School of Management, (SOM)
 
SM80.1706 : Managerial Economics  3(3-0)
 
Course objectives:

An understanding of economic theory, economic tools and techniques is essential for managers to make the best operating and planning decisions.  This course focuses on the evolution and functioning of markets using theories of economics, behavioral science and sociology and enable students to understand the behaviors of real markets.  The role of government in influencing a firm's decision making is also introduced since changes in government policy could directly or indirectly affect the firm's operating and planning decisions.
 
Learning Outcomes:

The students on completion of this course would be able to:

  • Identify and analyze elasticities which could influence changes in demand and scale economics and cost that could influence supply. 
  • Evaluate the characteristics of different market models, how the real markets function and how prices and quantity are set in each type of market. 
  • Apply production and cost theories to the analysis of real market behavior in Asian countries and related managerial response decisions.
 
Pre-requisite(s):

None
 
Course Outline:

 I.    Introduction
1.    Introduction to managerial economics: nature, scope and key concepts
2.    Optimization techniques

II. Demand Theory
1. Individual and market demand
2. Price elasticity
3. Income elasticity
4. Cross price elasticity
5. Implications of elasticity in managerial decisions

III.  Estimating Demand Function
1.    Methods to estimate demand
2.    Regression analysis
3.    Demand Forecasting

IV.   Production Theory
1.    Production function with one variable (law of diminishing returns, optimal utilization)
2.     Production function with two variables (isoquants, isocosts, MRTS, optimization)
3.     Returns to scale
4.    Technological changes and industrial innovation

V.    Cost Theory
1.    Cost functions
2.    Economies of scale and scope
3.    Learning curve
4.    Break-even analysis

VI.     Perfect Competition; Monopoly and Monopolistic Competition
1.       Market structure
2.       Market prices and output under perfect competition
3.       Market prices and output under monopoly market
4.       Market prices and output under monopolistic competition

VII.   Government Policy
1.    Regulations to monopoly
2.    Regulations to encourage competition
3.    Regulations to protect consumers/workers
 
VIII.  Pricing Techniques
1.    Pricing of multiple products
2.    Pricing of joint products
3.    Price discrimination
4.    Transfer pricing

IX.     Oligopoly and Game Theory
1.      Market structure (measures of oligopolistic market)
2.      Collusive agreements (optimal solution and its instability)
3.      Price leadership
4.      Game Theory

X.     Market Failures
1.      Externalities
2.      Information Asymmetry
3.      Public Goods
 
XI.   Market Models
1.    Business simulation and real market analysis in Asia
2.    Impacts of different market models
   a.  Monopolistic Competition
   b.  OIigopoly
    c.  Monopoly
 
Laboratory Sessions:

None
 
Learning Resources:

Textbook:

Besanko, D. & Braeutigam, R. (2015). Microeconomics, (5th ed.). New Jersey: Wiley International.

 
 
Reference Books:
Archibald, G.C. (2005). Information Incentives and Economics of Control, Cambridge: Cambridge University Press.

Salvatore, D. & Rastogi, S. K. (2016), Managerial Economics: Principles and Worldwide Applications (8th ed.). New York: Oxford University Press.
 
Journals and Magazines:
Financial Times, FT
The Economist (especially Asia; Business and Financial and Economics Section), The Economist Group
Asian Business, APBL Group
Business Week, Bloomberg

Others:
Higher Education Academy, The Economics Network available at  http://www.economicsnetwork.ac.uk/books/
 
Time Distribution and Study Load:
Lectures = 40 hours
Assignments = 10 hours in-class discussions
Term paper presentation = 3 hours 
Self Study (including assignments and term paper) = 135 hours
Field trip: ½ day to the Stock Exchange of Thailand
 
Teaching and Learning Methods:
The teaching and learning methods applied for this course are lectures, class assignments, term paper and field trip.
 
Evaluation Scheme:
The final grade will be computed from the following constituent parts:
Assignments                                     15%
Term paper & presentation             15%
Mid-term Exam                                  30%
Final Exam                                          40%

An “A” would be awarded if a student can demonstrate the knowledge learned in class by presenting his/her own analysis of all topics given as assignment, term paper and two exams. A “B” would be awarded if a student shows an overall understanding of all given topics; a “C” would be given if a student performs below average expectation on both knowledge acquired and analysis. A “D” would be given if a student does not meet basic expectations in understanding and analyzing the topics and issues presented in the course.
 
Instructor(s):
SECTION NAME
A Dr. Syed Shurid Khan