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PLYMOUTH STATE UNIVERSITY COLLEGE OF BUSINESS ADMINISTRATION

SYLLABUS ECONOMIC ANALYSIS BU-5210.AU4


(CRN 10069)

FALL 2011
-

ONLINE: September 12-November 18, 2011

Instructor: Dr. Monica Ioana Pop Silaghi Lecturer, Babe-Bolyai University, Cluj-Napoca, Romania Email: mipopsilaghi@plymouth.edu

Course description Todays business climate demands managers who can make decisions involving the best use of an organizations scarce resources under conditions that change rapidly. This course demonstrates the power of problem-solving insights and uses a cross-functional approach. Topics to be covered include strategic pricing using game theory, forecasting techniques and demand estimation, cost analysis, linear programming, and optimization under various market structures. In order to achieve their goals, firms need to behave in the most efficient way. Therefore, this course applies economic theory and methods to business decision-making. The course intends to familiarize students with the understanding of how to link economic theory with the quantitative methods so as to provide tools for managers in the process of decision-making. In order to maximize their profits and to face the competitors, the firms must evaluate properly the constraints that they have, must forecast demand based on a set of explicative variables and must understand the pricing practices. This course, by providing the theoretical perspectives in verbal, mathematical and graphical terms and through the case studies we will approach is meant to provide insights of all MUST requirements managers have to cover and to assure solutions for the most complicated situations. Course Objectives The main goal of this course is to use the theory of the firm to model business organizations. To do that we will: apply demand theory to establish elasticity of demand and to forecast demand trends basing on demand estimation apply the theory of production to manage production use cost theory to establish short-run cost function and long-run behavior use game theory to decide upon strategies firms should follow in case of duopoly offer ideas and tools to understand and emphasize strategic managerial-decision making. Required readings Paul G. Keat & Philip K. Y. Young, Managerial Economics: Economic Tools for
Todays Decision Makers, Prentice-Hall, Inc., 6th Ed., 2009, ISBN-13: 978-0-13-507065-9

Optional readings
1.

Managerial Economics, Business and Public Policy, Ebsco Research


Starters, 2008

2. Farshad Rafii and Paul J. Kampas, How to indentify your enemies before they destroy you, Harvard Business Review, November 2002 3. Lelia Holden Carroll, Nonmedical Out-of-Pocket Expenses: A Hidden Cost of Hospitalizatin, Journal of Pediatric Nursing (26), 2011, pp.76-84 4. Ceri R. Thompson, Martin McKee, An analysis of hospital capital
planning and nancing in three European countries: Using the principalagent approach to identify the potential for economic problems, Health Policy Journal, 99 (2011), pp. 158-166 Papers 1 &2 can be found by students in the library resources of PSU. Papers 3&4 will be made available by the instructor on MOODLE and are designated firstly for students with a background in medicine who take this course.

Availability of the textbook The book should be available at the PSU Bookstore and also directly from the Publisher (Pearson Education). You can buy it also from www.amazon.com at a price of $138. the NEW one and from $ 67.99 the OLD one.
If you wish to buy the online book, you can find it at

http://www.mypearsonstore.com/bookstore/product.asp?isbn=0136040055 at a price of $79.80. You can also look for a CourseSmart access code at the bookstore, or go to www.coursesmart.com to buy the online book. My advice is to buy the print version of this book. The reason is that if you have it in your personal library, you never know when you want to remind some issues that you have read in it or you will be interested to see chapters that we do not have time to cover due to time reasons. If you will buy the online version, most probably you will print only the chapters we approach and after the course is finished you will drop the extract somewhere. However, it is up to you, if you wish to save money and time, you can choose the electronic version. As long as you will fulfill your tasks, I am happy. On the moodle platform, you will have other resources such as Power Point presentations and course materials which help you to understand better what we are doing and to learn efficiently. How to manage well in Managerial Economics (about the textbook) As you will be able to figure it out when you will start reading the textbook, you will see that the authors have a very unique style of writing it. Each chapter begins with a socalled Situation in which managers from some fictional companies must take the right decisions about their products in the beverage industry. Then, the authors carry you through the relevant economic concepts and tools that you need to know in order to run a good analysis giving a lot of practical examples and in the end or meanwhile they offer you a Solution in which the acquired knowledge is applied. Thus, you can see how the managers are helped to take the best decisions if they have learnt how to use the theoretical concepts and the technical tools. Needless to say that, after or while you are reading a chapter you should try as an exercise to solve the Situation by yourselves and then to verify your own gained knowledge by verifying with the Solution from the

