
They are all the children of poverty, and if they live, are destined to a
life of toil. But now poverty puts on its most pleasant aspect, for it is
beheld standing before the altar of religion with contentment and
faith. This is a time when the better and deeper nature of every man
must rise up within him, and when he must feel, more especially,
that he is a spiritual and immortal being making covenant with God.
He is about to take upon himself a holy charge; to promise to look
after his child’s immortal soul; and to keep its little feet from the
paths of evil, and in those of innocence and peace. Such a thought
elevates the lowest mind above itself, diffuses additional tenderness
over the domestic relations, and makes them who hold up their
infants to the baptismal font, better fathers, husbands, and sons, by
the deeper insight which they then possess into their nature and
their life.
The minister consecrates the water; and, as it falls on his infant’s
face, the father feels the great oath in his soul. As the poor helpless
creature is wailing in his arms, he thinks how needful indeed to
human infancy is the love of Providence! And when, after delivering
each his child into the arms of the smiling maiden from whom he
had received it, he again takes his place for admonition and advice
before the pulpit, his mind is well disposed to think on the perfect
beauty of that religion of which the Divine Founder said, “Suffer little
children to be brought unto me, for of such is the kingdom of
heaven!”
The rite of baptism had not thus been performed for several
months in the kirk of Lanark. It was now the hottest time of
persecution; and the inhabitants of that parish found other places in
which to worship God and celebrate the ordinances of religion. It was
now the Sabbath-day, and a small congregation of about a hundred
souls had met for divine service in a place of worship more
magnificent than any temple that human hands had ever built to
Deity. Here, too, were three children about to be baptised. The
congregation had not assembled to the toll of the bell, but each heart
knew the hour and observed it; for there are a hundred sun-dials
among the hills, woods, moors, and fields, and the shepherd and the
peasant see the hours passing by them in sunshine and shadow.
The church in which they were assembled was hewn by God’s hand
out of the eternal rocks. A river rolled its way through a mighty
chasm of cliffs, several hundred feet high, of which the one side
presented enormous masses, and the other corresponding recesses,
as if the great stone girdle had been rent by a convulsion. The
channel was overspread with prodigious fragments of rock or large
loose stones, some of them smooth and bare, others containing soil
and verdure in their rents and fissures, and here and there crowned
with shrubs and trees. The eye could at once command a long
stretching vista, seemingly closed and shut up at both extremities by
the coalescing cliffs. This majestic reach of river contained pools,
streams, rushing shelves, and waterfalls innumerable; and when the
water was low, which it now was in the common drought, it was easy
to walk up this scene, with the calm blue sky overhead, an utter and
sublime solitude. On looking up, the soul was bowed down by the
feeling of that prodigious height of unscaleable and often
overhanging cliff. Between the channel and the summit of the far-
extended precipices were perpetually flying rooks and wood-pigeons,
and now and then a hawk, filling the profound abyss with their wild
cawing, deep murmur, or shrilly shriek. Sometimes a heron would
stand erect and still on some little stone island, or rise up like a white
cloud along the black wall of the chasm and disappear. Winged
creatures alone could inhabit this region. The fox and wild-cat chose
more accessible haunts. Yet there came the persecuted Christians
and worshipped God, whose hand hung over their heads those
magnificent pillars and arches, scooped out those galleries from the
solid rock, and laid at their feet the calm water in its transparent
beauty, in which they could see themselves sitting in reflected
groups, with their Bibles in their hands.
Here, upon a semicircular ledge of rocks, over a narrow chasm, of
which the tiny stream played in a murmuring waterfall, and divided
the congregation into two equal parts, sat about a hundred persons,
all devoutly listening to their minister, who stood before them on
what might well be called a small natural pulpit of living stone. Up to
it there led a short flight of steps, and over it waved the canopy of a
tall graceful birch-tree. This pulpit stood in the middle of the
channel, directly facing that congregation, and separated from them
by the clear deep sparkling pool into which the scarce-heard water
poured over the blackened rock. The water, as it left the pool,
separated into two streams, and flowed on each side of that altar,
thus placing it on an island, whose large mossy stones were richly
embowered under the golden blossoms and green tresses of the
broom. Divine service was closed, and a row of maidens, all clothed
in purest white, came gliding off from the congregation, and crossing
the stream on some stepping-stones, arranged themselves at the foot
of the pulpit, with the infants about to be baptized. The fathers of the
