GRABSUM School Inc.

Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

OUTCOMES-BASED TEACHING AND LEARNING PLAN IN MANAGERIAL ECONOMICS

Course Title Managerial Economics Course Code : Mng Eco

Credit Units 3 UNITS Pre requisites:

Course Description:

Managerial Economics is concerned with the application of economic principles and methodologies to key management decisions
within organizations. It provides principles to foster the goals of the organization, as well as a better understanding of the external
business environment in which an organization operates. A primary purpose of the course is to develop tools useful in other business
related courses since economics is the foundation for much of what is taught in finance, marketing, business strategy and many other
courses in the accountancy related program. Managerial Economics is fundamentally a unique way of thinking about problems, issues
and decisions that managers face in each of the functional areas of the organization as well as the strategic ones faced by general
managers

Learning Outcomes:

After completing the course the student should be able to:

 Use the rational-actor paradigm to predict firm and individual behavior.

 Compute the relevant costs of any decision.
 Use marginal analysis to make extent (how much) decisions.
 Make investment decisions that increase firm value.

Page 1 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

 Set optimal prices and price discriminate.

 Predict industry-level changes using demand/supply analysis.
 Develop long-run strategies to increase firm value.
 Use game theory to predict how your actions influence those of others.
 Bargain effectively.
 Make decisions in uncertain environments.
 Solve the problems caused by moral hazard and adverse selection.
 Align individual incentives with the goals of the company.
 Align division incentives with the goals of the company.
 Manage relationships between upstream suppliers or downstream retailers.
 Identify unconsummated wealth-creating transactions and devise ways to profitably consummate them.

Assessment
Week Content Standard PERFORMANCE TASK Learning Outcomes Learning Activities
Methods
1-3 The Economic Way of Demonstrate clear understanding of
Thinking economics and other related term

1. Markets and the Firm Understand the different  Lecture  Quiz

sub-markets making up
2. Agenda for 405 an economy  Researching  Recitation

3. Actors in the market Explain who the main  Field Observation  Written exam
actors in most markets
4. Defining a market are  Peer Discussion  Report on

Page 2 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

company’s
5. Supply and Demand Explain what  Collaborative performance
Analysis considerations go in Work
defining the relevant
6. Supply Basics market  Interview
authority of
7. Demand Basics What why supply- firm /
demand analysis is organization
8. Concept of Equilibrium needed
 Articles/case
9. Principles Economic Understand how to think study/research
Thinking: Opportunity of Supply separately sbout economics
Cost
Understand how to think
10. Principles Economic of Demand separately
Thinking: Relevant cost
How to bring Supply and
Demand together to
define a market’s
equilibrium

Explain Surplus and

Shortage in a market

Explain what determines

the evolution of prices
over time in a supply-
demand framework

Do we observe full

Page 3 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

supply and demand

curves or only points of
intersection in
the real world?

Define and give business

examples of opportunity
cost.

Explain the distinction

between an irrelevant
cost and a relevant
(differential)
one.

If time: some applications

to the economic way of
thinking

4-5 Demand Analysis I Demonstrate competences and skills to

analyze demand based on the different
determinants . Define an indifference  Lecture  Quiz
1. Personal value curve and explain the
1.1. Total personal value shape of one between  Class Discussion  Recitation
1.2. Marginal personal two goods;
value between a good and a  Information  Written exam
1.3 Willingness to pay bad. Inquiry
 Reaction Paper
2. Indifference curves Define marginal personal  Case Study
value and derive a analysis  An analysis

Page 4 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

3. The demand schedule schedule from total

personal value.
4. Consumer surplus
5. The demand function Derive and plot a demand
schedule for an
6. Change in demand vs. individual from
quantity demanded knowledge of the
person’s marginal
7. Determinants of demand personal value.
7.1. Variables usually
outside the firm’s State the law of demand
control
7.1.1 Income Explain the reasons
7.1.2 Prices of related behind a downward
goods sloping industry demand
7.1.3 Price curve
expectations
7.1.4. Population size Infer the marginal
and mix personal value schedule
7.1.5. Network effects implicit in a person’s
demand schedule.
7.2. Factors that the firm
can usually control Define consumer surplus
7.2.1 Product and calculate its
7.2.2 Promotion magnitude in the context
7.2.3 Place of a numerical example.