book. Most of you, if not all, have a practice experience and you will be glad to see that you can solve the case sometimes very easily; based on intuition and knowledge you have so far. When you will check with the Solution of the case, you will see that, even you thought almost the same, some of you probably omitted to use some of the concepts or some of the tools you have been found out by reading the text. This textbook and our course is intended to prove to you that economic courses are not too theoretical, but they would strongly contribute to the solid background of a manager who need to take the right decision in due time. At the end of each chapter you have summary, important concepts for recap and some open questions and problems if it is the case. This helps you to revise and to test yourselves. You will realize while you will be reading the textbook, the Power Point lectures, the explanations of the instructor and when you will take the quizzes and the assignments, that your performance in this course is highly conditioned of the understanding of the concepts, the graphs and the mathematical calculus. A document entitled Review of Mathematical Concepts used in Managerial Economics will be provided by the instructor at the beginning of our course. As you will see, the level is easy and at most moderate for the tools we will be using in this course. Course organization At the beginning of the course, please watch the tutorial Introduction to Moodle (Students) in the Moodle Help Documentation that will help you to familiarize with the platform if you have not done it before this course. Our course will be organized in modules, each week you will be assigned one module. All modules start from Monday and end Sunday at midnight (EST time) (see the Schedule of the course/tasks for periods, detailed tasks). In the folder entitled Module x (x being the number of the given week) you will find: Module Overview which contain Learning objectives and schedule of Learning activities Power-Point lectures Compulsory tasks i.e. Quizzes, Assignments Module x Forum The supplemental reading Forum i.e. a case study from the real world. Each week you will have your compulsory assignment for the given week. Please submit your work in the Assignment area. The assignments will generally include three open questions which will involve a lot your analytical thinking and two problems/exercises1. These are meant to familiarize you with concepts from core microeconomics. After the deadline (see the rubric Sequence of Daily Tasks and Deadlines for exactly indicated deadlines) of the assignment, you will find a Solution of the assignment posted by the instructor in the same area.
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The only exception is during week 3 when you will have to do an estimation of demands for three stores using Excel and answer to the posed questions. A guide to regression analysis using MS Excel will be posted in the respective Module folder and also further instructions.

You must also take and submit the quiz. Each quiz will have 15 questions and you will be allowed to solve them in 40 minutes. One attempt is permitted to each quiz. In the folder Modules and Assignments you will find examples of: a solved assignment; a solved problem in Excel; a graph in Excel or Word. Further instructions regarding the given Assignments other than in this Syllabus will be available at the beginning of each module. A prior reading of the chapters and interactive participation in the Forum area are absolutely necessary to accomplish well your tasks. Your class participation is a continuous and very important task. This will be accounted for in your final grade under Class Participation item (see the Grading rubric) and it is an extremely important item for the entire course. Each week we will have two forums of discussions, one dedicated to the topics covered in the respective week and one dedicated to the supplemental reading case study. I will participate in the discussions by asking specific question and by providing hints and comments if necessary. You will be asked to write in the subject line the question you are answering too. The cases provided as a supplemental reading are good topics for the discussions and you will be interested in discussing them as they concern real world being similar with situations and cases that you find out while you are reading the textbook. For a maximum class participation credit in a given week (20 points, see the Grading rubric) I mean at least 4 rationale, relevant, qualitative and logic postings in different days and also a feedback to at least one of your colleague. Each answer will be graded on a scale between 0-5 points. Sequence of Daily Tasks and Deadlines Each module is assigned with one week, in which daily tasks are organized as follows: Day Monday Task Read assigned chapters from the textbook Module Overview Power-Point Lecture Module Forum Read assigned chapters from the textbook Module Overview Power-Point Lecture Module Forum Read assigned chapters from the textbook Self tests from the textbook (questions at the end of the chapter -not graded but very useful for your understanding) Module Forum Read assigned chapters from the textbook Module Forum Take and submit quiz 1 Participate in the chat session at 5:00 PM EST (Eastern Standard Time) in the

Tuesday

Wednesday

Thursday

Friday Saturday

Sunday

USA (6:00 PM Antigua time) Self tests from the textbook Module Forum Prepare assignment Supplemental reading Forum Prepare assignment Submit the assignment Deadline: Saturday midnight (EST) in the USA Supplemental reading Forum Take and submit the quiz Deadline: Sunday midnight (EST) time.

