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Semester: II Course: Managerial Economics Faculty: Dr.

Ranita Nagar &

Hitesh Thakkar

Gujarat National Law University

Gandhinagar, Gujarat (India)

Course Outline


Managerial Economics



Semester: II

Session: 2016-2017 (January – June 2017)


Mr. Hitesh Thakkar Dr Ranita Nagar

Assistant Professor Professor
E-Mail: hthakkar@gnlu.ac.in Email : rnagar@gnlu.ac.in

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Semester: II Course: Managerial Economics Faculty: Dr. Ranita Nagar &
Hitesh Thakkar

Sl. No. Contents Page No.

1.0 Objectives of the course 3

2.0 Proposed teaching schedule 3

3.0 Detailed course-outline 4

4.0 Prescribed/Recommended readings 7

5.0 Teaching methodology 8

6.0 Evaluation pattern 8

Tentative dates for test/submission of project/GD,

7.0 9

8.0 Important instructions to students 9

9.0 Contact hours 9

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Semester: II Course: Managerial Economics Faculty: Dr. Ranita Nagar &
Hitesh Thakkar

1.0 Objectives of the Course

 The course in Managerial Economics attempts to build a strong theoretical foundation for
Management students. The course is mainly analytical in nature and focuses on clarifying
fundamental concepts from microeconomic viewpoint. The students are expected to study and
analyse the dynamics of managerial decision making through this course.

 The Objectives of this course is to:

 List the different goals and constraints that firms face.
 Apply the economic way of thinking to individual decisions and business decisions.
 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.
 Understand the different costs of production and how they affect short and long run
 Derive the equilibrium conditions for cost minimization and profit maximization.
 Understand economies of scale, diseconomies of scale, economies of scope, and cost
complementarities, and how each affects the cost of production.
 Understand the four basic market models of perfect competition, monopoly, monopolistic
competition, and oligopoly, and how price and quantity are determined in each model.
 Understand how game theory can be used to explain a number of business decisions.
 Explain four different pricing practices such as discrimination, two part pricing, block
pricing, commodity bundling and transfer pricing.
 Understand why there is a role for the government to play in market economies.
 Equip the students with the skills to develop an interface with Law and Economics.
 Enable the students to apply the tools of economic analysis to Law in order to address the

2.0 Proposed Teaching Schedule

No. of Sessions
Module No. Modules
II.6.1 Introduction to Managerial Economics 4
II.6.2 Demand and Supply: Concept of Elasticity in Business 6
II.6.3 Consumer Demand Theory 6
II.6.4 Production Theory 6
II.6.5 Cost and Revenue Concepts: Maximizing Profits 6
II.6.6 Market Structure: Perfect competition, Monopoly, 7
Monopolistic Competition and Oligopoly
II.6.7 Introduction and Interface: Law and Economics 7
II.6.8 An introduction to Law and Economic Development 7
II.6.9 An Economic theory of Property 7
II.6.10 An Economic theory of Crime and Punishment 7
Total = 63
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Semester: II Course: Managerial Economics Faculty: Dr. Ranita Nagar &
Hitesh Thakkar

3.0 Detailed Course Outline

Managerial Economics

Module- II.6.1. Principles of Economics Sessions: 4

 Ten Principles of Economics

o How People Make Decisions
o How People Interact
o How the Economy as a Whole Works
 Thinking Like an Economist
o The Economist as Policy Adviser
o Why Economists Disagree
 The Basics of Business Forecasting

Module- II.6.2 Demand and Supply: Concept of Elasticity in Business Decision Sessions: 4

 Law of demand and supply

 Elasticity of demand and supply
 Types of elasticity
 Application of the concept of elasticity in business decision
 Impact of regulations in the light of elasticity ( Labor laws, Prohibited substance etc)

Module- II.6.3 Consumer Demand Theory Sessions: 6

 Cardinal utility analysis

 Total and marginal utility
 Law of diminishing marginal utility
 Law of Equi marginal utility
 Ordinal utility analysis
 Application of demand theory
 Hicks and Slutsky decomposition of price effect

