MANAGERIAL

ECONOMICS
EC-545

School of Business & Economics

Program MBA (P)

Semester Fall 2015
Credit Hours 03
Pre Requisite EC-535 Business Economics and the
knowledge of mathematical and statistical
tools
Resource Person Dr Rukhsana Kalim
Course Management System www.moodle.umt.edu.pk
Contact drrukhsana@umt.edu.pk

Course Description

Managerial Economics is a key branch of economics at graduate level. The course deals with a
description of a real managerial problem that challenges students to ponder possible choices and
to apply possible economic tools for solution. The course provides a unifying theme of
managerial decision making around the theory of the firm. It examines the process whereby a
firm can reach optimal managerial decisions in the face of constraints in today’s dynamic
market. It covers a variety of topics such as demand Analysis, estimation, forecasting and
decision making under uncertainty, market structure, production and cost analysis, pricing
practices, economic optimization and risk analysis. Decision making is woven throughout the
entire discussion on different topics.

The course enables students to comprehend the complexity, risk element, and key success in
business.
A strong background of mathematical and statistical tools makes the understanding of the subject
matter more interesting and easy.

Recommended Text:
 William F. Samuelson, Stephen G. Marks (2012), Managerial Economics 7th Edition,
John Wiley & Son, INC.

Supplementary Text:

 Mark Hirschey (2009), “Managerial Economics”, India Edition, South-Western

 Dominick Salvatore (2012, 7th edition), “Managerial Economics in a Global Economy”,
Oxford University Press
 Micheal Baye (2014), “Managerial Economics and Business Strategy”, 8th edition.
Boston McGraw-Hill Irwin
 Petersen, Lewis and Jain (2006), “Managerial Economics” Pearson: Education.
 McGuigan R James, R. Charles Moyer and Harris F.H.deB (2005), Managerial
Economics, Application, Strategy, and Tactics, Thomson South-West

Weblinks:

www.pepsico.com/investors/index.shtml

www.simmons.com

www.conference-board.org/

www.bus.okstate.edu/ecis/price/ICS/ECON3113W/framed/econ3113w.htm

http://papers.nber.org/papers/W9965

Class Room Behavior

Time management of class is mandatory. Students are expected to switch off their mobiles in the
class. Decent behavior in the class is highly appreciated. No whispering or gossip is permissible
in the class.

Participant Responsibilities

Submission of assignments, reports, projects, take home exercises and case studies etc. must
meet the deadline. Late submission will not be accepted. Students should avoid plagiarism in
their assignments and other documents as it may cause a serious setback to their result. Avoid
missing quizzes, presentations, or any other discussion as no makeup policy will be applied.

Assessment Criteria

All activities undertaken by the participants during the semester will be evaluated and the final
grade will be determined on the basis of modes of assessments which are shown below along
with their weight age. It must be noted that 60 percent are the pass marks for the course.
Assessment Mode Weightage (%)

Quizzes 15

Exercises/Class participation 05

Case Study 10

Project 10

Assignment 10

Mid Term Exam 20

End Term Exam 30

Total 100

Note: To pass the course you must obtain 60 percent marks in total.
 CALANNDAR ACTIVITIES

(Managerial Economics –Fall 2015)

Session Topics Learning Objectives Teaching Method Assessment Readings and

Critera Activities
1–4 Managerial Economics To understand the Lecture, Handouts Discussion Samuelson and
 The Basic Process of role of principles of Case Study Marks (Ch.1)
Economic Decision economics in solving Case Study PP: 1-24
Making management Exercise
 Six Steps to Decision problems faced by Hirschey (Ch. 1)
Making firms. Relevance of PP: 18-28
 Theory of the firm mathematical tools Handout(s)
 Expected Value becomes clear. Salvatore (Ch.1)
maximization
 The objective of the Case Study #1
Firm
 Constrains faced by a Exercise #1
firm
 Business vs. Economic
profit
 Business Ethics

5-8 Economic Optimization Getting the Class Exercise

 A Simple Model of the knowledge on Lecture Quiz Samuelson and
Firm optimal solution of Numerical Examples with Case Study Marks (Ch.2)
 Demand Curve Inverse any objective practical implications Assignment PP: 27-61
Demand Equation function
 Marginal Analysis Hirschey (Ch. 2)
PP: 33-48
  Revenue Relations
 Total Average and Case Study # 2:
Marginal Relationships
 Price and Total Assignment # 1
Revenue
 Cost Relations Quiz #1
 Marginal profit
 Profit Maximization Exercise #2
 Optimization by
Marginal Analysis
9-10 Multivariate Optimization Development of Lecture Class Exercise Samuelson and
and the Lagrangian understanding the Numerical Examples Marks (Ch.2)
Technique concept of Discussion on Case Study PP:62-72
 Partial Derivative optimization with
Concept more than two Hirschey (Ch. 2)
 Constrained variables PP: 71-78
optimization
 Lagrangian Multipliers
Exercise #3

