LIRA UNIVERSITY
FACULTY OF MANAGEMENT SCIENCES
DEPARPMENT OF BUSINESS ADMINISTRATION & MANAGEMENT
REVIEWED SYLLABUS 2023.
COURSE NAME :MANAGERIAL
ECONOMICS
COURSE LEVEL : YEAR I - SEMESTER II
COURSE CODE : EMBA 7205
CREDIT UNIT :3
CONTACT HRS : 45 HRS
Course Description
This course applies economic principles to key management decisions within organizations. It
provides guidance to increase value creation, and allows a better understanding of the external
business environment in which organizations operate. Economics provides a fundamentally
unique way of thinking about problems, issues and decisions that managers face in each of the
functional areas of their organization. This unique way of thinking stresses the importance of
incentives as determinants of human behavior and performance, and emphasizes the
consideration of costs and benefits as an efficient method for reaching economic decisions. This
is a core course, and as such a primary purpose is to teach tools that will be
useful for the rest of your MBA courses. Economics is a key foundation for much of what is
taught in MBA courses.
The course, accordingly, is concerned with both theory and practice: the theory serves to
sharpen analytical skills, and the practice will give experiences in the application of the
principles and techniques to the real-world business management problems.
Objectives
The course is aimed at achieving the following objectives
I. To make students better decision-makers in a business or institutional context by
applying principles and techniques to personal financial and economic decisions
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II. To sharpen students analytical skills to be able to recognize and solve decision problems
in different contexts.
III. To help students evaluate the tools that managers apply in economic decision making
IV. To help students comprehend the operation of various markets structures V. To use
economic principles both to describe and to appraise decisions
Learning outcomes
On completion of this course, students should be able to:
I. Apply microeconomics principles in solving real world situation problems II.
Use knowledge gained in this course to make rational decisions.
III. Able to apply appropriate tools in solving economic problems in different context
IV. Apply basic microeconomic principles to the economic decisions of households and
firms under a variety of market conditions.
V. Measure the responsiveness of consumers demand to changes in the price of a good or
service, the price of other goods and services, and income and analyze cost of
production.
Intellectual practical and transferable skills
After completing this course, students should be able to:
I. Work with abstract concepts and in a context of generality
II. Reason logically and work analytically
III. Select and apply appropriate techniques to solve problems
IV. Analyze and solve complex problems accurately.
Teaching and learning patterns
This course will be taught for a total of 60 hours[i.e. four(4)contact hours per week].Teaching
and learning in this course will be through among others, team-teaching; problem-base
approaches; student-centered learning; lectures; in class exercises; own readings; take-home
assignments and group exercises.
Assessment Methods
The assement is structured to include coursework and final examinations.
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Coursework consists of assignment, participations and tests
Final Exams : 60%
Team Assignment : 20%
Individual Test : 15%
Class Participation : 05%
Indicative content
Below are the detailed topics to be covered;
Chapter Topic Sub-Topic Contact
Hrs
01 Introduction • Introduction 3 hours
• Definition and meaning of ME
• Objectives of ME
• Characteristics of ME
• Nature of ME
• Scope of ME
• ME as a tool of decision making and forward planning
• Relationship of ME and other disciplines
• Importance of ME
• Functions and responsibilities of
Managerial Economist
02 Demand • Introduction 3 Hrs
Analysis. • The concept of demand
Definition and explanation
Demand analysis
Law of demand
Demand Schedule and Dd curve
Assumption of the law of Dd
Why Dd curve is negatively sloped
Exceptional Dd curve
Determinants of Dd
Changes in Dd Vs Changes in Q’ty Dded
• The concept and definition of elasticity of demand
Types of elasticity of demand
Importance of elasticity of demand
Determinants of elasticity of demand
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Methods of measuring elasticity of demand
O3 Keynesian • The concept of the theory 6 Hrs
Theory of • Aggregate demand functions
Income • The consumption function
Determination • The aggregate saving function
• The investment function
• The aggregate supply function
• The paradox of loanable funds
Equilibrium income determination (Two sector
economy, three sector and the open economy
04 Theory of • Production and Economics resources Production 8 Hrs
production with one variable input:
• Stages of production
• Increasing, constant and decreasing returns to scale
• Production with two variable inputs
• Isoquants – their properties and characteristics
• Marginal rate of technical substitution
• Isocosts and their characteristics
• Production equilibrium
• Expansion path concept and the regions of production
• Factor substitution and the elasticity of technical
substitution.
05 Cost of • Concept to cost of production
production • Element to cost of production
• Factors influencing cost in production processes
• Types and classification to cost of production
• Concept of short run and long run costs
• Importance of cost in the production processes
• Concept of revenue
• Break-even analysis
06 Competitive • The concept of the market 6 Hrs
Markets & • Perfect competition
Regulations • Monopoly competition
• Monopolistic competition
• Oligopoly competition
07 Profits • Definitions and explanations 4 Hrs
• Theories of profits
• Roles of profits
• Problems in measuring profits
• Profits as a sole objective of a business firm
• Controversy over profit maximization
• Other objectives of a business firm
08 Pricing • Concepts of pricing 6 Hrs
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strategies and • Objectives of pricing
practices • Policy and methods of pricing
• Alternative pricing methods and their limitations
09 National • Definitions of national income & key concepts 6 Hrs
income • Methods of measuring National income
Analysis: • Simple circular flow of Income
Concepts and • Difficulties in measurement of national income
Measurements • Determination of the size of National Income
• Importance of national income analysis
Per capital Income and its applications
10 Theory of a (A). Economic theory of the firm
firm (B). Behavioral Theory of a Firm
(C). Managerial theory of a firm
11 Demand/ • Meaning of demand estimate
Sales • Steps in demand estimate
forecasting • Techniques used to estimate demand forecasting
• Types of demand forecasting
• Methods of demand forecasting
• Factors affecting demand forecasting.
12 Strategic • Explanation of the terms
Interactions • Coordination in businesses
and Games • Battle of sexes
Theory • Application of game theory
• Nash equilibrium
• Equilibrium in the battle of sexes
• The compatible couple
• The fait money game
• Cooperation verse competition
• Prisoners’ dilema
• Equilibrium in the prisioners’ dilema
• Cooperation and prisioners’ dilema
Lecturer: Opio Charles B
BSC Economics (Muk),
MBA, Corporate Strategy and Economics Policy (MsM),
PGDE (Muk), PGD in M&E (UMI), PGD in Marketing of Services (MsM) and PGD in
Project Planning and Management,
PhD Candidate in Business Management-Strategic Management, (Moi University)
REFERENCES
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The references include but not limited to the following:
• Baumol W.J (1999) Economic theory and operations Analysis, Third Ed. Prentice Hall
• Leftwich, Richard (1986), the price system and resource Allocation, Fifth ed. Dry den press
Jhigan M.L: Advanced Economics, Theory, Eight Ed.
• Baumol W.J and Blinder Alan, 2002, Macroeconomics Principles and policy
• Lindsey and Dolar, 2002 Macroeconomics Library of Congress. Cataloging in publication
• McConnell, Campbell and Brue, 2000, Macroeconomics principles, Problems and policies, 14 th
Ed. New York Mcgrew-hill inc
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