Module- II. 6.4 Production Theory Sessions: 6

 The production function

 Production with one variable input (Law of variable proportions)
 Production with two inputs (Isoquants)
 Returns to scale and Economies of scale

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Semester: II Course: Managerial Economics Faculty: Dr. Ranita Nagar &
Hitesh Thakkar

Module- II. 6.5 Cost and Revenue Concepts: Maximizing Profits Sessions: 6

 Opportunity cost
 Marginal and average cost
 Fixed and variable cost
 Short run and long run cost
 TR, AR and MR : Revenue pattern in Perfect Competition and Imperfect Competition
 Equilibrium of the Firm: Maximizing Profits in Perfect Competition and Imperfect

Module- II. 6.6 Market Structure: Perfect competition, Monopoly, Monopolistic

Competition and Oligopoly Sessions: 7

 Introduction
 Short and long run equilibrium
 Social cost of monopoly
 Price discrimination
 Business strategy and game theory
 Cartels and collision
 Barriers to entry
 Relevance to competition policy and I.P.R.


Module- II.6.7 Introduction and Interface: Law and Economics Sessions 7

 Evolution, Scope and manifestation

 Effect of Legal Sanctions on behavior
 Rationality analysis and its application in Market and Non market behaviour
 Economics as a tool to measure efficiency of laws.
 Pareto efficiency and Kaldor Hicks efficiency
 Edgeworth box and its applications in Market and Non market behaviour
 Application of Indifference curves (Social welfare programs, Arbitration, Cybercrime)
 Efficient markets, The liability system as an Exchange system
 Market Failure and regulatory mechanisms
 Game theory and its application in Market and Non market behaviour
 Maximization of expected utility and attitudes towards risk.
 The Demand for Insurance, Supply of Insurance, Moral hazard, Adverse selection
 Behavioral Economics, Law and Policy

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Semester: II Course: Managerial Economics Faculty: Dr. Ranita Nagar &
Hitesh Thakkar

Module- II.6.8 An introduction to Law and Economic Development Sessions 7

 The Economics of Demonetization

 Labor Law reforms and Unemployment
 The Double Trust Dilemma of Development
 The Property Principle for Innovation
 Keeping What You Make--Property Law
 Doing What You Say--Contracts
 Giving Credit to Credit--Finance and Banking
 Financing Secrets—Corporations
 Hold or Fold--Financial Distress


 The Insolvency and Bankruptcy Code, 2016

Module- II. 6.9 An Economic Theory of Property Sessions: 7

 Alternate bundles of rights and their implication on efficiency.

 Bargaining theory as the foundation of the economic theory of property.
 The limits of Law, the Coase Theorem
 Successful and failed bargaining and the role of law.
 The level of Transaction costs and the appropriate legal rule.
 The Normative Coase and Hobbes Theorems: Information cost versus transaction cost.
 How property rights are protected, Damages and Injunctions (Demonetization).
 What can be privately owned, Public and private goods in terms of externalities

Module- II. 6.10 An Economic theory of Crime and Punishment Sessions: 7

 Rational Crime: Actual punishment, expected punishment, perfect disgorgement

 Applying the Model of Rational crime to Public Policy

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Semester: II Course: Managerial Economics Faculty: Dr. Ranita Nagar &
Hitesh Thakkar

4.0 Prescribed/Recommended Readings

Prescribed Readings

1. Ahuja, H.L., Modern Microeconomics: theories and policies (S. Chand 2009)
2. Robert D. Cooter and Thomas Ulen, Law and Economics (6th edn, Pearson
Education 2011)
3. Petersen Craig H. Petersen, W. Cris Lewis and Sudhir K. Jain, Managerial Economics
(Pearson 2009)
4. Dominick Salvatore and Ravikesh Srivastava, Managerial Economics Principles
and Worldwide Applications (7th edn Oxford University Press 2012)
5. Gangopadhyay,S and V. Santhakumar, Law and Economics (SAGE Publications
6. Koutsoyiannis A, Modern Microeconomics (Macmillan Press Ltd, London 2010)
7. Pindyack, Robert S & Rubinfeld, Daniel L, Microeconomics (5th edn Pearson
Education Pvt Ltd 2004)
8. Lipsey, Richard & Chrystal, Alec , Economics (Oxford University Press, New York

