Beijing Jiaotong University – China

Australia Business School

SCHOOL OF
E C O N O M IC S A N D
F IN A N C E

Economics for
Management/
Business Economics
BEO6500/BEO6600

U N IT O F S T U D Y G U ID E

Semester 2, 2010

P R E P A R E D BCY h: ris ta b e l Z h a n g
UNIT OF STUDY GUIDE
VICTORIA UNIVERSITY
FACULTY OF BUSINESS & LAW
SCHOOL OF ECONOMICS AND FINANCE

YEAR 2010 SEMESTER Two

UNIT TITLE Economics for Management/Business Economics
UNIT CODE BEO6500/BEO6600
PRE-REQUISITES None
CREDIT POINTS 12
MODE OF On-campus
DELIVERY
UNIT NAME Christabel Zhang
COORDINATOR ROOM C11.20 City Flinders Campus
AND LECTURER
EMAIL Christabel.Zhang@vu.edu.au
PHONE 0061 3 9919 1478
WORKSHOP NAME Professor ZHAO Jian
LEADER ROOM Beijing Jiaotong University
EMAIL jzhao@center.njtu.edu.cn.
PHONE
LECTURE TIME &
LOCATION

DESCRIPTOR
The aim of this unit is to provide a clear and comprehensive account of
key principles of micro and macroeconomics and their applications to a
wide variety of situations encountered by decision makers in a modern
industrial society.

LEARNING OUTCOMES
On successful completion of this unit, students should be able to:
1. Demonstrate an awareness of modern economic theory and its
applications to real world business situations;
2. Recognize the role of market structure and market conduct in
affecting the price and output decisions of firms;
3. Employ demand and supply analysis in understanding the
operation of the market as well as identifying its shortcomings;
4. Identify economic problems and analyse the relative merits of
alternative policies offered as solutions to these problems;
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5. Analyse the current state of the economy and be able to determine
likely future developments and their implications for business
strategies.

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UNIT CONTENT
Introduction and the basic problem of scarcity
Demand, Supply and market equilibrium
Elasticity, efficiency and resource allocation
Externalities and public goods
Firm’s production costs and market structure
National income, Unemployment and inflation
Monetary policy, fiscal policy and challenges for policy makers
International trade and exchange rate
Current issues and applications of economic principles in management
decision making

LEARNING IN THE WORK PLACE

25% of the assessment in this Unit of Study will relate to Learning in the
Workplace and Community (LiWC). Learning in the workplace activities
that will be included in this Unit of Study are:
Each group consisting of three students will be required to choose from three
topics concerning real world current economic issues and critically analyse the
issue. Each group is required to submit a final written report of their research
and evaluation. The critique should focus on the following:
• The current issues relating to the chosen topic
• The strengths, weaknesses of current situation/practice
• The relevance of a theory/concept to the chosen topic and issues
presented
• Policy recommendations and trade-offs of suggested policy

TEACHING & LEARNING STRATEGIES

This Unit of Study will be delivered as e.g. 2 hours lecture and 1 hour
tutorial per week. It is expected that you will spend at least ten hours
per week studying this Unit of Study (including lecture and tutorial time).
This time should be made up of reading, research, working on exercises
and group work. In periods where you need to complete assignments or
prepare for tests, the workload may be greater.
GRADUATE CAPABILITIES
Victoria University’s Graduate Capabilities are generic skills that all
students should possess at graduation. These skills are in addition to the
specific knowledge and skills associated with the discipline area of
students’ degrees. Graduate Capabilities are divided into five levels (for
undergraduates) and will be achieved progressively with increasing
levels of sophistication. A full description of the Graduate Capabilities
can be found in the VU Graduate Capabilities policy pages 7-8.

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This unit of study contributes to development of these Graduate
Capabilities in a number of ways, with emphasis on communicate in a
variety of contexts and modes, work both autonomously and
collaboratively and manage learning and career development
opportunities. Table 1 offers examples of how the teaching and learning
activity in this unit and the assessment tasks correspond to each
Graduate Capability.
The shaded boxes are capabilities on which this unit of study particularly
focuses.

