Spring Semester, 2012, Module 2:

Lecture time:

 

 

COURSE DESCRIPTION

Managerial Economics is the application of economic theory and methodology to managerial decision making problems within various organizational settings such as a firm or a government agency.  The emphasis in this course will be on demand analysis and estimation, production and cost analysis under different market conditions, advanced topics in business strategy. Students taking this course are expected to have had some exposure to economics and be comfortable with basic algebra. Some knowledge of calculus would also be helpful.

 

COURSE OBJECTIVE

In today's dynamic economic environment, effective managerial decision making requires timely and efficient use of information.  The purpose of this course is to provide students with a basic understanding of the economic theory and analytical tools that can be used in decision making problems. Students who successfully complete the course will have a good understanding of economic concepts and tools that have direct managerial applications. The course will sharpen their analytical skills through integrating their knowledge of the economic theory with decision making techniques. Students will learn to use economic models to isolate the relevant elements of a managerial problem, identify their relationships, and formulate them into a managerial model to which decision making tools can be applied. Among the topics covered in the course are: price determination in alternative market structures, demand theory, production and cost functions, and business strategy. In addition, the course will provide a basic introduction to econometric analysis and its role in managerial decision making.

 

 The main textbook is Managerial Economics and Business Strategy, 7th ed. by Michael Baye, McGraw Hill

 

Class notes (PPT) and other materials will be posted online for students download.  

 

 

 

 

Midterm Exam:                                                      30%

Final Exam:                                                           50%

Consulting Projects:                                                      20%

 

All chapters listed below refer to the Baye textbook unless otherwise indicated. You are responsible for materials in the Baye text that correspond to the material covered in class. The Baye text should be viewed as a learning aide, NOT as an independent source of examinable material. However, doing questions end of each chapters will greatly help you to prepare exams.

 

Week 1

       The Fundamentals of Managerial Economics         Ch 1

       Market Forces: Demand and Supply                      Ch 2

 

Week 2

       Quantitative Demand Analysis                         Ch 3

       The Theory of Individual Behavior                          Ch 4

Week 3

       The Production Process and Costs                         Ch 5

 

Week 4

       The Organization of the Firm                                  Ch 6

       The Nature of Industry                             Ch 7

 

Week 5

       Midterm Exam

       Managing in Competitive, Monopolistic,

Monopolistically Competitive Market                Ch 8

 

Week 6

Basic Oligopoly Models                             Ch 9      

Game Theory: Inside Oligopoly                         Ch 10

 

Week 7

       Pricing Strategies for Firms with Market Power             Ch 11

 

Week 8

The Economics of Information                           Ch 12    

Advanced Topics in Business Strategy                    Ch 13

 

Week 9

       A Manager’s Guide to Government in the Marketplace       Ch 14    

Project Presentation and Hand In                     

 

Final Exam (TBD)

In order to help students to build up the managerial economics analysis skill we provide 4 real world consulting projects in the course. Students are required to independently conduct 4 consulting reports regarding to the 4 projects. The exercises require you to apply some of the tools you learned in each chapter covered in the class to make a recommendation based on an actual business scenario. The topics of 4 consulting projects are,

 

·        Estimating Industry Demand for Fresh Market Carrots

·        Estimation and Analysis of Demand for Fast Food Meals

·        Production Decisions at Harding Silicon Enterprises, Inc.

·        Pricing and Production Decisions at PoolVac, Inc.

 

 

The penalties for any form of cheating or plagiarism (whether in exams or project) are severe. Written work submitted must be your own. Any sources of information used in completing your work must be identified. Plagiarized written work will not be accepted and you should be aware that non acceptance of a submission might, in some cases, lead to failure in the course. Since the project is a team work, the final report should identify each student’s contribution. The significant uneven contribution in the work will lead to less mark for the student who made less contribution comparing to his/her team member.