8. Elasticity definitions Graphically portray

8.1. Income elasticity consumer surplus.
8.2. Cross price elasticity

Page 5 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

8.3. Own price elasticity Distinguish between a

8.4 Promotional change in demand and a
change in quantity
demanded.
9. Price elasticity
categories List at least five
conceptually distinct
10. Special cases of price factors that cause
elasticity demand to change.

11. Elasticity and total Define and give examples

revenues of complements,
substitutes and normal
12. Relation among P, MR goods.
and Ed
Define, precisely, price
13. Basic price elasticity of demand.
discrimination
Define cross price and
13.1 Rationale income elasticities.
13.2 Rules
Calculate price elasticity
of demand from data.

Categorize demand as
being elastic or inelastic
from given data.

Explain the unique

properties and reasons

Page 6 of 34
GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

behind totally elastic and

totally
inelastic demand.

Assess the impact on

revenues of a price
change under alternative
scenarios of
elasticity.

Argue that a firm should

not operate in the
inelastic range of
demand.

Demonstrate verbally
and graphically that the
profit-maximizing price
occurs
where demand is elastic
if marginal cost is
positive.

Distinguish the special

case of zero marginal
cost and the unique
pricing solution
where demand elasticity
is unity.

Page 7 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

Correctly provide the

equation that relates
marginal revenue, price
and elasticity.

Calculate marginal
revenue from knowledge
of the demand function.

Determine the optimal

price for a price searcher
– given the demand and
cost functions.

Explain why, for the price

searcher, marginal
revenue is less than
price.

6 PRELIMINARIES EXAMINATION
7-9 Demand Analysis 2 Demonstrate competences and skills to
analyze demand based on the different
1. Determinants of price determinants . Identify the most
Elasticity important factor in
determining elasticity –
1.1. Competition from competition.  Web Searching  Quiz
substitutes: Role of
market share Describe how its market  Inquiry Research  Written exam
1.2. Relationship Between share impacts a firm’s Method
Market and Firm demand elasticity.  A report

Page 8 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

Elasticity  Class Discussion

1.3. Rivals' price response Explain how the elasticity  Reflection paper
1.4. Other factors of supply of substitute
1.4.1 Switching costs products impacts the  Interviewing an
1.4.2 Search costs elasticity of demand for a expert
1.4.3 Quality and signaling seller.
1.4.4 Importance of item  Dialogue
in total costs of
“solution’ Define switching costs  Article/case
2. Differentiation versus and relate the concept to study/Research
Cost Leadership elasticity. reading
strategies
Discuss how the Internet  Group Discussion
3. Supply might affect demand
3.1. Supply function elasticity facing a
3.2. Law of supply particular on-line
3.3. Change in quantity seller.
supplied versus
change in supply Conjecture whether
3.4. Supply elasticity demand is likely to be
elastic or not in the
4. Competitive market absence of data.
equilibrium
Distinguish between a
5. Effects of demand and firm and an industry
supply shifts elasticity and explain
which is relevant
6. Price ceiling is a particular situation,
including price matching
7. Price floor of rivals.

Page 9 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

8. Firm versus market Link elasticity to the

Demand strategies of product
differentiation and cost
9. Estimating demand – leadership.
econometrics
9.1. Linear regression Display the market
9.2. Interpreting clearing price and
coefficients quantity for a
9.3. Interpreting competitive market.
regression fit
9.4. Omitted variables Show the impact of a
9.5. Log linear estimation change in demand on the
9.6. Identification market clearing price and
Problem quantity.

10. Solving for optimal price Show the impact of a

change in supply on the
market clearing price and
quantity.

Explain how supply

elasticity affects the
degree to which price
changes when
demand changes.

Distinguish between the

industry demand for a
product sold in a

Page 10 of 34
GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

competitive
market from the demand
facing one seller.

Explain why the demand

facing a price taker is
horizontal.

Run a regression that

estimates a demand
function containing
multiple
independent variables.

Interpret in words the

meaning of the
coefficients of each of the
independent
variables.