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Table 1: Unit of Study Graduate Capabilities
T & L Activity
Graduate Lev Description of Graduate
and
Capability el Capability*
Assessment
Identify and solve a broad
range of complex problems, Weekly exercises;
1. Problem solve creating new strategies and lecture
in a range of P6 drawing on in-depth illustrations; mid-
settings knowledge, understanding, semester test and
reflection and evaluation. final exam

Find, critically evaluate,

2. Locate,
synthesise and apply
critically evaluate, Problems and
complex information on a
manage and use applications; group
I6 broad range of topics context
written, numerical assignment and
for a range of purposes,
and electronic case studies
including the creation of new
information
knowledge.
Communicate with others,
using speech and writing, on
a broad range of complex
3. Communicate
topics using specialised and Group assignment
in a variety of
C6 appropriate language and lecture and tutorial
contexts and
demonstrating control and participation
modes
authority in the use of a
broad range of genres/text
types.
Manage self and others in
both individual and
collaborative contexts and Mid-semester test,
4. Work both
critically reflect on, respond group assignment,
autonomously and W6
to and evaluate own and class discussions
collaboratively
others’ performance, and final exam
designing and using the
appropriate parameters.
Critically evaluate, create
5. Work in an
and apply socially
environmentally,
responsible solutions to Group assignment,
socially and
S6 complex environmental, class participation
culturally
social and cultural situations and final exam
responsible
in work, community and
manner
learning contexts.
Field trip to
Demonstrate critical
professional
reflection on own learning in
seminar;
6. Manage relation to work and career
encouragement of
learning and choices and requirements,
attendance and
career CD6 and capacity to
provision of
development autonomously manage own
relevant
opportunities learning to achieve career
information on
and learning goals.
professional
presentations

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GRADE SETS
There are five grade sets, namely fail (N: 0-49%), pass (P: 50-59%), credit (C: 60-69%), distinction (D: 70-79%), and
high distinction (HD: 80-100%); eligibility for supplementary exam (E: 45-49%), the maximum mark for a
supplementary exam is P.

ASSESSMENT
The assessment scheme has x components as listed below:
Assessment Weig Learning Format1 LiWC2 Graduate ePortfol Due Date
ht Outcome0 Capabilities3 io4
1. At risk Multiple
25% 1, 2 P6, I6, C6 n/a Week 5
assessment Choice Test
2. Group Simulated real Real world based Week 6
assignment 5% 1, 2, 3, 4, 5 world issues economic issues P6, I6, W6, C6 Sep.3
2.1 Part 1
2. Group Simulated real Real world based Week 8
assignment 5% 1, 2, 3, 4, 5 world issues economic issues P6, I6, W6, C6 Sep. 17
2.2 Part 2
2. Group Simulated real Real world based Week 10
assignment 15% 1, 2, 3, 4, 5 world issues economic issues P6, I6, W6, C6 Oct. 8
2.3 Final report
3. Final exam MCT and Real world based Exam
50% 1, 2, 3, 4, 5 simulated real economic issues P6, I6 period
world issues

NOTE: To be eligible for a pass in this unit, candidates must have completed all components of the assessment

A summary of assessment tasks follows. Please go to Blackboard for:

1. Full assessment/assignment details;
2. Criterion referenced assessment guide for each assignment as required; and

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3. Assignment Declaration cover sheet, with Assessment Criteria completed and a separate cover sheet loaded
for each assignment.

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ASSESSMENT TASKS

Assessment 1 – Mid Semester Test (50%)

The test will be a closed book exam and students are not permitted to
bring any materials into the room. The test will consist of multiple choice
and short answer questions. The duration of the test will be two hours.
The test will cover lecture topics 1-6. A non programmable calculator
may be required for this test.

Learning outcome
1. Demonstrate an awareness of modern economic theory and its
applications to real world business situations;
2. Employ demand and supply analysis in understanding the
operation of the market as well as identifying its shortcomings;
3. Identify economic problems and analyse the relative merits of
alternative policies offered as solutions to these problems;
4. Analyse the current state of the economy and be able to determine
likely future developments and their implications for business
strategies.

Assessment 2 – Final Examination (50%)

A 3-hour exam will consist of short answer and essay questions.
Students will be assessed on the lecture topics 1-12, and on the
corresponding required readings.

Learning outcome
1. Demonstrate an awareness of modern economic theory and its
applications to real world business situations;
2. Recognize the role of market structure and market conduct in
affecting the price and output decisions of firms;
3. Employ demand and supply analysis in understanding the
operation of the market as well as identifying its shortcomings;
4. Identify economic problems and analyse the relative merits of
alternative policies offered as solutions to these problems;
5. Analyse the current state of the economy and be able to determine
likely future developments and their implications for business
strategies.

Supplementary Assessment
Students who receive a final score between 45 and 49 and the grade E
in the unit will be eligible for Supplementary Assessment that will be an
exam following the usual final exam period. More detailed information

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regarding the date of the exam and the results of supplementary
assessment will be available on MyVU. The highest grade applicable to
Supplementary Assessment will be a PASS grade. Students who fail to sit
a final exam are not eligible, unless they have applied for special
consideration.

