Post Graduate Programme in Management

AY 2016-17
TERM: I
TITLE OF THE COURSE: MICROECONOMICS FOR MANAGERS
CREDITS: 4
Name of the Faculty
Prof. Ajay Sharma
Prof. Joysankar Bhattacharya
Prof. N. Karthikeya
Prof. Sneha Thapliyal

Faculty Block/
Room No.
J 206
A 105
B 1 Conf. Room
B 2 Conf. Room

Email
ajays@iimidr.ac.in
joysankar@iimidr.ac.in
karthikeyan@iimidr.ac.in
snehat@iimidr.ac.in

Telephone
Number
+91-731-2439622
+91-731-2439517
+91-731-2439596
+91-731-2439665

Course Description
This course serves as the first course in Microeconomics. The focus of the course is on
understanding of economic concepts and tools to facilitate decision-making in business
management as well as public policy contexts. A special emphasis is given on conceptual
application in Indian contexts.
Course Objectives
The course aims to equip participants with intermediate level economic concepts and tools of
analysis to develop critical thinking and analytical skills to apply under different business
situations. Concepts of this course can further be applied in Industrial Regulation, Strategic
Competition, International Business, Marketing, Managerial Accounting, Public Policy, etc.
Pedagogy/Teaching Method:
All sessions are lecture based. Applications and case studies are used for illustrative purposes to
reinforce the understanding of concepts and tools.
Textbook:
The basic reference book used is: Besanko, D. and Braeutigam, R. (2015) Microeconomics,
5thEdition, Wiley India. (Hereafter B-B).
Make-up Exam policy
There is no makeup provision for the quizzes; whereas makeup for mid-term and end-term exams
will be given only if the participant was on medical leave with approval from PGP Chair.
The nature of such make up will be on the discretion of the instructors.
Evaluation
Class Participation
Surprise Quizzes
Mid-term Exam
End-term Exam
Total

Weightage
10
20
35
35
100%

SCHEDULE OF SESSIONS
Module I
Module Objective:
Session 1:
Objective:
Reading:
Case:

Basic Economic Concepts

How economists think to make sense of the world
B-B, Chap-1: Analyzing economic problems
The Toughest Ticket in Sports, links: http://goo.gl/aZ7bnz; http://goo.gl/riXmVk
Positive and Normative analysis of the minimum wage, pg. 15-16 (B-B)

Module II
Module Objective:

Session 2:
Objective:
Reading:
Case:

Session 3-4:
Objective:
Reading:
Case:

Session 5:
Objective:
Reading:
Case:

Basic Economic Concepts

To introduce the participants to the economic way of thinking

Consumer Behaviour
To understand the behaviour patterns of consumers under different
conditions

Consumer Behaviour
How consumers match scarce resources with unlimited wants
B-B, Chap-3: Consumer preferences and the concept of utility, pg 59-77
and Chap-4: Consumer choice, pg 83-95
Blind taste tests, pg. 76; The effect of rising petrol prices on driving habits, pg. 88
(B-B)
Demand and Supply Analysis
What and how affects demand and supply of various classes of goods
How an equilibrium is reached under different conditions
B-B, Chap-2: Demand and Supply Analysis, pg 21-33 and
Chap 5: The Theory of Demand, pg 121-132 pg. 139-141; pg. 147-151
A Computer on Every Desk and in Every Home, B-B, pg 31-33. (B-B)
Externalities in social networking websites, pg.150 (B-B)
Elasticity
How to measure the changes in demand and supply
B-B, Chap-2: Demand and Supply Analysis, pg 34-44
How people buy cars: The importance of price, pg. 44 (B-B)

Module III
Module Objective:

Production and Product Pricing Decisions

To study production decisions and product pricing under different
conditions

Session 6:
Objective:
Reading:
Case:

Theory of Production
What are the basic concepts related to production choices
B-B, Chap-6: Inputs and Production Functions, pg 163-186 and 188-190
How much is a qualification worth, pg. 194 (B-B)

Session7:
Objective:
Reading:

Theory of Cost
What are the relevant costs and ensuing implications
B-B, Chap-7: Costs and Cost Minimization, pg 201-212 and
Chap -8: Cost Curves, pg 235-249
Who is more likely to avoid the sunk cost fallacy, B-B, pg 206; Self-Checkout or
Cashier?, pg 212. (B-B)

Case:

Module IV
Module Objective:

Market Structures
To explore different market structures and implications for economic
decisions

Session8:
Objective:
Reading:
Case:

Competitive Supply
How markets behave under perfectly competitive environment
B-B, Chap-9: Perfectly competitive markets, pg 267-280 and 303-312.
Perfect Competition in Wood Products, pg 271. (B-B)

Session 9-10:
Objective:
Reading:
Case:

Impact of Taxes and Subsidies

How government's policy decisions affect the consumers and suppliers
B-B, Chap-10: Competitive markets: Applications
Petrol: The effect of a Frozen Fuel Duty, B-B, pg 327-329. (B-B)
A Bailout of the King of Cheeses, B-B, pg 351. (B-B)

Session 11:
Objective:
Reading:
Case:

Monopoly and Market Power

How markets behave when market power exists
B-B, Chap-11: Monopoly and Monopsony, pg 363-380 and 389-395
Market Power in the Breakfast Cereal Industry, B-B, pg380. (B-B)

Session 12-13: Pricing with Market Power

Objective:
How to price the product when cost is not the only parameter
Reading:
B-B, Chap-12: Capturing Surplus, pg 405-433
Case:
Education in the First Degree, pg 412-413; Bundling Television, pg 433. (B-B)
Session 14-15: Monopolistic Competition and Oligopoly
Objective:
What are the more common market structures and their process of decisionmaking
Reading:
B-B, Chap-13: Market Structure and Competition, pg 441-456 and 467-470
Case:
Corn Syrup Capacity expansion confirms Cournot, pg. 449-450. (B-B)
Smartphone wars, pg. 462 (B-B)
Session 16-17: Competitive Strategy
Objective:
How market structures make decision-making a strategic and competitive process
Reading:
B-B, Chap-14: Game Theory and Strategic Behaviour, pg 477-492. (B-B)
Case:
Everyone Loses Except Lawyers, pg 481. (B-B)

Module V
Module Objective:

Market Failures
To explore situations and remedies when markets fail

Session 18:
Objective:
Reading:

Economics of Information
What are the cost, benefits, and implications of information
B-B, Chap-15: Risk and Information, pg 522-527.
Adverse selection in health insurance market, pg. 524-526. (B-B)

Session 19:
Objective:
Reading:

Externalities
Are there situations where markets fail due to externalities
B-B, Chap-17: Externalities and Public Goods, pg 591-613

Case:

Clearing the Air: The European Carbon Emission Trading Market as a response to
climate change pg. 605. (B-B)
Londons Congestion Charge, pg 607-608. (B-B)

Session 20:
Objective:
Reading:
Case:

Public Goods
What are the problems in provision of public goods
B-B, Chap 17: Externalities and Public Goods, pg 613-617.
Free Riding on the Public Airwaves, pg. 617. (B-B)
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