MANAGERIAL ECONOMICS (NQF 7)

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. This Course is about exposing the students to a foundation in
microeconomics and industrial organization. It aims to develop students’ Capacity to analyse
the economic environments in which business entities operate and understand how
managerial decisions can vary under different constraints that each economic environment
places on a manager’s pursuit of its goals.

Learning outcomes

Upon completion of this course, the students will be able to:

 Analyse the economic environments in which business entities operate

 Understand how managerial decisions can vary under different constraints that each
economic environment places on a manager’s pursuit of its goals.
 Understanding of the economic theory and analytical tools that can be used in
decision making problems.
 Analyse the impact of uncertainty in business decisions.

Course outline
1. Introduction to Managerial Economics

 What is managerial economics?

 The nature and importance of profits
 Goals and constraints of the firm
 Understanding incentives
 Understanding markets
 Marginal analysis
2. Economic decision making
 Business decisions
  Decision making process
 Decision Making under Uncertainty: Risk Analysis
 Decision trees
3. Managerial compensation
 Principal agent problem
 Competence based theory
 Managerial compensation
4. Project Decisions
 Franchising
 Pricing
 Auctions
5. Forecasting techniques
 Business and Economic Forecasting
 Different forecasting methods

Recommended texts
1. Mark Hirschey, Managerial Economics, 10th edition, Thomson/South-Western College
Publishing: 2003

2. Microeconomics (International Edition), 8th ed., Robert S. Pindyck & Daniel Rubinfeld,
Pearson/Prentice Hall, 2013

3. Managerial Economics, 4th ed., Ivan Png, Rutledge, 2012.