Calculate the price, cross

price, and income
elasticities from the
regression
output at given values of
the independent
variables.

Forecast demand based

Page 11 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

on the regression results.

Use the regression and

knowledge of costs to
make pricing decisions.

Explain the problem of

non-linearity.

Recast a regression in
log-linear form.

Correctly interpret the

coefficients of a log-linear
demand regression as
elasticities.

Explain and give one

example of the
identification problem.

9 -10 Production and Costs Exhibit skills and competencies to apply

correctly the optimal condition for factor
employment in other settings besides one
dealing with production (capital and labor)
when given a set of numbers relating to factor
prices and production.
1. Production function Distinguish between  Interactive  Individual or
1.1. Short run function short run and long run Discussion Group
1.2. Long run function situations. Exercises

Page 12 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

 Lecture-
2. Law of diminishing Give a precise definition
returns and explanation for the  Group Work  Oral reporting
principle of diminishing
3. Product curves returns.  Brainstorming
 Worksheet
3.1. Total  Group Discussion presentation
3.2. Marginal Define MP, AP and TP of
3.3. Average labor and be able to show  Demonstration
on a graph the  Written exam
relationships among the  Computation and table
4. Marginal revenue product functions. exam

5. Marginal labor cost Employ data on the MP of

labor and demand for the
6. Optimal employment of product and create the
labor in the short run short run demand curve
for labor, using the
7. Production isoquants concept of marginal
revenue product.
8. Marginal rate of technical
Substitution State and explain where
the optimal employment
9. Returns to scale is for a factor such as
9.1. Constant labor in the short run.
9.2. Increasing
9.3. Decreasing Explain why the marginal
labor cost exceeds the
10. Isocost lines wage for a wage
searcher.

Page 13 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

11. Optimal combinations of

factors Define a production
isoquant and state the
12. Expansion path relationship between the
slope of the isoquant and
13. Application: Optimal the ratio of factor
interventions and Cost- marginal products.
effectiveness
Explain why the ratio of
14. Cost types the MP’s is a measure of
the substitutability
14.1. fixed between factors.
14.2. sunk
14.3. variable Explain why the slope of
14.4. differential an isoquant becomes
flatter as one moves
15. Application of cost down along it.
types: technology
adoption State the definition of
and reasons for both
16. Cost functions increasing and
16.1. Short run decreasing returns to
16.1.1. total fixed scale.
cost
16.1.2. total cost Define an isocost line and
16.1.3. average demonstrate that its
variable cost slope is a measure of
16.1.4. average relative factor prices and
fixed cost that its position is a
16.1.5. marginal measure of total outlay.

Page 14 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

cost
16.2. Long run Explain verbally,
16.2.1. total cost graphically and
16.2.2. average cost mathematically why for
16.2.3. marginal cost optimality in the mix of
factors, MRTS must equal
the ratio of the factor
17. Application of costs: prices.
Make versus Buy
Define an expansion path
18. Relation between cost and explain why it is a
and productivity long-run equilibrium
18.1. MC and MP of production concept.
labor
18.2. Unit labor cost Be able to apply correctly
and AP of labor the optimal condition for
factor employment in
19. Relation between long & other settings besides
short run cost functions: one dealing with
the envelope curve production (capital and
labor) when given a set
20. Economies of scale of numbers relating to
factor prices and
21. Economies of scope production.

22. Learning curve Define what is meant by

the term "cost-effective".

Determine which of two

alternative methods of

Page 15 of 34
GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

achieving an outcome is
preferred - given data on
costs and effects of each.

Define implicit cost as

opposed to explicit cost
and give an example of
each.

Explain the meaning of

normal rate of return by
relating the concept to
opportunity cost.

Demonstrate that a
normal rate of return is
equivalent to zero
economic profit.

Distinguish between a
short run and a long run
situation.

Distinguish among sunk,

fixed, and variable costs
in a variety of contexts.

Explain the relationship

between a marginal and
an average cost function.

Page 16 of 34
GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

Define and derive per

unit cost functions
(marginal, average
variable, average
fixed, average total) from
knowledge of total cost
functions and vice versa.