infants, just as if they had been in their own kirk, had been sitting
there during worship, and now stood up before the minister. The
baptismal water, taken from the pellucid pool, was lying consecrated
in a small hollow of one of the upright stones that formed one side or
pillar of the pulpit, and the holy rite proceeded. Some of the younger
ones in that semicircle kept gazing down into the pool, in which the
whole scene was reflected, and now and then, in spite of the grave
looks or admonishing whispers of their elders, letting a pebble fall
into the water, that they might judge of its depth from the length of
time that elapsed before the clear air-bells lay sparkling on the
agitated surface. The rite was over, and the religious services of the
day closed by a psalm. The mighty rocks hemmed in the holy sound,
and sent it in a more compacted volume, clear, sweet, and strong, up
to heaven. When the psalm ceased, an echo, like a spirit’s voice, was
heard dying away up among the magnificent architecture of the cliffs,
and once more might be noticed in the silence the reviving voice of
the waterfall.
Just then a large stone fell from the top of the cliff into the pool, a
loud voice was heard, and a plaid hung over on the point of a
shepherd’s staff. Their watchful sentinel had descried danger, and
this was his warning. Forthwith the congregation rose. There were
paths dangerous to unpractised feet, along the ledges of the rocks,
leading up to several caves and places of concealment. The more
active and young assisted the elder—more especially the old pastor,
and the women with the infants; and many minutes had not elapsed,
till not a living creature was visible in the channel of the stream, but
all of them hidden, or nearly so, in the clefts and caverns.
The shepherd who had given the alarm had lain down again in his
plaid instantly on the greensward upon the summit of these
precipices. A party of soldiers were immediately upon him, and
demanded what signals he had been making, and to whom; when
one of them, looking over the edge of the cliff, exclaimed, “See, see,
Humphrey! we have caught the whole tabernacle of the Lord in a net
at last. There they are, praising God among the stones of the river
Mouss. These are the Cartland Craigs. By my soul’s salvation, a noble
cathedral!” “Fling the lying sentinel over the cliffs. Here is a canting
Covenanter for you, deceiving honest soldiers on the very Sabbath-
day. Over with him, over with him—out of the gallery into the pit.”
But the shepherd had vanished like a shadow; and, mixing with the
tall green broom and brushes, was making his unseen way towards
the wood. “Satan has saved his servant. But come, my lads, follow
me; I know the way down into the bed of the stream, and the steps
up to Wallace’s Cave. They are called the ‘Kittle Nine Stanes.’ The
hunt’s up—we’ll be all in at the death. Halloo, my boys, halloo!”
The soldiers dashed down a less precipitous part of the wooded
banks, a little below the “Craigs,” and hurried up the channel. But
when they reached the altar where the old grayhaired minister had
been seen standing, and the rocks that had been covered with people,
all was silent and solitary—not a creature to be seen.
“Here is a Bible dropped by some of them,” cried a soldier; and
with his foot spun it away into the pool.
“A bonnet! a bonnet!” cried another. “Now for the pretty sanctified
face that rolled its demure eyes below it.”
But after a few jests and oaths the soldiers stood still, eyeing with a
kind of mysterious dread the black and silent walls of the rock that
hemmed them in, and hearing only the small voice of the stream that
sent a profounder stillness through the heart of that majestic
solitude. “Curse these cowardly Covenanters! What if they tumble
down upon our heads pieces of rock from their hiding-places?
Advance? Or retreat?”
There was no reply; for a slight fear was upon every man. Musket
or bayonet could be of little use to men obliged to clamber up rocks,
along slender paths, leading they knew not where; and they were
aware that armed men now-a-days worshipped God,—men of iron
hearts, who feared not the glitter of the soldier’s arms, neither barrel
nor bayonet; men of long stride, firm step, and broad breast, who, on
the open field, would have overthrown the marshalled line, and gone
first and foremost if a city had to be taken by storm.
As the soldiers were standing together irresolute, a noise came
upon their ears like distant thunder, but even more appalling; and a
slight current of air, as if propelled by it, passed whispering along the
sweetbriers and the broom, and the tresses of the birch-trees. It came
deepening and rolling, and roaring on, and the very Cartland Craigs
shook to their foundation as if in an earthquake. “The Lord have
mercy upon us!—what is this?” And down fell many of the miserable
wretches on their knees, and some on their faces, upon the sharp-
pointed rocks. Now it was like the sound of many myriad chariots
rolling on their iron axles down the stony channel of the torrent. The
old grayhaired minister issued from the mouth of Wallace’s Cave,
and said, with a loud voice, “The Lord God terrible reigneth!” A
waterspout had burst up among the moorlands, and the river, in its
power, was at hand. There it came—tumbling along into that long
