Economics for Mangers

School of Business Management, NMIMS FTMBA- Banking Management: 20 2-20 ! Trim: I """""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""" Instructor: #r$ %han&rima Sik&ar Email I&: chan&rimas'(gmail$com """"""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""""
Objectives: An essential )re-re*uisite for an+ ,usiness enter)rise ,e it large, small, )rofit-making or non )rofitmaking is to un&erstan& the &+namics of the market an& hence to make the ,est of the o))ortunities gi-en the -arious constraints$ To take a &ecision on .hat to )ro&uce, ho. to )ro&uce, at .hat cost to )ro&uce, ho. much *uantit+ to ,e )ro&uce& etc the manager of the enter)rise nee&s to ha-e a clear un&erstan&ing of the market$ Business Economics is concerne& .ith the a))lication of economic )rinci)les an& metho&ologies to such ,usiness &ecision )ro,lems$ /o.e-er, ,usiness enter)rises an& managers, in the course of their &ecision making e0ercise more than often nee& to ha-e an i&ea a,out the aggregate &eman&, interest rates, )rice-le-els 1 e0change rates situations etc that are )re-ailing in the econom+$ None of these -aria,les are un&er the control of the enter)rises or the managers ,ut an+ change in them has significant im)act on the acti-it+ )lans of the enter)rises$ Macroeconomics is that ,ranch of economics that &eals .ith such -aria,les an& their interrelationshi)s an& thus e0)lains the .a+ an econom+ functions$ This course on Economics for Managers aims at )ro-i&ing the )artici)ants .ith an increase& un&erstan&ing of ,usiness &ecision making against the ,ack&ro) of macroeconomic scenario of an econom+$ It .ill ena,le them to learn a -ariet+ of techni*ues that .ill hel) them to sol-e -arious ,usiness )ro,lems relating to costs, )rices, re-enues, )rofits, an& com)etiti-e strategies as also ena,le them to ha-e a ,asic un&erstan&ing of macroeconomics$ The course inclu&es ,oth theor+ an& )ractice$ 2hile the theor+ ser-es to shar)en anal+tical skills, the )ractice .ill gi-e e0)erience in the a))lication of the )rinci)les an& techni*ues to real .orl& ,usiness )ro,lems an& un&erstan&ing the nuances of macroeconomic )olic+ &ecisions Evaluation Criteria: %lass-)artici)ation 3rou) assignments Mi&-term e0amination : Trimester-en& E0amination Pedagogy The )e&agog+ .ill essentiall+ in-ol-e lectures that .ill ,e su))lemente& ,+ other in-class acti-ities, inclu&ing informal &iscussion an& in-class e0ercises$ 5ea&ing material .ill ,e )ro-i&e& ,efore han& an& )artici)ants are e0)ecte& to go through these ,efore coming to class$ This .ill ensure their acti-e )artici)ation an& make the sessions interacti-e an& interesting$ The course )resumes a ,asic un&erstan&ing of school le-el calculus, alge,ra an& geometr+$

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Session Details: Session No$ Contents/ Pedagogy / Cases / Chapter wise reading / Essential Reading Intro&uction to Economics: Basic conce)ts of scarcit+, efficienc+, tra&e-off, role of go-ernment, economic s+stems$ 5ea&ing : Economics ,+ 6$Samuelson an& Nor&haus, %ha)ter 2 12

Anal+sis of #eman& an& elasticit+ of &eman&: #eman& function an& &eman& sche&ule, la. of &eman& 1 its e0ce)tions, utilit+ anal+sis, &eman& cur-e, changes in &eman&, elasticit+ of &eman&, consumers e*uili,rium 5ea&ing : Economics ,+ 6$Samuelson an& Nor&haus, %ha)ter !,' 1 4 %ases: i$ The #eman& for 6etrol 1 Automo,iles 7Source: 6in&+ck 1 5u,infel&8 ii$ Beha-iour of co))er )rices 77Source: 6in&+ck 1 5u,infel&8

Anal+sis of Su))l+ an& elasticit+ of su))l+: su))l+ function, Su))l+ sche&ule, elasticit+ of su))l+, changes in su))l+ 5ea&ing : Economics ,+ 6$Samuelson an& Nor&haus, %ha)ter !,' 1 4

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Market e*uili,rium: #eman&-Su))l+ e*uili,rium anal+sis, a))lications to economic issues, 6rice controls 5ea&ing : Economics ,+ 6$Samuelson an& Nor&haus, %ha)ter !,' 1 4 %ases: i$ 6rice controls 1 963 shortages 7Source: 6in&+ck 1 5u,infel&8 i-$ Ne.s )a)er articles on )rice of gol&, )etrol )rices ,eing market &etermine& -$ Mo,ile tele)hon+ in In&ia 7ISB%S ME 00:8, -i$#o soaring )rice an& Mounting &eman& in In&ian 3ol& Market s)eak of a )ara&o0$ 7ISB%S ME00;8