Special Consideration
If a student is unable to comply with the conditions of assessment or
attendance requirements or find that their study program has been
seriously affected by illness or other cause, the student is advised to
follow the special consideration provisions described in the current
Faculty Handbook (available on the VU website). Explanations based on
work related grounds will not normally be considered.
Applications for Special Consideration with evidence must be lodged
with the Faculty Office on Level 10, City Flinders Campus no later than
three working days after the due date of the specific piece of
assessment. If it is impossible for you to submit the application, you or
your representative must contact the Faculty/School Office, or you
will risk failing the subject.
Medical Certificates will not be accepted to support an application for
Special Consideration. You must supply a Certification of Health
Professional or Non VU Counsellor, in support of your application for
special consideration. For accepted evidence details, refer to the Special
Consideration Application form.
For commonly used administration forms see:
http://www.vu.edu.au/Current_Students/Student_Administration/Commonly_Used_Forms/ -
enrolment

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REQUIRED READING

Gans, J., King, S., Stonecash, R. and Mankiw, N. G. 2009, Principles of

Economics, 4th Australian Edition, Cengage Learning, Melbourne,
Australia. (GKSM)

Students are expected to study a wide variety of other sources,

such as Business Section of various daily newspapers and
business magazines.

Web Resources:

World Economic Outlook http://www.imf.org

Australian Bureau of Statistics http://www.abs.gov.au

National Bureau of Statistics http://www.stats.gov.cn/english/

Reserve Bank of Australia http://www.rba.gov.au

People’s Bank of China http://www.pbc.gov.cn/english/huobizhengce/

Federal Budget http://www.budget.gov.au

RECOMMENDED READING

Stiglitz, J. E., Sen, A. and Fitoussi, J. 2010 Mis-measuring Our Lives: Why
GDP Doesn’t Add Up, New York: London, the New Press.

Stiglitz, J. and Members of a UN Commission of Financial Experts, 2010,

The Stiglitz Report, New York: London, the New Press.

Baumol, W. J. and Blinder, A. S. 2009, Economics, Principles and Policy,

11th Edition, South-Western Cengage Learning, USA.

Jackson, J., McIver, R. and Bajada, C. 2007, Economics Principles, 2nd

Edition, McGraw-Hill, Sydney, Australia.

Additional Reading
Check additional material and web resources on unit of study Blackboard
page

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TEACHING SCHEDULE
1. LECTURE SCHEDULE
Week Topic Preparation
Topic 1 Introduction to Economics and GKSM: Chapters 1,
1 Resource Allocation 2 and 4.
Case Study: 1
GKSM: Chapters 5,
Topic 2 Elasticity 6 and 8
2
Case Study: 2,3
GKSM: Chapters 8,
Topic 3 Efficiency and Resource Allocation 10 and 13
3
Case Study: 4,5,6
GKSM: Chapters 14,
4 Topic 4 Externalities 15,
Case Study: 7,8
GKSM: Chapters 16
Topic 5 Firm’s Production Costs and and 18
5
Markets Structure: Monopoly
Case Study: 9,10
GKSM: Chapters 24-
Topic 6 Markets Structure: Oligopoly and
26, 28 and 30 Case
6 Monopolistic Competition
Study: 11, 12 and
14
GKSM: Chapters 27,
33 Web links:
Australian Bureau
of Statistics
7 Topic 7 Gross Domestic Product http://www.abs.g
ov.au/; World
Economic Outlook
http://www.imf.or
g
GKSM: Chapters 29
and 34

Topic 8 Unemployment and Inflation Web link:

8 Australian Bureau
of Statistics
http://www.abs.g
ov.au/
GKSM Chapters 34,
35 and 36
Topic 9 Money, Bank Money Creation and
9 Monetary Policy Web link: Reserve
Bank of Australia
http://www.rba.g
ov.au/
10 Topic 10 Fiscal Policies and Challenges GKSM: Chapters 3,

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 9 and 31
Web link: Budget
http://www.budge
t.gov.au/
Topic 11 International Trade GKSM: Chapters 31
11
and 26
Revision
12

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2. TUTORIAL SCHEDULE
Wee
Topic Preparation
k
Introduction to Economics
• Assessment
• Expectations
• What is Economics?
• Scarcity
1 • Opportunity cost
• Economic theory/principle and
application
• Positive and normative statement
• Ceteris Paribus
• Fallacy of composition
Introduction to Economics and
Resource Allocation
• What is the main economic problem?
• Describe the types of economic co-
Problems and
coordinating systems.
Applications:
• Distinction between Microeconomics GKSM Chp 1 1, 3, 8, 11
and Macroeconomics and 13.
• Law of Demand and Supply
GKSM Chp 2 5, 6, 7 and
2
• Difference between a change in 10.
quantity demanded and a change in
demand
GKSM Chp 4 1- 9, 11
• Difference between a change in and 12.
quantity supplied and a change in
In the news: p.82
supply
• Market equilibrium and market
dynamics
• Discuss the current water shortage

Elasticity
• Determinants of price elasticity of
demand Problems and
• Price elasticity of demand and total Applications:
3
revenue GKSM Chp 5 1-10, 12
• Income and cross elasticity and 13.