Explain the underlying

reasons behind the
shapes of each cost curve
- both short run and long
run.

Derive and explain the

implications of the
relationship between
unit labor cost and the
average productivity of
labor; ditto for marginal
cost and for the marginal
productivity of labor.

Demonstrate that long

run adjustments are
cheaper than short run
ones because the firm
can minimize costs in the
long run.

Page 17 of 34
GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

Understand that the long

run cost functions come
from the expansion path
of the firm and stem
from the cost-minimizing
condition.

Derive and plot the long

run average cost curve as
the envelope of the short
run curves.

Differentiate between the

reasons behind a
declining long run
average cost and a
declining short run
average cost.

Define and recognize the

existence of economies of
scale - given cost data.

State three different

reasons why scale
economies may occur.

Decide which scale of

plant is most

Page 18 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

advantageous for a firm

to build.

Differentiate between
lower costs that stem
from cumulated volume
versus rate
effects

Relate the Improvement

Factor to the exponent in
the equation for the
learning effect.

Explain how the learning

effect can lead to
competitive advantage.
11 Profit Maximization and
Competitive Markets
Portray profit maximizing price and output
for a price taker firm that is making or losing
money in the short run and long run operation
in a competitive market..

Predict how the elasticity of supply of inputs

will impact the shape of the long run industry
supply curve Distinguish the features  Class Discussion

Page 19 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

1. Market structures of monopoly, oligopoly

1.1. Price taker and monopolistic  Lecture
1.2. Price searcher competition, giving two
examples of each.  Reading of a case
study : Paul Chesler,
Director, Quality
2. Demand facing a price Describe and graph the Assurance
taker revenue conditions
(demand, MR, and TR)  Group discussion
3. Price taker: profit- facing a price taker.
maximizing output
3.1. Short run State the profit
3.2. Long run maximizing condition for
the price taker in the
4. Economic vs. accounting short run.
profit
5. Shut-down condition Explain the “shut down”
rule.
6. Supply curve of a price
taker Portray profit
maximizing price and
7. Industry supply curve output for a price taker
firm that is losing money
8. Relationship between MC in the short run but finds
and supply it advantageous to
operate.
9. Contribution analysis
Portray profit
10. Market entry maximizing price and
output for a price taker

Page 20 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

11. Long run competitive firm that is making

equilibrium profit in the short run.

12. Industry supply in long Explain how the firm’s

Run short run supply curve is
determined.
12.1. Constant cost industry
12.2. Increasing cost Depict the effect of a
industry change in costs on the
12.3. Decreasing cost position of the firm’s
industry supply curve.

13. Effect of a tax in Derive the industry

competitive markets supply as the lateral
summation of all the
14. Effects of price controls firms’ supply curves.

15. Allocation mechanisms Predict which firms will

stay in the market at the
16. Benefits from lowest prices.
international trade
Define “contribution” and
17. Effects of trade explain why it is the
Restrictions criterion for decisions in
the short run.

Explain why entry of new

firms occurs when price
is above average cost for
the existing firms.

Page 21 of 34
GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

Define, state the

conditions, and
graphically portray long-
run competitive
equilibrium for the firm.

Explain what is meant by

constant, decreasing and
increasing cost
industries.

Distinguish between
economies of scale and a
decreasing cost industry.

Define the long run

industry supply price.

Predict how the elasticity

of supply of inputs will
impact the shape of the
long run industry supply
curve

Distinguish between
incidence and burden of
a tax and graphically
demonstrate the role of
supply and demand

Page 22 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

elasticities in
determining the burden.

Portray the impacts of

price controls, including
shortages, surpluses and
nonprice competition.

Illustrate the impacts of

licensing restrictions in
an otherwise competitive
market, including prices
and quantities, the losses
and gains to effected
parties.

Explain how elasticity of

supply and demand
shapes these results.