Recommended Readings


1. Dholakia Ravindra H, Micro economics for management students (Oxford University

Press 2010)
2. Christopher R. Thomas, S. Charles Maurice and Sumit Sarkar, Managerial Economics
(9th edn Tata McGraw Hill Education Private Limited 2010)
3. Cowell, Frank A, Microeconomics Principles and Analysis (Oxford University Press
4. Klein, Grady & Bauman, Yoram, Cartoon introduction to Economics, Vol.1
Microeconomics (Hill and Wang, New York 2010)
5. TR Jain and VK Ohri, Introductory Microeconomics and Macroeconomics (VK Global
Publications Pvt. Ltd 2011)
6. Mankiw Gregory N., Principles of Economics (7th edn, South Western Publication
7. Posner, Richard, Economic Analysis of Law (8th edn Aspen Publisher 2010)
8. David Friedman, Law's Order: What Economics Has to Do with Law and Why It Matters
(Princeton University Press 2001)
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Semester: II Course: Managerial Economics Faculty: Dr. Ranita Nagar &
Hitesh Thakkar


1. Sengupta, Rajeswari and Sharma, Anjali, ‘Corporate Insolvency Resolution in

India’ (2016) 51(15) Economic and Political Weekly.
2. Aparna Ravi, ‘Indian Insolvency Regime in Practice: An Analysis of Insolvency
and Debt Recovery Proceedings’ (2015) 50(51) Economic and Political Weekly.
3. Alok Prasanna Kumar, ‘Demonetisation and the Rule of Law’ (2016) 51(50)
Economic and Political Weekly 19.
4. Arun Kumar, ‘Estimation of the Size of the Black Economy in India, 1996-2012’
(2016) 51(48) Economic and Political Weekly 36.
5. Simon Deakin, ‘The Contribution of Labour Law to Economic Development and
Growth’ [2016] WP 478
research/downloads/working-papers/wp478.pdf> accessed 21 December 2016.
6. Branch B and Khizer A, ‘Bankruptcy practice in India’ (2016) 47 International
Review of Financial Analysis 1.

5.0 Teaching Methodology

 Lecture Method
 Case Study
 Class-room participation
 Presentation by students if needed
 Group discussion whenever required
 Guest Lecturers

6.0 Evaluation Pattern

Evaluation: Marks

Continuous Evaluation…….………………………………..……….………….50
 Project/Project Presentation……………………………….………….20
 Mid-Term Exam…..………………………….…………….…………30
End-Semester Examination…..…………………………………...........................50

Total 100

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Semester: II Course: Managerial Economics Faculty: Dr. Ranita Nagar &
Hitesh Thakkar

7.0 Tentative Dates for Continuous Evaluation Tests/ Submission of Project

 Project : 2nd February, 2017

 Project Presentation : 4th February, 2017
 Mid-Term Exam : 27th February 2017 – 04th March, 2017

8.0 Important Instructions to Students

The Course Outline given here is though exhaustive, it is also considered tentative in the sense
the concerned faculty-member may modify it while engaging the academic sessions with inputs
from students if found to be appropriate and required.

The teaching course of this subject and methodology will not be necessarily bound by
parameters shown here.

Both faculty-members and students may mould the Course Outline according to the needs
suitable for better and progressive understanding of the subject in a flexible way.

Students are requested to respond to the course outline well before the academic sessions if
they have suggestions.

9.0 Contact Hours

Days: Thursday and Friday
Timings: 3.30 pm – 4.30 pm

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