• Price elasticity of supply

• Elasticity and policy implications

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 Efficiency and Taxes
• Consumer and producer surplus
• Floor and ceiling prices Problems and
Applications:
• The incidence of tax and who is GKSM Chp 6 2, 4, 5, 8
actually paying the 10% GST? and 9.
• Deadweight loss
4 GKSM Chp 7 1, 6, 9 and
• Efficiency 10.
• Effects of a tax FYI: p.145
• Discuss the effects of the current
water restrictions in solving the water GKSM Chp 8 4 and 10.
shortage problem. What suggestions
do you have for easing problem and
why?
Externalities
• Negative externalities
• Positive externalities Problems and
Applications: GKSM
• Public goods Chp 10 3, 6, 8, 11, 12
• Evaluate the public transport system and 14.
5
in Melbourne, what do you suggest
can be done and why? GKSM Chp 11 2.
• If you were the education minister, Case Study: P.239
what will be the guiding principle in
your major decision making, how can
it be achieve and why?
Costs and Markets Structure: Monopoly
• Accounting and economic profit,
normal profit
• Explain the law of diminishing
marginal returns and its significance
• Derive the firm’s short run cost Problems and
curves Applications: GKSM
Chp 13 5, 9-11.
• Show the relationship between
average and marginal cost
6
GKSM Chp 15 9, 11 and
• Derive and explain the significance of
13.
the long run average cost curve
In the news: p.338-
• Discuss economies of scale,
339
diseconomies of scale and constant
returns to scale
• Structure, conduct and performance
of monopoly
• Concept of productive and allocative
efficiencies

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 Problems and
Markets Structure: Oligopoly and Applications: GKSM
Monopolistic Competition Chp 16 9; GKSM Chp
18 2, and 7.
• Oligopoly
7 • Product variety
GKSM Chp 17 4, and 7.
• Concentration and competition Case Study: p.388-
389.
• ACCC and competition policy
implications In the news: p.384-
386
National Income Web links: Australian
• Macroeconomic problems and issues Bureau of Statistics
http://www.abs.gov.a
• Complementary and conflicting u/;
economic goals National Bureau of
• The circular flow model Statistics
http://www.stats.gov.
• Gross Domestic Product (GDP) cn/english/
• Nominal and real GDP World Economic
8 Outlook
• Measurement of GDP http://www.imf.org
• Value added
Problems and
• Consumer Price Index (CPI) Applications: GKSM
• Nominal and real interest rate Chp 2 3; GKSM Chp 24
1-4, 6 and 8;
• Determinants of productivity GKSM Chp 25 1, 2, and
• Discuss your understanding of 8; GKSM Chp 26 4, 5
sustainable economic growth and 8.
Unemployment and Inflation Web links: Australian
Bureau of Statistics
• The business cycle http://www.abs.gov.a
• Unemployment u/
• Types of unemployment
9 Problems and
• Labor participation rate Applications: GKSM
Chp 28 1, 3 and 4;
• Inflation
• Types of inflation
GKSM Chp 25 5, 6 and
• The redistribution effect of inflation 10. FYI p.564

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 Money, bank money creation
and Monetary Policy
• Definition and functions of
money Web link: Reserve Bank of
Australia
• Money supply and interest http://www.rba.gov.au/
rates People’s Bank of China
• Derivation of total money http://www.pbc.gov.cn/english/
demand curve huobizhengce/
10
• Money market equilibrium,
interest rates and
adjustments Problems and Applications:
GKSM
• Creation of money by banks
Chp 29 1, 7, 8, 10 and 12; GKSM
• Reserve Bank of Australia Chp 34 1, 6 and 15.
• The workings and
implications of monetary
policy
Fiscal Policies and Challenges
• Budget philosophies Web link: Budget
http://www.budget.gov.au/
• Automatic versus
discretionary fiscal policy
11 Problems and Applications:
• The workings of fiscal policy
GKSM Chp 34 8 -13; GKSM Chp 36
• Why are some economists
5, 8 and 9.
against a target of zero
inflation?
12 International Trade and Problems and Applications:
Exchange Rate GKSM Chp 3 1, 3, and 7; GKSM
Chp 9 1, 3, 10 and 11.
• Absolute and comparative
advantage
• Gains from trade
Revision Questions from students

• The reason and types of trade

protection
• Policy implication of trade
protection: tariff
• Size, direction and composition
of Australian trade
• Exchange rate and determinants
• Analyse the effect on the value
of Australian dollar when the
following occurs:
 interest rate is relatively
lower in Australia
 income is higher in
Australia
 inflation is lower in

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Australia

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