MANAGERIALECONOMICS

BBS7MEC

FacultyofBusiness
2011/12

MBA(Level7)

MBA - Managerial Economics

TableofContents
1. 2. 3. 4.

ModuleDetails ..................................................................................................................................3 ShortDescription .............................................................................................................................. 4 AimsoftheModule ........................................................................................................................... 4 LearningOutcomes............................................................................................................................ 5

4.1 KnowledgeandUnderstanding ............................................................................................................5 4.2 IntellectualSkills ................................................................................................................................ 5 4.3 PracticalSkills ....................................................................................................................................6 4.4 TransferableSkills .............................................................................................................................. 6 5. 6. 7. AssessmentoftheModule .................................................................................................................7 Feedback ........................................................................................................................................10 IntroductiontoStudyingtheModule ................................................................................................ 11

7.1 OverviewoftheMainContent ..........................................................................................................11 7.2 OverviewofTypesofClasses .............................................................................................................11 7.3 ImportanceofStudentSelfManagedLearningTime ...........................................................................12 7.4 Employability ...................................................................................................................................13 8. 9. 10. TheProgrammeofTeaching,LearningandAssessment ......................................................................14 StudentEvaluation .......................................................................................................................... 21 LearningResources .......................................................................................................................... 21

10.1 CoreMaterials ................................................................................................................................ 21 10.2 OptionalMaterials ........................................................................................................................... 21

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MODULEDETAILS
ModuleTitle: ModuleLevel: ModuleReferenceNumber: CreditValue: StudentStudyHours: ContactHours: BlackboardContactHours: PrivateStudyHours: PrerequisiteLearning(Ifapplicable): CorequisiteModules(Ifapplicable): Course(s): YearandSemester ModuleCoordinator: MCContactDetailsRoom: Email: Tel: TeachingTeam&ContactDetails: Room: Email: Tel: ContactDetails: Room: Email: Tel: SubjectArea: SummaryofAssessmentMethod: ManagerialEconomics 7(MBA) BBS7MEC 20CATSPOINTS 200 60 20 120 None None ExecutiveMBA&MBA 1(Semester1) CeyhunElci LR317(LondonRoad) ceyhun.elci@lsbu.ac.uk 02078157071 BrainArdy LR137(LondonRoad) ardy@lsbu.ac.uk 02078158129 MichaelWood LR51(LondonRoad) woodm@lsbu.ac.uk 02078157780 Business 1. DiscussionQuestionResponses 2. ProjectProposalandOutlineReport 3. UnitFinalProjectReport (Seepage79)

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2.

SHORTDESCRIPTION
This module is designed to provide students with an understanding of how economics can informmanagerialdecisionsandprovidearangeoftoolsforoptimisingtheprofitabilityofthe firm. Students will be introduced to many realworld case studies illustrating the concepts studiedinapracticalcontext. Theunitwillshowhoweconomictheorycanreinforcedecisionmakinginthedevelopmentand implementation of business strategy for greater competitiveness in the global economy. The participants are introduced to the main themes of managerial economics and go on to study somekeymanagementtoolsindetail.Theseincludeoptimisation,demandanalysis,production andcostanalysis,riskanalysis,gametheory,andpricingstrategy.Considerationisgiventothe importanceofmarketstructureandtheroleofgovernmentintheeconomyandinenterprises.

3.

AIMSOFTHEMODULE
Understandthecontributioneconomictheorycanmaketotheanalysisofissuesinbusiness management; Appreciatethe value of economictoolsinshapingbusiness decisionsandstrategyfor the achievementofgreatercompetitiveness; Gain experience in the use of economics for business and management research, both academicandpractical.