reach of cliffs, and in a moment filled it with one mass of waves.
Huge agitated clouds of foam rode on the surface of a blood-red
torrent. An army must have been swept off by that flood. The soldiers
perished in a moment; but high up in the cliffs, above the sweep of
destruction, were the Covenanters—men, women, and children,
uttering prayers to God, unheard by themselves in that raging
thunder.
THE LAIRD’S WOOING.
By John Galt.
The laird began the record of his eighteenth year in these words:—
There lived at this time, on the farmstead of Broomlands, a person
that was a woman, by calling a widow; and she and her husband,
when he was in this life, had atween them Annie Daisie, a dochter;—
very fair she was to look upon, comely withal, and of a feleecity o’
nature.
This pretty Annie Daisie, I know not hoo, found favour in my eyes,
and I made no scruple of going to the kirk every Sabbath day to see
her, though Mr Glebeantiends was, to a certainty, a vera maksleepie
preacher. When I forgathered with her by accident, I was all in a
confusion; and when I would hae spoken to her wi’ kindly words, I
could but look in her clear een and nicher like Willie Gouk, the
haverel laddie; the which made her jeer me as if I had a want, and
been daft likewise; so that seeing I cam no speed in courting for
myself, I thocht o’ telling my mother; but that was a kittle job,—
howsoever, I took heart, and said—
“Mother!”
“Well, son,” she made answer, “what would ye?”
“I’m going to be marriet,” quo’ I.
“Marriet!” cried she, spreading out her arms wi’ consternation.
“And wha’s the bride?”
I didna like just to gie her an even down answer, but said I thought
myself old enough for a helpmeet to my table, which caused her to
respond with a laugh; whereupon I told her I was thinking of Annie
Daisie.
“Ye’ll surely ne’er marry the like o’ her;—she’s only a gair’ner’s
dochter.”
But I thocht of Adam and Eve, and said—“We’re a’ come of a
gair’ner;”—the which caused her presently to wax vera wroth with
me; and she stampit with her foot, and called me a blot on the
‘scutcheon o’ Auldbiggins; then she sat down, and began to reflec’
with herself; and, after a season, she spoke rawtional about the
connection, saying she had a wife in her mind for me, far more to the
purpose than such a causey-dancer as Annie Daisie.
But I couldna bide to hear Annie Daisie mislikened, and yet I was
feart to commit the sin of disobedience, for my mother had no mercy
when she thought I rebelled against her authority; so I sat down, and
was in a tribulation, and then I speir’t, with a flutter of affliction, who
it was that she had willed to be my wife.
“Miss Betty Græme,” said she; “if she can be persuaded to tak sic a
headowit.”
Now this Miss Betty Græme was the tocherless sixth daughter o’ a
broken Glasgow provost, and made her leevin’ by seamstress-work
and flowering lawn; but she was come of gentle blood, and was
herself a gentle creature, though no sae blithe as bonnie Annie
Daisie; and for that I told my mother I would never take her, though
it should be the death o’ me. Accordingly I ran out of the house, and
took to the hills, and wistna where I was, till I found myself at the
door of the Broomlands, with Annie Daisie before me, singing like a
laverock as she watered the yarn of her ain spinning on the green. On
seeing me, however, she stoppit, and cried—
“Gude keep us a’, laird!—what’s frightened you to flee hither?”
But I was desperate, and I ran till her, and fell on my knees in a
lover-like fashion; but wha would hae thocht it?—she dang me ower
on my back, and as I lay on the ground she watered me with her
watering-can, and was like to dee wi’ laughing: the which sign and
manifestation of hatred on her part quenched the low o’ love on
mine; an’ I raise an’ went hame, drookit and dripping as I was, and
told my mother I would be an obedient and dutiful son.
Soon after this, Annie Daisie was marriet to John Lounlans; and
there was a fulsome phrasing about them when they were kirkit, as
the comeliest couple in the parish. It was castor-oil to hear’t; and I

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(eBook PDF) Managerial Economics:

Applications, Strategies and Tactics

(eBook PDF) Managerial Economics: Applications,

Managerial Economics 14th edition (eBook PDF)

Managerial Economics 14th Edition by Mark Hirschey

Strategies and Tactics in Organic Synthesis 1st Edition

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(eBook PDF) Managerial Economics and Organizational

INTRODUCTION 1 2 Fundamental Economic Concepts 28

7 Production Economics 236 7A Production Economics of Renewable and

11-1 Monopoly Defined 385 12-2 Interdependencies in Oligopolistic

15-2a Vertical Requirements Contracts 561 Case Exercise: Designing a Managerial

17-Bd The Appropriate Rate of Discount 678 D Check Answers to Selected

PEDAGOGICAL FEATURES OF THE

Instructor's Manual and Test Bank

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Frederick H. deB. Harris

In picture galleries, or in private apartments, portraits seldom

A striking incident of this kind naturally made a deep impression on

Rare encounters of wit and amusing banter occasionally took place

It is a pleasant and impressive time, when, at the close of divine

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