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FORE School of Management, New Delhi

Course Outline
Programme: PGDM (FMG- 28/IMG-13/FM-2)
Name of the Course: Managerial Economics Credits: 3.0
Term: 1 Academic Year: 2019-2020
Faculty: Dr. Basant K. Potnuru Office Contact No.: 011-46485514
& Visiting Faculty Email: basant@fsm.ac.in
Introduction:
The central question of the study of economics is how the scarce resources are allocated to optimize
production, distribution and consumption at the micro-level (household/firm), meso-level
(industry) and the macro-level (countries). Managerial Economics is a sub-science of Economics
that deals with predominantly the economic problems of a business firm. In this sense, Managerial
Economics is a form of application of Microeconomic tools to business problems and decisions. It
plays an interface between business administration and Economics.

Objective:
Managers are required to address microeconomic issues such as pricing and demand, cost
determination, compensation, entry into and exit from markets, output decisions, etc. At the end
of the course, the students will have a basic understanding of tools and techniques that structure
the problems of organizing production, determining price and optimizing profits.

Text Book:
Baye, Michael R. and Prince, Jeffrey T. Managerial Economics and Business Strategy, 8th Edition,
McGraw Hill Education.

Reference Books:
Dominick Salvatore, Principles of Microeconomics, 5th Edition (International Version), Oxford
University Press (OUP), 2014.

Christopher R Thomas and S Charles Maurice, Managerial Economics: Concepts and


Applications, 10th Edition, The McGraw-Hill Companies.

Pedagogy: A mix of lectures and class discussions, quizzes and assignments will be employed.
Evaluation Component and weightage:
Quiz : 20
Assignment : 10
Class Participation : 10
Mid Term : 20
End Term : 40
________
Total 100 Marks

1
Session Plan:

S.N. Session Theme Readings Learning


Outcome
1& Introduction of Economics: Chapter 1: Understanding
2 Use of the subject in general Baye, Michael R. and Prince, Jeffrey T. the importance
and management in particular. Managerial Economics and Business of Economics for
Production Possibility Strategy, 8th Edition, McGraw Hill Managers and
Frontier, positive and Education. learning key
normative economics, analytical tools
nominal and real values, Chapter 1: of Economics.
Opportunity Cost and Dominick Salvatore, Principles of
Economic Profit, Present Microeconomics, 5th Edition
value. (International Version), Oxford
University Press (OUP), 2014
3& Utility Analysis: Cardinal vs Chapter 2 & 4: Establishes a basis for
4 ordinal Baye, Michael R. and Prince, Jeffrey T. consumer demand
Derivation of the demand Managerial Economics and Business and explores the
curve Strategy, 8th Edition, McGraw Hill determinants of
Theory of Demand: Meaning Education. demand.
of demand, Statement of
demand function. Chapter 2, 3 & 5:
Determinants of demand. Law Dominick Salvatore, Principles of
of Demand. Microeconomics, 5th Edition (International
Version), OUP, 2014
5& Exceptions of the law and Chapter 3 & 4: Understanding
6 Giffen Paradox. Elasticity of Baye, Michael R. and Prince, Jeffrey T. the implications
demand: Concept, types and Managerial Economics and Business of change in
determinants. Analysis of Strategy, 8th Edition, McGraw Hill price and other
Price elasticity and its Education. determinants of
determinants. demand.
Chapter 4 & 5:
Dominick Salvatore, Principles of
Microeconomics, 5th Edition
(International Version), OUP, 2014
7 Measurement of elasticity of Chapter 3: How to measure
demand: Point elasticity and Baye, Michael R. and Prince, Jeffrey T. or anticipate the
Arc elasticity methods Income Managerial Economics and Business change in
elasticity and Cross elasticity Strategy, 8th Edition, McGraw Hill demand with the
Education. change in any of
Time element in the theory of the determinant
demand Chapter 5: Dominick Salvatore, of demand.
Principles of Microeconomics, 5th
Edition (International Version), OUP,
2014
8 Estimation of Demand Chapter 3: How to
anticipate future
2
Baye, Michael R. and Prince, Jeffrey T. demand for
Managerial Economics and Business managerial
Strategy, 8th Edition, McGraw Hill readiness?
Education.