ThespecificaimsofthisunitinManagerialEconomicsaretoensurethatstudentscan:

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LEARNINGOUTCOMES
4.1

KnowledgeandUnderstanding
Demonstrate understanding of economic theory and its relevance to business management;

Oncompletingtheunititisexpectedthatstudentsshouldbeableto:

Applyeconomictoolstotheanalysisofcomplexbusinessissues; Criticallyevaluatethemethodologiesusedinparticulareconomicanalyses; Criticallyappraisemanagerialbehaviourandfirmbehaviourineconomicreasoning; Demonstrateacriticalunderstandingofmarketandgovernmentinteraction; Criticallyapplyeconomicprinciplestomanagementactivitiesandmechanisms; Demonstrate an indepth knowledge and comprehension of different methods of economicevaluation;

Demonstrateadetailedunderstandingandevaluationofcosts,revenues,andeconomic financialperformanceoforganisations;

4.2

IntellectualSkills
Evaluate and interpret economic tools, decisionmaking views and information from a varietyofsources;

Oncompletingtheunititisexpectedthatstudentsshouldbeableto:

Demonstrateinformationgathering,interpretation,andanalytical/problemsolvingskills witheconomicsformanagementtasks;

Demonstrate capabilities in economic analysis to form managerial decisions with strategiceconomicviews;

Demonstrate an ability to apply the methods of economic analysis to the reallife managementdecisionmaking;

Critically evaluate alternative performance and success methods with new economic toolsformanagement;

Effectivelycommunicatetheoutcomesofquantitativeandquantitativedecisionmaking techniques.

Demonstrate the development of critical understanding and analytical judgment of economicissues.

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4.3

PracticalSkills
Develop group and team working skills through case studies and indepth topic discussionswithinseminarsandworkshops; Develop the ability to engage in selfmanaged learning, including reading and study skills in preparation for class discussions, coursework and examination assessment, whileconsideringmanagementtools; Demonstrateanabilitytounderstandandcriticallyevaluatealternativeviewpointsand theories,weighevidenceanddrawconclusionsforthebetter; Prepareandwriteamanagementreportwitheconomictheoremsformanagement; Develop information technology skills through the use of electronic databases and softwareusedinthecorporatefield.InteractwiththeWorldWideWebforgathering corporateinformationandpublisherbasedlearnersupportmaterials.

Oncompletingtheunititisexpectedthatstudentsshouldbeableto:

4.4

TransferableSkills
Communicationskillsthroughengagingindiscussionsanddebateinthecontext seminars(managerialteams)

Oncompletingtheunititisexpectedthatstudentsshouldbeableto:

Engageininteractive,problemsolvingwithothermembersoftheunitthrough discussionanddebateaboutmanagerialdecisions;

Problemsolvingskillsdevelopedthroughindividualworkandinteractiveseminar discussions;

Criticalanalysisandevaluationskillsthoughnegotiationsanddebates; Writtenpresentationskillsforprofessionalreportwriting; Timemanagementandplanningskillsinorganisingtimeandtheworkingtoassignment deadlines.

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5.

ASSESSMENTOFTHEMODULE
Theunitwillbeassessedthrough3assignmentsthatwillmakeuptheunits100%coursework assessment: Unitassessmentismadeupof3mainelements: Assignment1DiscussionQuestionAnswers&Participation(30%weighting) StudentswillhaveregularonlineBlackboardinteractionwithotherstudentsfromthe unit and the unit team in order to help consolidate the students understanding of theoreticalconceptsandtodevelopskillsthroughdiscussionexercises.Thecontentof the online blackboard contact sessions will relate to the materials covered in the lectures and reading material and will focus on Discussion Questions set by the unit coordinatorpriortoweeks2,4,6,8and10. Forassignment1Studentsarerequiredtosubmitatotalof5blackboarddiscussions submissionsinresponsetoDiscussionQuestionsthatwillbesetbytheunitcoordinator forblackboardsubmission.StudentmustsubmittheirinitialresponsetotheDiscussion Questionforweek2,4,6,8and10bytheSundaypriortotheweek.Atypicalanswer shouldhaveabout500words,butitisthequalityoftheanswerthatmatters,notthe numberofwords. Thesubmissionswillthenbefollowedbyparticipationinthediscussionswithfollowon postings to your peers answers, making 35 significant discussion question followup postingsinadditiontoyourinitialresponseforeachDiscussionQuestion.Thequestions will be developed through the blackboard discussion board and in seminars following theSundaysubmissioninweeks2,4,6,8and10. Assignment2UnitProjectProposal&OutlineReport(20%weighting) Assignment 2 is to prepare a project proposal of the Final Project Report, for Assignment 3. The unit requires students to complete a course project that reveals masteryinapplicationofthemacroeconomicandmicroeconomicconceptsemphasised inthecourse.Thisinvolvesreportingonaspecificorganisationwithinanindustryand optimalstrategiesinvolvingpricingandresourceutilisationthataffectthevalueofthe chosenfirmorindustry(seeAssignment3;below).