<n&erstan&ing 6ro&uction: )ro&uction function, shortrun -s longrun, t+)es of in)uts, 9a. of -aria,le )ro)ortions, Stages of 6ro&uction, 5eturns to scale, 6ro&ucer=s e*uili,rium 5ea&ing : Economics ,+ 6$Samuelson an& Nor&haus, %ha)ters ; %ases: i$ A 6ro&uction Function for 2heat 7Source: 6in&+ck 1 5u,infel&8 ii$ 5eturns to Scale in the %ar)et In&ustr+ 7Source: 6in&+ck 1 5u,infel&8

<n&erstan&ing %ost of )ro&uction: %ost function, Economic >s$ Accounting cost, conce)t of o))ortunit+ cost, long run an& short run costs, economies of scale an& sco)e, 9earning cur-e 5ea&ing : Economics ,+ 6$Samuelson an& Nor&haus, %ha)ter : %ase: i$ Economies of sco)e in Trucking In&ustr+ 7Source: Samuelson 1 Nor&haus8

Anal+sis of market structure: T+)es of markets an& main characteristics, 6rofit ma0imi?ation, 6erfect com)etition, shortrun 1 lonrun e*uili,rium un&er )erfect com)etition, ,reake-en 1 shut&o.n )oint, su))l+ cur-e of firm 5ea&ing : Economics ,+ 6$Samuelson an& Nor&haus, %ha)ter @ %ases: i$ 6erfect %om)etition un&er eBa+: A Fact or a Factoi&A 7IBS%S ME 00 :8 ii$ A ta0 on 6etrol

Mono)ol+: Shortrun 1 longrun e*uili,rium, mono)ol+ )o.er, )rice &iscrimination 5ea&ing : Economics ,+ 6$Samuelson an& Nor&haus, %ha)ter B %ase: i$ Economies of %ou)ons 1 5e,ates ii$ Airline Fares i-$ 6ricing of %ellular 6hone Ser-ices 7Source: 6in&+ck 1 5u,infel&8

Mono)olistic %om)etition: Shortrun 1 longrun e*uili,rium, i&ea of e0cess ca)acit+ 5ea&ing : Economics ,+ 6$Samuelson an& Nor&haus, %ha)ter 0 %ase: i$ Mono)olistic %om)etition in Markets for %olas 1 %offee 7Source: 6in&+ck 1 5u,infel&8 0 Cligo)ol+: Non-collusi-e 1 %ollusi-e Cligo)ol+, Intro&uction to game theor+ 5ea&ing : Economics ,+ 6$Samuelson an& Nor&haus, %ha)ter 0 %ases: i$ Times of In&ia 1 /in&ustan times 7Source: I%M58 ii$ 6rocter 1 3am,le in a 6risonner=s #ilemma 7Source: 6in&+ck 1 5u,infel&8 C-er-ie. of Macroeconomics 1 measuring economic acti-it+ 5ea&ing : Economics ,+ 6$Samuelson an& Nor&haus, %ha)ters B 1 2 2 Business %+cles 1 Aggregate #eman& 5ea&ing : Economics ,+ 6$Samuelson an& Nor&haus, %ha)ter 22 ! 6u,lic Finance 1 Fiscal 6olic+ 1 fiscal )olic+ tools 5ea&ing: Sh+amal 5o+, %ha)ter ' ' Mone+ an& Financial S+stem 5ea&ing : Economics ,+ 6$Samuelson an& Nor&haus, %ha)ters 2! 4 Macroeconomic 6olicies: Monetar+ 6olic+, Monetar+ )olic+ tools, Fiscal 1 monetar+ )olic+ mi0 5ea&ing : Economics ,+ 6$Samuelson an& Nor&haus, %ha)ters 2' %ase Stu&ies: #iscussion of ne.s )a)er articles ; C)en Econom+: C)enness in goo&s market 5ea&ing : Economics ,+ 6$Samuelson an& Nor&haus, %ha)ter 2@ : C)en Econom+: C)enness in financial market 5ea&ing : Macroeconomics ,+ Cli-ier Blanchar&, %ha)ter @

Macroeconomic 6olicies in C)en Econom+ 5ea&ings: Macroeconomics ,+ Manki., %ha)ter 2 %ase Stu&ies: i$ #iscussion of ne.s )a)er articles ii$ Me0ican 6eso crisis 7Source: Manki.8 iii$ %hinese currenc+ contro-ers+ 7Source: Manki.8

3lo,ali?ation of In&ian econom+, go-t$ )olic+ in )ost li,erali?ation )erio& .ith focus on monetar+ )olic+ 5ea&ings: Economic Sur-e+s of In&ia 7-arious issues8

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Te0t Book: Economics 7 Bth e&ition8, 6aul A$ Samuelson an& 2illiam #$ Nor&haus , Tata Mc3ra.-/ill 6u,lishing %o$ 9t&$, Ne. #elhi 5eference: i$ 5o+, Sh+amal, Macroeconomic 6olic+ En-ironment: Tata Mcgra. /ill,200: ii$ Blanchar&, Cli-ier, Macroeconomics, 6earson, ' th e&ition iii$ Manki. 3regor+, Macroeconomics, 2orth, ; th e&ition iii Achar+a, S, In&ia=s Macroeconomic 6erformance an& 6olicies since 2000, I%5IE5 2orking 6a)er 224, 200@ Internet 5eferences: htt):DDin&ia,u&get$nic$in htt):DDcommerce$nic$in ...$r,i$org$in