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Managerial Economics Course Outline

This document provides an overview of the Managerial Economics course offered at the National University of Science and Technology. The course aims to help students develop an analytical economic approach to business decision making using microeconomic principles and quantitative methods. It covers topics such as demand and elasticity, production theory, costs, market structures, pricing decisions, and investment evaluation. At the end of the course, students should be able to make optimal business decisions and critically evaluate alternatives that may not maximize profits. Recommended textbooks and journal articles are also listed.

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Luckmore Chivandire
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400 views4 pages

Managerial Economics Course Outline

This document provides an overview of the Managerial Economics course offered at the National University of Science and Technology. The course aims to help students develop an analytical economic approach to business decision making using microeconomic principles and quantitative methods. It covers topics such as demand and elasticity, production theory, costs, market structures, pricing decisions, and investment evaluation. At the end of the course, students should be able to make optimal business decisions and critically evaluate alternatives that may not maximize profits. Recommended textbooks and journal articles are also listed.

Uploaded by

Luckmore Chivandire
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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NATIONAL UNIVERSITY OF SCIENCE AND TECHNOLOGY

FACULTY OF COMMERCE
P.O. Box AC 939 Ascot. Bulawayo. Zimbabwe
Cnr. Gwanda Road / Cecil Avenue
www.nust.ac.zw

09-280371
09-282842

Managerial Economics (GMB 5163)


Lecturer: Mr F. Chinjova
COURSE DESCRIPTION AND OBJECTIVES
Managerial economics is a discipline that borrows from Management Sciences and
Economics. It makes use of analytical tools of analyzing, explaining and solving
organizational problems in business. The objective of the course is to help students
develop analytical economic approach to decision making using mainly principles of
microeconomics and quantitative methods. At the end of this course students should be
able to make optimal business decisions and critically evaluate business alternatives
that may not necessarily optimize profits and other objectives of the firm.
COURSE OUTLINE
TOPICS
Introduction
Subject matter of Managerial Economics, important terminology
Methodology of Managerial Economics, Scope and links with other disciplines.
The allocative and signal roles of the Price mechanism.
Business objectives and models of the firm
Accounting vs Economic profits
The neoclassical model
Managerial discretion models
The behavioral model of the firm
Risk and uncertainty in decision- making
Alternative states of information
Techniques for decision making under uncertainty and risky conditions
Techniques for coping with uncertainty
Demand and supply
Methods of estimating demand and supply
Forecasting demand

Elasticity of demand and supply


Price elasticity of demand : estimation and use
Income elasticity of demand : estimation and use
Cross price elasticity of demand: estimation and use
Arc- elasticity of demand
Elasticity of supply
Consumer behavior
Theories of consumer behavior
The Cardinal Utility Approach
The Ordinal Utility Approaches
o Indifference curve analysis
o Revealed preference theory / hypothesis
The Theory of production
The general production function: technical efficiency and inefficiency
The law of variable proportions in production
The Cobb-Douglass production function and returns to scale
Other production functions
The Theory of costs in Economics and Business
Short-run and long-run costs
The classical cost function and empirical evidence
X-inefficiency
The learning curve
The growth of the firm: economies and diseconomies of scale
Industrial concentration: external economies of scale
Market Structures
Perfect competition and characteristics
Monopolistic competition
Oligopoly market structure
Oligopoly models
Game theory and strategic dependence
Monopoly and characteristics
Monopoly and Price Discrimination
Pricing Decisions
Pricing and market structures
Pricing in practice
Two Part Tariff
Bundling vs Tying
Transfer pricing
Pricing for public enterprises
Investment decisions in Business and Society
Net Present Value (NPV)

Internal Rate Of Return (IRR)


Payback period
Cost-Benefit Analysis (CBA)
Shadow Pricing and externalities in public sector project appraisal

RECOMMENDED TEXTS
Chiang A.C (1984) : Fundamental Methods of Mathematical Economics, 3rd Edition.
Davies H. (1991) : Managerial Economics for Business and Management Accounting,
Pitman, London, UK.
Hill S. (1989) : Managerial Economics : The Analysis of Business Decisions,
MacMillan, London, UK.
Koutsoyiannis A .(1994) : Modern Microeconomics, 2nd Edition, MacMillan, London,
UK.
Webb S. C. (1976) : Managerial Economics, Houghton Mifflin Company, Boston, USA.
Journal Articles
Baumol W. What can economic theory contribute to managerial economics?
American Economic Review, 51 (2) May 1961 pp142-146.
Bourdon E. Pricing Strategies in highly competitive markets, Management
Decisions, 30 No14,1992, pp57-64.
Earl P.E. Behavioral Analysis of demand analysis, Journal of Economic Studies, 13
No 3,pp20-37.
Harrison E. F. Interdisciplinary models of decision making, Management decision
13, No 8, pp 27-33.
Hirshleifer J. Investment decision under uncertainty, choice theoretic approach,
Quaterly Journal of Economics, November 1965, pp509-536.
Longman J.R. and Bakash N. IRR, NPV and Payback period and their relative
performance in common capital budgetary decision procedures for dealing with
risk, Engineering Economist, 39, Fall, 1993, pp17-47.

Wolinsky A. Price as signals of product quality, Review of Economic studies, 50,


October 1983, pp647-658.

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