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Assignment 2 is a proposal and outline of the work intended to be undertaken in the final project report. The project proposal should include the nature of the students finalproject,includingthesourcesofinformationthatisplannedtouse,andthemost importantconceptsandtechniquestobeappliedinamanagerialeconomicsreport. Tasksare: 1. To assess the macroeconomic conditions and the opportunities and threats suggestedbytheseconditionsforthechosenfirm; 2. To analyse the microeconomic market structure and demand, cost, and productionconditionsobserved; 3. Toevaluatetheorganisationitselfforpractisesofriskmanagementaswellas capitalstructureandbudgeting; 4. Todevelopareasonedandevidencebasedmanagerialstrategybasedonthese macroeconomic,microeconomic,andorganisationalspecificconditionsineach areaofproduction,pricing,andresourceutilisation. The proposal and outline should have a 1,250word count and is to be submitted in week 10, both to the faculty office and the unit blackboard turnitin system. You will receivefeedbackontheproposalfromtheunitteachingteaminWeek11,whichwill giveyoutimetomakeadjustmentsforthefinalproject. Assignment3UnitFinalProjectReport(50%weighting) The final assignment is an Individual Final Project Report for the unit. The Individual Final Project Report is to allow students to demonstrate their attainment of the learningoutcomesoftheunit,throughtheapplicationoftheconceptsandtechniques learnt. ThepurposeoftheFinalProjectistoapplytheconceptsandtechniquesoftheunitto theanalysisofrealworldsituationsorproblems.Studentsareexpectedtousediverse sources of information and to carry out an original analysis rather than summarise or rehash existing work. Students are encouraged to use situations and data from their ownexperiencewherepossible. TheFinalProjectReportshouldbeaformalreportthatprovidesbothspecificstrategies and tactics involving pricing, production, and resource utilisation in order to enhance

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the value of the chosen firm. These strategies and tactics are to be supported with macroeconomicandmicroeconomictheory. TheFinalProjectReportshouldfollowthegivenoutline: 1. Briefcompanybackgroundandhistory; 2. Descriptionoffirm'sorganisationandmanagementmodel; 3. Competitorandmarketanalysis; 4. Productandservicespricingstrategies; 5. Degreeofregulationorderegulation; 6. Riskmanagement; 7. Capitalstructureandbudgeting; 8. Conclusion, The Final Project should also include a section on how and where you obtained the informationsourcesaswellasthemethodologyusedtoperformanyanalysis The final report should have a 2,500word count and is to be submitted in week 13, bothtothefacultyofficeandtheunitblackboardturnitinsystem. KEYDATES: DiscussionQuestionResponses: Deadline the Sunday (midnight) prior to the startofweeks,2,4,6,8and10.Followedby3 5followupresponses. ProjectProposalandOutline: FinalProjectReport: DayoflectureinWeek10 DayoflectureinWeek13

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FEEDBACK
Feedback will normally be given to students 15 working days after the submission of an assignment.

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7.