11 –14 Demand Analysis and Students will be able Lecture Quiz Samuelson and
Optimal Pricing to understand the Numerical Examples Exercise Marks (Ch.3)
 The Market Demand market demand Case Studies PP:77-119
Function function. They will Guest Speaker to be invited McGuigan R James,
 Demand Function and get the knowledge of R. Charles Moyer
Demand Curve the role of demand in and Harris F.H.deB
 Demand Curve and managerial decision (Ch. 3)
Shifting Demand making.
Demand Sensitivity analysis Hirschey (Ch. 3 & 4)
 Computation of Price, Guest speaker will PP: 83-86;
Income and Cross price share his/her 125-137
Elasticity of Demand by corporate experience
two Methods with particular Peterson (Ch. 3)pp.
  Uses and Application of emphasis on 67-95)
Price, Income and managerial skills
Cross-Price Elasticity Case Study # 3
of demand
 Some other Demand Assignment #2
Elasticity
Quiz #2

Exercise #4
15-16 Advanced Demand Analysis Participants will learn Lecture Samuelson and
 Price elasticity, to apply the elasticity Discussion Marks (Ch.3)
Marginal Revenue and concept in business Project to be Discussed PP: 77-119
Total Revenue decision making.
 Optimal Pricing Policy Discussion Hirschey (Ch. 4)
under given price Project can enhance PP: 116-127
elasticity the analytical skills of
students

Mid-Term Exam
17-18 Demand Estimation by Guest Speaker Samuelson and
Regression Analysis Participants would be Lecture Discussion Marks (Ch.4)
 Simple Regression able to specify, PP:128-181
Analysis estimate and interpret
 Multiple Regression econometric models Hirschey (Ch. 5)
Analysis in general and PP: 155-174
 Specifying the demand models in
regression Model particular. Guest Speaker

19-22 Demand Forecasting Participants will be Lecture Case Study Samuelson and
 Collecting Data able to do forecasting Numerical Examples Assignment Marks (Ch.4)
 Consumer Surveys and determine the Quiz Pp: 128-181
 Controlled Market forecasting power of
 Studies models Hirschey (Ch. 6)
 Uncontrolled Market PP:175-208
Data
 Forecasting Case Study # 4
 Time Series Models
Categories of Time Series Assignment# 3,
Models
 Trend Projection Quiz#3
 Business Cycles
 Seasonal Variations
 Random Fluctuations
Forecasting Accuracy
 Average Absolute Error
(AAE)
 RMSE
23-24 Production Analysis Participants will learn Lecture Case Study Samuelson and
 Production Function how to use concepts Discussion Discussion Marks (Ch.5)
 Production with One like, production Excercise PP: 190-225
Variable input function, AP,
 Total, Marginal and Employment of Hirschey (Ch. 7)
average Products factors, and Returns PP: 210-233,
 The Law of to Scale in business
Diminishing Marginal decision making. IndustrialTour/
Returns Seminar*
 Optimal Use of an Input Industrial tour will
benefit students to Quiz #4
understand corporate
culture and Assignment #4
production practices
of the organization
25-28 Production in the Long Run Lecture Exercise
 Least Cost Production The long run Discussion Discussion Samuelson and
 Isoquant Curve production decision Marks (Ch.5)
 MRTS can be understood. PP: 190-225
 Isocotslines
 Optimal Level of Optimal employment
Multiple Inputs concept will become Exercise #5
Measuring Production clear
Functions
 Linear Production
Function
 Leontief Production
Function
 Polynomial Functions
 The Cobb-Douglas
Production Function
Other Production Decisions
 Multiple Plants
29-30 Cost Analysis and Estimation Participants will Lecture Samuelson and
 Economic and comprehend the Numerical Examples Discussion Marks (Ch.6)
Accounting Costs relevance of cost and Case Study Discussion PP: 226-272
its relation with
 Opportunity Costs output. Hirschey (Ch. 8)
 Explicit and Implicit PP: 244-276
Costs
 Opportunity Cost and
Economic Profit
 Fixed and Sunk Costs
The Cost of Production
 Short-Run Costs
 Short run average cost
 Marginal costs
 Long-Run Costs
Returns to Scale and Scope
 Returns to Scale
 Minimum Efficient
Scale
 Economies of Scope
 The Shut Down Rule
 Multiple Products
End-Term Exam
Note: * Organizational Tour/Seminar will be equivalent to 3 credit hour class.