See the Schedule of the course/tasks for exams period and take the exam anytime within the designated period. You will have at disposal 2 hours for 30 quiz questions. Deadline for the first exam is Sunday at midnight (EST time) in the USA (October 9) and Friday at midnight (EST time) in the USA (November 18) for the second exam. PLEASE respect the deadlines if you want your work to be graded. Thank you. Grading Seven Assignments: 47% (6 assignments of 70 points each, 1 assignment of 50 points) i.e. 470 points Seven Quizzes: 10.5% (15 points each) i.e. 105 points Seven Class participation: 24.5% (35 points each: 20 points Module Forum , 15 points Supplemental Reading Forum) i.e.245 points Two exams: 18% (90 points each exam) i.e. 180 points Total: 1000 points
Score 950-1000 900-949 850-899 800-849 750-799 700-749 650-699 600-649 550-599 <550 Grade A+ A B+ B BC+ C CD F

Schedule of the course / tasks2


Week
1

Period Topic
09/1209/18 Introduction The Firm and Its Goals Supply and Demand

Required readings
Chapters 1, 2 & 3

Tasks
Familiarize with the Moodle watching the tutorial Introduction to Moodle for students in the Moodle Help Documentation Use the Roster Area to add your profile (including a photo) Read the materials in the folder entitled Modules and assignments to see the whole organization of the course and examples to solve the Assignments Quiz 1 (ch.1, 2&3) Assignment 1 : pp.69-70 questions 3, 11,13 Problems: 4, 10 p.72 Supplemental reading: Life is Sweet: Sugar Boom, The Economist, April 2010 available at: http://www.economist.com/world/unitedstates/displaystory.cfm?story_id=15955155

Participate in the Forums.

09/1909/25

Demand Elasticity

Chapter 4

Quiz 2 (ch.4) Assignment 2: pp.104-105 questions 2,11,17 (Read the Market for Used Automobiles section in Appendix 4A before answering 17) Problems: 2 p. 105, 15 p.107 Supplemental reading: World Oil: EIUs monthly oil outlook The Economist, January 2011 http://viewswire.eiu.com/index.asp? layout=ib3Article&article_id=587753643&cou ntry_id=&pubtypeid=1142462499&industry_id =&company_id=&channel_id=&rf=0 Participate in the Forums.

Any changes, if there will be any regarding this schedule, wont disadvantage the student.

Week
3

Period Topic
09/2610/02 Demand Estimation and Forecasting

Required readings
Chapter 5

Tasks
Quiz 3 (ch.5) Read and learn How to Use Excel to run regressions available in the folder assigned for the given week (Module 3) Assignment 3: To decide in what zone should be placed a store which sells video-cassettes, the manager of a firm which sells and rents cassettes makes a study to estimate the demand for each store. The independent variables are: number of inhabitants, average income of inhabitants, number of competitors situated (all these variables refer to a one mile distance) and the price of a video-cassette. You will have a number of 15 supermarkets and the values of all 5 explicative variables (set of data will be posted on the blackboard in folder week 3). Questions: 1. What can you say about R and Rsquared? 2. How do you interpret the standard error? 3. Explain briefly the meaning of the Ftest and interpret its value 4. For which variables did you obtain a significant coefficient? 5. What is the economic interpretation of each of the coefficients of this model? 6. Which variables you would eliminate if you were to re-do the estimation? Supplemental reading: The cattle market: Bullish on Beef Brett Crosby, December 2010 available at: http://www.beefbasis.com/

10/0310/09

First Exam

Revision Chapters 1-5

Participate in the Forums. Submit the first exam Supplemental reading: IEAs Oil Demand Forecast Will Be Little Changed, Bloomberg Business Week, March 2010 available at: http://www.businessweek.com/news/2010-0311/iea-s-oil-demand-forecast-will-be-littlechanged-tanaka-says.html Participate in the Revision Forum Quiz 4 (ch.6, 7) Assignment 4: p. 219 question 12 p.291 questions 12, 15 Problems: 2 p.220, 8 p.294 Supplemental reading:

10/1010/16

Production and costs

Chapter 6 & 7

Week

Period Topic

Required readings

Tasks
The folly of the 'fun tax' Peter Navarro, Los Angeles Times. Los Angeles, Calif.: Nov 13, 2008. pg. A.23, available at: http://articles.latimes.com/2008/nov/13/opinion/ oe-navarro13 Participate in the Forums.