INTRODUCTIONTOSTUDYINGTHEMODULE
7.1 OverviewoftheMainContent
Themainindicativecontentoftheunitare: To build on students experience to date of managerial services and foster your own understanding of the issues that inextricably link management and economics. The aim is to familiarise students with the main principles of managerial economics, focussing on the economicevaluationofdifferingandnewmanagerialtechnologies.Themodulewillintroduce studentstotheconductandcriticalappraisalofmanagerialeconomicevaluations.Attheendof the module, students should be able to recognise and understand key economic terms and havetheskillstoengageindiscussionswithcolleaguesabouttheadvantagesandchallengesof usingeconomicstomakeinformedmanagerialdecisionmakingandprioritysettingoftasks. Oncompletionofthisunityoushouldbeableto: Criticallyappraisemanagerialbehaviourintermsofeconomictoolswithfurtheranalysis ofthefirmbehaviourinmanagerialdecisionmakingaspects; Demonstrateacriticalunderstandingofeconomicsiffirmactivities; Criticallyapplyeconomicprinciplestomanagerialactivitiesandmechanisms; Demonstrateanindepthknowledgeandcomprehensionofdifferentmethodsof economicevaluation; Demonstrateadetailedunderstandingandevaluationofcosts,revenues,andeconomic financialperformanceoforganisations; Demonstrateacriticalunderstandingoftherationalbehindorganisationmanagement inaneconomicsperspective.

7.2

OverviewofTypesofClasses

Learningwillbeviaatwohourlectureeachweektointroduceparticipantstothetheoriesand concepts underpinning the unit. Each weeks theme will be made up of several topics, which willenableyoutoachievethelearningobjectivesfortheweekandoneormoreofthelearning outcomesofthemodule.ThesetopicswillbeaddressedintheLectureNotesandreadingsfor theweek. Thiswillbesupplementedwithatwohourseminareachweektoprovideextensivediscussion experience with the practical/applied aspects of the unit. The seminars will develop on managerialeconomicsthemesthroughacombinationofselfstudyandtheuseofopenlearning
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materials that will be provided via the blackboard. The seminars will require students to undertake substantial interactions with other students and the teaching team, in order to consolidate theoretical concepts and develop skills through discussion and exercises. The content of these seminars will relate to the materials covered for each week and will include DiscussionQuestionssetbytheteachingteam. Theunitwilluselecturesandopenlearningmaterialstointroducethefullrangeoftopicsthat need to be covered, although some additional detail will arise through discussion and collaborationbetweenstudentsandtheteachingteamsprofessionalexperienceinmanagerial economics,andthroughstudentsownexplorationofrecommendedfurtherreading.Oneofthe strengths of the seminarlearning program is the high level of student interaction, where studentsareencouragedtosharetheirownexperiencesintheclassroomforthebenefitofthe others. Each part of the module has detailed learning objectives, indicating the topics and level of competencethatstudentsshouldachieveoncompletionofthatpart.

7.3

ImportanceofStudentSelfManagedLearningTime

Students will be studying this unit through a combination of selfstudy and classroom interactions.Selfstudymaterialsarevitalforachievingweeklylearningoutcomesandintroduce thefullrangeoftopicsthatneedtobecoveredwithpriorselfstudywhileafterclassselfstudy linksthematerialtoownexperiences. Hence,allstudentsareexpectedtoundertakesubstantialselfmanagedlearningtime.Theself studypartoftheunitincludes:

Overviewing the written and presented lecture notes covering managerial economics topicswithineachoftheunit;

Becoming aware of links to slides and other media offering additional insights to managerialeconomics; Analysingtherecommendedreadingrelatingtothetopicswithintheweeklytheme.