Chapter 5: Managerial Economics, 8th


edition, Dominick Salvatore and S. K.
Rastogi, Oxford Higher Education.

9 Production concepts and Chapter 5: How to organize


analysis; Production Baye, Michael R. and Prince, Jeffrey T. production in the
functions: short run and Laws Managerial Economics and Business short run with
of production: Law of variable Strategy, 8th Edition, McGraw Hill managerial
proportion or law of Education. implications.
diminishing marginal returns.
Chapter 7: Dominick Salvatore,
Principles of Microeconomics, 5th
Edition (International Version), OUP,
2014
10 Introduction of Isoquants, Chapter 5: How to organize
types of isoquants, Long run Baye, Michael R. and Prince, Jeffrey T. production in the
and laws of long run Managerial Economics and Business long run with
production. Budget line. Strategy, 8th Edition, McGraw Hill managerial
Problems of output Education. implications.
maximization and cost
minimization.
Chapter 7: Dominick Salvatore,
& Principles of Microeconomics, 5th
QUIZ 1 Edition (International Version), OUP,
2014
11 Economies and diseconomies Chapter 5: How to organize
of scale, Managerial use of Baye, Michael R. and Prince, Jeffrey T. production in the
Production function. Managerial Economics and Business long run with
Strategy, 8th Edition, McGraw Hill managerial
Education. implications.

Chapter 7: Dominick Salvatore,


Principles of Microeconomics, 5th
Edition (International Version), OUP,
2014
12 Cost concepts and analysis: Chapter 5: How to
Short run and long run costs. Baye, Michael R. and Prince, Jeffrey T. minimize short
Empirical evidence of the Managerial Economics and Business and long run
behavior of short run and long Strategy, 8th Edition, McGraw Hill costs?
run cost curves. Education. Empirical
standing of the
Chapter 8: Dominick Salvatore, behavior of costs
Principles of Microeconomics, 5th
3
Edition (International Version), OUP,
2014
13 Introduction of markets, Chapter 7: Characteristic
Perfect competition. Baye, Michael R. and Prince, Jeffrey T. features of an
Equilibrium of a firm. Break Managerial Economics and Business ideal market.
even analysis. Price Strategy, 8th Edition, McGraw Hill How does the
determination, importance of Education. time affect the
time element in price theory pricing
Chapter 9: Dominick Salvatore, decisions?
Principles of Microeconomics, 5th How is the price
Edition (International Version), OUP, determined in a
2014 perfectly
competitive
market

14 & Imperfect competitions – Chapter 8: Imperfections in


15 Monopoly, monopolistic and Baye, Michael R. and Prince, Jeffrey T. the market and
oligopoly. Monopoly and Managerial Economics and Business pricing decisions
pricing decision: short run and Strategy, 8th Edition, McGraw Hill
long run. Education.

Chapter 10: Dominick Salvatore,


Principles of Microeconomics, 5th
Edition (International Version), OUP,
2014
16 & Price discrimination under Chapter 8: Pricing by a
17 monopoly Discriminating Baye, Michael R. and Prince, Jeffrey T. single seller
Monopolist Equilibrium and Managerial Economics and Business
Dumping Strategy, 8th Edition, McGraw Hill
Education.

Chapter 10: Dominick Salvatore,


Principles of Microeconomics, 5th
Edition (International Version), OUP,
2014
18 Oligopoly solutions: Chapter 9: Understanding a
Cournot’s, Bertrand’s model Baye, Michael R. and Prince, Jeffrey T. few sellers’
(classical). Managerial Economics and Business market and their
Strategy, 8th Edition, McGraw Hill pricing practices
Education.

Chapter 11: Dominick Salvatore,


Principles of Microeconomics, 5th
Edition (International Version), OUP,
2014

4
19 Stackelberg model and market Chapter 11: Dominick Salvatore, Understanding a
sharing Sweezy’s Kinked Principles of Microeconomics, 5th few sellers’
demand curve model Edition (International Version), OUP, market and their
2014 pricing practices
20 Review & Quiz 2

For official use: -


As Benchmarked with course content in previous year, the contents of this course: (Please mark the
right option below)
(a) Is totally new
(b) Has not changed at all
(c) Has undergone less than/equal to 20% change
(d) Has undergone more than 20% change

Faculty Signature: _______________

Area Chair Signature: _____________