Managerial economics is concerned with the application of economic concepts
and principles to managerial decision making problems. The course begins
with a review of economic models and the basics of marginal analysis. This
is followed by a review of the theory of the consumer and the firm.
This introductory discussion is followed by a discussion of several
mathematical tools that can be used to assist managerial decision making.
These tools include linear programming and regression analysis. The primary
focus is on the application of these tools to managerial problems. Alternative
forecasting techniques are examined and compared.
Managerial Economics
Eco302
<<Spring 2007>>
S. Atri
Office Hours:
Mahar 431A
W: 3:00 - 4:30 PM
Phone: (315) 312-3954
T,TH: 11:00 - 12:15
Email: atri@oswego.edu
and by appointment
Syllabus
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, production and
cost analysis under different market conditions, and decision-making under
uncertainty. 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. Managerial economics is an applied quantitative
course in which managerial problems are studied and analyzed (and in many
cases solved) in the context of microeconomic models. Our tools of analysis
in this course include graphs, diagrams, and mathematical expressions and
equations.
Course Objectives
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. The course will sharpen the analytical
skills of the students 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.
Required Textbook
Mark Hirschey, Fundamental of Managerial
Economics, 8th Edition, Thomson South-Western: 2006
Course Outline
Orientation
What is Managerial Economics?
The Economic Function of a Firm
The Role of Profits
The Theory of the Firm and its
Limitation
Optimization
Value Maximization
Marginal Analysis
Use of Graphs
Profit Maximization vs. Value Maximization
Demand and Supply
Demand and its Determinants
Supply and its Determinants
Market Equilibrium
Elasticity
Statistical Estimations
A Review of Some Basic Statistics
Regression Analysis
Evaluating Regression Results
Estimating Elasticity
Production and Economics of the
Firm
Production Function
Law of Diminishing Returns to a
Factor
Optimization in the Case of a Single
Input
Optimization in the Case of Multiple
Inputs
Isoquants and Isocosts
Optimal Combination of Inputs
Expansion Path and Returns to Scale
Cost Analysis
The Concept of Opportunity cost
Explicit and Implicit Costs
Sunk Costs
Short-Run Cost Analysis
Long-Run Cost Analysis
Optimal Plant Size and Transportation
Costs
Learning Curves
Scale and Scope Economies
A Firm’s Break-Even Volume and
Operating Leverage: A simple Analysis
Market Structure: Perfect Competition
Competitive Markets
Profit Maximization under Competitive
Conditions in the Shot Run
Market Supply in a Competitive
Market
Profit under Competitive Conditions
Efficiency and Competitive Markets
Markets and Government Policy
Market Structure: Imperfect Competition:
Monopoly and Monopsony
The Characteristics of Monopoly
Markets
Types of Monopolies
Natural Monopolies
Social Costs and Benefits of Monopolies
Antitrust Laws
Market Structure: Monopolistic
Competition and Oligopoly
The characteristics of Monopolistically
Competitive Markets
Equilibrium and Efficiency in Monopolistically
Competitive Markets
Oligopolies and their Characteristics
Oligopoly Models
Duopolies
Game Theory: The Prisoner’s Dilemma
Model
Cartels
Concentration Ratios
Pricing Practices
Marginal Cost Pricing
Pricing in Imperfectly competitive
Markets
Markup Pricing
Price Discrimination
Transfer Pricing
EVALUATION METHODS
The will be two scheduled exams
as follows:
|
Scheduled Tests
|
Date
|
Planned Coverage
|
Weight (%)
|
|
Test I
|
Thursday, Feb 15
|
Chapters 1-2, 3
|
15
|
|
Test II
|
Thursday, March 15
|
Chapters 3, 4,5, 7
|
30
|
|
Final Exam
|
Thursday, May 17
(10:30 AM-12:30PM)
|
Chapter 7,8,10-14
|
40
|
In addition to the above exams students
will be given regular quizzes and/or homework assignments. Quizzes and
homework assignments carry a total of 15 points which will be added to
the points obtained from the schedules tests.
Note: Students who have a
disabling condition which might interfere with their ability to carry out
the course requirements are encouraged to speak, confidentially, to the
class instructor, or to contact the Office of Disability Services
ATTENDANCE POLICY
Students are strongly urged to
attend classes regularly and keep up with the course coverage and other
assignments. Excessive absences could have an adverse effect on one's grade.
Make-up tests are given only when a student misses a test as a result of
professionally diagnosed and treated illness and other verified extenuating
circumstances. Make-up tests may or may not have the same format as the
scheduled tests. There will be no makeups for missed quizzes.
A FEW WORDS ABOUT MY THOUGHTS
AND MY PLANS FOR THE COURSE
Learning is a dynamic process that
starts at birth and continues throughout one's life. College education
is simply a brief part of that process. Every one of you comes into this
course with a body of knowledge that could (and should) be used as a foundation
for the new information that you will acquire in the course. Most of the
economic and managerial issues discussed in this course have to do with
familiar topics, especially for those of you who have already taken courses
in business and economics. In fact, even those who have not had any formal
training in economics or business will find the issues addressed in the
course rather common. We should try to capitalize on that. For most people
it is much easier to understand and learn new information if it can be
linked to what they already know. This principle is the basis of my teaching
philosophy and I suggest that you make it the foundation of your approach
to learning. I always attempt to design my lectures in such a way that
they be complementary to the material in the textbook. Thus it is essential
that you read and use the relevant chapters in the textbook in conjunction
with the class notes.
How to Study Managerial Economics
This is an introductory course in
managerial economics with limited goals. It is by no means comprehensive.
We will not be able to even cover all of the chapters in the textbook.
We will still try to make good use of what we learn in the way of application.
We shall study most topics from the perspective of a business firm whose
managers' primary objective, we assume, is to maximize its value. This
is the core theme of the course that should be kept in mind throughout
the course.
Economics is nothing more than a
chain (or a network) of logical inferences based on factual observations
packaged in what we call economic models. Economic models are simplified
pictures of the "real" world. That makes our job somewhat easy because
most of us are already familiar with many economic facts and, in fact,
we even practice them. What makes economics difficult is keeping track
of the interactions among economic actors (consumers, investors, business
firms, governments, etc.) and understanding their consequences. That is
why we need economic models that are abstract pictures of the reality.
Economic models allow us to see and understand the fundamentals of economic
relationships more clearly. These relationships are not always easily observable
in the complex context of the real world.
As mentioned earlier, we will try
to wrap most of our discussions around the main theme of the course; that
is decision making based on the objective of value maximization. I will
remind you of this theme in beginning of most lectures and try to build
upon that as well as other relevant information covered in earlier lectures.
Before you start learning the details of each new topic, be sure to think
about and understand the relevance of it to the main theme of the course
and its possible connection to the material you have studied and learned
earlier. In that way you will be able to anchor the new information to
what you already know. Never study mechanically or try to memorize the
material. Take notes while you are reading, pause and think about the key
concepts, and try to recall the important points of each section and their
relevance after you have completed the section.
College Policy on Intellectual
Integrity
Intellectual integrity on the part
of all students is basic to individual growth and development through
college course work. When academic dishonesty occurs, the teaching/learning
climate is seriously undermined and student
growth and development are impeded.
For these reasons, any form of intellectual dishonesty is a serious
concern and is therefore prohibited.
The full intellectual integrity
policy can be found at
http://www.oswego.edu/administration/registrar/policy_text.html#cpii