10/1710/23

Market structure, pricing and output decisions

Chapter 8

Quiz 5 (ch.8) Assignment 5: Questions 3,6, 13 pp.338-9 Problem: 4 p. 340 (use excel for graphs), 8 p.341 Supplemental reading: Airline fees tough to get a handle on; Travel agents are demanding easier-to-access information, Charisse Jones. USA TODAY. McLean, Va.: Feb 23, 2010. pg. B.2 available at: http://www.usatoday.com/travel/flights/201002-23-businesstravel23_ST_N.htm Participate in the Forums. Quiz 6 (ch.9) Assignment 6: Questions: 4, 9, 12 p. 380-381 Problems: 1 p. 381, 5 p.382 Supplemental reading: OPEC's oil price aspirations edge higher, again, Reuters, April 2010, available at: http://www.reuters.com/article/idUSTRE63D1T D20100414

10/2410/30

Market structure, pricing and output decisions

Chapter 9

10/3111/6

Special Pricing Practices and Game Theory

Chapter 10 & Chapter 11 (pp.425-pp.431 only)

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11/711/13 11/1411/18

Revision Second exam

Chapters 6-11 Chapters 6-11

Participate in the Forums. Quiz 7 (ch.10, 11) Assignment 7: Questions: 8,9, 12 p.421 Problems: 8 p.423, 1 p. 449 Airbus, Boeing Confront Bombardier on Financing Rules, Bloomberg Business week, March 2010 available at: http://www.businessweek.com/news/2010-0326/airbus-boeing-confront-bombardier-onfinancing-rules-update1-.html Play the repeated prisoners' dilemma: http://www.gametheory.net/Mike/applets/PDile mma/ Participate in the Forums. Participate in the Revision Forum Submit the second exam

Communication If you have any questions, doubts or you have not understood something; do not hesitate to write me an email. You will receive an answer in maximum 24 hours. You will interact one with another using the Forum area under a title for each topic. I strongly encourage your class participation. You will quickly realize how important is the interaction via discussions and its role in strenghtening your ability to perform well in this course. We will also have a chat session on each Thursday at 5:00 PM EST in the USA. I will be in the chat area for 1 hour and a half. We will revise terms and important concepts you have to know in the respective module, will launch questions, we will discuss issues based on cases from the real world. I stronlgy encourage you to participate in our chat sessions if your schedule permits. For those who cannot attend due to overloaded program, the chat log will be available. Academic Integrity Students must become familiar with the Universitys Policy on Academic Integrity found in the Plymouth State University Academic Catalog 2010-2011 ( (http://www.plymouth.edu/undergrad/pdfs/2010-11AcademicCatalog.pdf), pages 44-46 or in the following webpage. http://www.plymouth.edu/registrar/policies/academic_standing.html The content of the catalog applies to this course. I would like to draw your attention regarding this issue. Please do not be tempted to copy someone else work from the internet, any copied part will be identified and penalized. Please cite any reference you use, including textbook. The forum area is meant to exchange opinions, to agree or to disagree and to offer you a good tool for a brainstorming prior posting the final submission of the assignments which must represent yourselves and it must be your own work. Any violation of the requirements regarding the academic integrity will severely affect your grade for the entire course. Students with disabilities Plymouth State University is committed to providing students with documented disabilities equal access to all university programs and facilities. If you think you have a disability requiring accommodations, you should immediately contact the PASS Office in Lamson Library (535-2270) to determine whether you are eligible for such accommodations. Academic accommodations will only be considered for students who have registered with the PASS Office. If you have a Letter of Accommodation for this course from the PASS Office, please provide the instructor with that information privately so that you and the instructor can review those accommodations. Thank you and I am looking forward seeing you all in class!

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