Explain and graphically

portray the benefits of
free trade

12 MIDTERM EXAMINATION
13 - 14
Price Searchers' Markets Demonstrate skills and competences to
determine the appropriate market position
between quality and price for a  Interactive  Quiz
price searcher. Discussion

Page 23 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

 Written work
1. Types and characteristics Define the characteristics
of price searchers of price searchers,  Reflective Learning  Discussion /
emphasizing the revenue Recitation
1.1. Oligopoly conditions faced
1.2. Monopolistic  Cooperative Group  Concept Paper
Competition Graphically, Study
1.3. Monopoly mathematically and  SWOT Analysis
verbally show the profit  Business Worksheet
2. Price searcher model maximizing price,  Oral Presentation
quantity and level of
3. Monopolistic profit in a price
Competition model searchers' context.

3.1. Short run equilibrium Distinguish between the

3.2. Long run equilibrium profit-maximizing
3.3 Versioning solution for a monopolist
and that for a
monopolistically
4. Barriers to entry competitive firm.

4.1. Strategic versus State the conditions for

structural barriers long run monopolistically
4.2. Switching costs competitive equilibrium.
4.3. Network effects
4.4. Economies of scale Give a definition of
4.5. Capital requirements barrier to entry
4.6. Learning curve
4.7. Control of resources Enumerate and explain at
4.8. Legal barriers – least six categories of

Page 24 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

patents, copyrights, barriers to entry.

trademarks, licenses
Define competitive
advantage and explain its
5. Cartels relationship to long run
competitive
equilibrium.
6. Oligopoly – Cournot and
Bertrand Define what is meant by
the benchmark
competitor's value
proposition and
explain why a firm must
at least match this

Graphically display the

choice of market position
between quality and
price for a price searcher.

Demonstrate that a fixed

fee makes no difference
in the pricing decision.

Graphically portray the

region (in the
quality/price space) that
a firm can operate
in and simultaneously
satisfy consumers and

Page 25 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323
TERTIARY EDUCATION DEPARTMENT
15 - 16 Advanced Pricing
1. Extensions of oligopolistic
pricing:
1.1 Limit Entry Pricing
1.2 Price Rigidity and
Kinked Demand
1.3 Price Leadership
Page 26 of 34
Tel. No. 042 585-8723 / Fax. No. 042 585-9969
shareholders.
Explain why cartels exist,
what problems they face
in being effective, and
graphically portray the
cartel model.
Argue the economic basis
for antitrust policy using
graphs.
Explain the assumptions
and results of the
Bertrand and Cournot
models.
Demonstrate understanding that if marginal Portray the "kinked
cost is zero, the optimal variable fee is zero if demand model" and
buyers have identical demands thus demand identify its assumptions,  Lecture  Quiz
has a great role in pricing applicability,
implications and flaws.  Group discussion
 Written work
Recite the assumptions
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

that are used to build the  Interactive

2. Objectives of pricing – model of price leadership Discussion  Discussion /
complex pricing Recitation
3. Price Discrimination Identify at least one
characteristic of an  Reflective Learning
3.1 Standard industry that is helpful  Concept Paper
3.2. for price leadership
to be effective  Cooperative Group
4. Volume pricing Study  Oral Presentation
Identify the motivation
4.1. Fixed fee for limit entry pricing  Business Worksheet
4.2. Sliding scale and the overall manner
4.3. All or none in which it is achieved.
4.4. Implications of positive
marginal cost Graph the limit entry
pricing model
5. Auctions (2nd half of
class) Recognize the incentive
Learning Objectives for oligopolists to
combine or collude.

Describe the objectives

and dilemmas of pricing

Explain how metered

pricing and tie-ins can
overcome some of the
impediments to
price discrimination.

Page 27 of 34
GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

Explain how volume

pricing can enhance the
seller’s profits compared
to simple pricing.

Explain why volume

pricing makes sense only
in the case of continuous
choice.

Graphically portray what

volume pricing can do to
consumer surplus.

Describe the manner in

which a two-part pricing
structure (fixed fee plus
variable fee) operates.

Understand that if
marginal cost is zero, the
optimal variable fee is
zero if buyers
have identical demands.

Describe the manner in

which an all-or-none
pricing structure
operates.

Page 28 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

Understand why
different types of
auctions are equivalent
in theory and why they
may not be in practice

Understand Winner’s
curse
17-18
Game Theory & Imperfect Demonstrate skills and competences to clearly Infer the dominant
Information explain why and how price wars occur using strategy of each player
game theory. when a payoff matrix is
1. Game Theory provided.  Business case analysis  Quiz

1.1. Optimization Verbally explain why  Reading: The Power of  Written work
price wars occur using Unconditional Service
1.2. Payoff tables game theory. Guarantees  Discussion /
Recitation
1.3. Equilibrium Understand how to find a  Case study analysis
strategy Nash equilibrium.  Concept Paper
 Group discussion
1.4. Dominant strategy Explain what a zero sum  SWOT Analysis
game is.  Interactive session
1.5. Game theory and Understand conditions  Oral Presentation
price wars under which a prisoner’s
dilemma occurs.  Case study / Research
1.6. Nash equilibrium Analysis
Understand how
2. Asymmetric information repeated interactions can

Page 29 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

help solve the prisoner’s  Lecture

dilemma.
3. Adverse selection  Group discussion
Describe how adverse
selection can lead to
4. Signaling inefficient market
outcomes.

5. Moral hazard Understand how

signaling can alleviate
adverse selection
6. Principal-agent problems.
relationship
Explain how signaling
can work on labor
markets to improve the
allocation of workers
to firms.

Define moral hazard and

provide 3 examples of
situations involving
moral hazard.

Describe mechanisms to
alleviate the problem of
moral hazard.

Explain how moral

hazard can undermine

Page 30 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

insurance markets.

Name 3 examples of
principal-agent
relationships.

Can the principal-agent

model explain why some
organizations may not
pursue
profitmaximization
as a goal?

Describe ways in which

agency problems
between shareholders
and managers can be
alleviated.

Understand how certain

compensation structures
can help alleviate agency
problems in employer-
employee relationships
when worker effort is not
perfectly observable
19 FINAL EXAMINATION

Page 31 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

Basic Readings and

References Froeb / McCann, Managerial Economics: A Problem-Solving Approach,2nd Edition. (South-Western, 2010).

James Brickley, Clifford Smith, Jerold Zimmerman, “The Economics of Organizational Architecture,” Journal of Applied
Corporate Finance, Vol. 8:2 (Summer, 1995) pp. 19-31.

Economics Interactive Tutorials (by Samuel L. Baker). (http://hadm.sph.sc.edu/courses/econ/tutorials.html)

Course Assessment
Course Requirements/Grading:

Attendance 10%
Recitation/Class Participation 15%
Performance Activities 15%
Quizzes 20%
Midterms/Final Exam 20%
Practical Exam 20%
100%

Preliminary Grade = 25%

Midterm Grade = 35%
Final Grade = 40%
SEMESTRAL GRADE = 100%

Course Policies
Language of Instruction
The language of instruction is English.

Attendance

Page 32 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

The school requires that every student to attend all classes regularly. Anyone who incurs 20 % (11 hours) of the total
hours of instruction may be given a failing grade, if majority of absences are unexcused. ( Student Handbook GSI )

Homework, Written Reports, Reaction Papers and othet performance output

The student are required to submit all the specified and agreed upon output on or before the scheduled submission. These
will be part of the course portfolio which must be compilled and be part of the student’s grade for each semester.

Honor, Dress and Grooming Code

All students are required to attend classes in their prescribed uniform with ID.
Students shall at all time neat, clean and decent in their clothing, orderly, respectful, and courteous in their conduct. .
( Student Handbook GSI )

All students of GSI are expected to conduct themselves properly, to respect the persons around them and the rights of their
fellow students, faculty members, school administrators, school authorities and employees. Also, they should
preserve human dignity and uphold the good name of the GSI at all times. . ( Student Handbook GSI )

Committee Cluster Leader:

Members Members:
Consultation Faculty Member :
Schedule Email-address :
Consultation Hours :
Time and Venue :
AY/Term of Prepared by: Checked by: Approved by: Revised by:
Effectivity

Page 33 of 34
 GRABSUM School Inc.
Candelaria,Quezon 4323 Tel. No. 042 585-8723 / Fax. No. 042 585-9969
TERTIARY EDUCATION DEPARTMENT

2018-2019 / 1st
Semester
Prepared on: Checked on: Approved on: Revised on:

Page 34 of 34