Itisimportantthatallstudentsunderstandthatthelecturesprovideonlyanoutlineofthetopic under consideration. It is, therefore, essential that all students supplement lectures with readingfromboththelecturenotesandthecorereading.Itisalsoimportanttokeepabreastof thetopicsbeingcoveredinthelectures,asmanylecturesbuildonmaterialcoveredinprevious lectures. This means doing some reading every week, while engaging in discussions that will developfundamentaleconomicmanagementviewsthatmaynotbeobviousfromjustfollowing thelecturesandthereadingmaterial.
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7.4

Employability

Theunitaimstomeettheexpectationsofindustrialexecutivemanagementemployers.Theunit and course will develop techniques for students to be able to demonstrate an awareness of economictheoryandtechniquesthatdescribetheroleandfunctionoftopexecutivemanagers.

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8.

THEPROGRAMMEOFTEACHING,LEARNINGAND ASSESSMENT
Week1: Introductiontoeconomicsformanagement Topics

Economicmodelsandassumptions
Pages 49 in Chapter 1 provides an introduction to the field of managerial economics. The content examines the field of economic theory and decision sciences and how these areas are incorporated into the decisionmaking process formanagerialeconomics.

Theoryofthefirm
Pages 1015 in Chapter 1 analyses the existence of the firm itself and the firms primary functions. The theory of the firm is explained while constraints and limitationsarealsointroducedinordertoevaluatethetheorysusefulness.

Thenatureandfunctionofprofits
Pages 1623 in Chapter 1 illustrates the difference between business and economicprofitswhilealsopresentingseveraltheoriesofprofits.Thereadingalso examinesthefunctionofprofitsinafreeenterpriseeconomy.

Theglobalcontextofmanagerialeconomics
Pages 2328 in Chapter 1 discusses the growing implications for firms as they operate and compete within an international framework. The author does write fromtheviewpointofanAmericanfirm,buttheissuespresentedcanbebroadly applied.

Demand,supply,andequilibrium
Pages3236intheAppendixtoChapter1areviewofthebasiceconomicconcepts of demand, supply, and equilibrium are provided. The appendix illustrates the demand and supply curves while also discussing how shifts in such curves can occurandthesubsequentimpactonequilibrium.

SelfstudyforWeek1:

Readand/orreviewthelecturenotesforeachtopic Readthetextbookpagesindicatedundereachtopic

Week2: Managementtoolsforoptimisationandintroductiontodemand Topics

Economicrelationships
Pages 4147 in Chapter 2 analyses the economic relationships between total, average, and marginal costs and revenues. The author explains each of the conceptsandalsoprovidesgraphicalrepresentations.

Optimisationanalysis
Pages4752inChapter2analysesthemarginalconceptofcostsandrevenues,as firms seek to optimise their performance. The author describes how firms should produce to the point where marginal revenue equals marginal costs, which is knownasoptimisationanalysis.

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Benchmarking,reengineering,andthelearningorganisation
Pages5259inChapter2discussesthepopulartoolsofbenchmarking,totalquality management,andreengineeringastheyapplytoimprovingafirmsperformance. The reading demonstrates a stark contrast between the three tools and analyses the potential within each. The author also introduces the concept of the learning organisationanddescribesthefivebasiccomponentsthatserveasitsfoundation.

Othermanagementtoolsforoptimisation
Pages 6063 in Chapter 2 provides a general overview of several different management tools that may be implemented for increasing efficiency and competitivenessofthefirm.Whilemanyofthesetoolsarenew,itisbelievedthat they will gain in popularity as firms seek novel and better ways to improve in the future.

NewManagementToolsandFunctionalSpecialisation
Pages6467inChapter2providesageneraloverviewofseveralnewmanagement toolsthatarebecomingmoreusedfordecisionmaking.

SelfstudyforWeek2:

Readand/orreviewthelecturenotesforeachtopic Readthetextbookpagesindicatedundereachtopic

DiscussionQuestions:

SubmitDQ1bySundaypriortoweek2(seeweeklyreadinghandbook)

Week3: DemandTheoryandAnalysis Topics

Demandtheory
Pages8898inChapter3analysesconsumerdemandandthefactorsaffectingit. Theauthorexaminestheforcesthatdeterminethedemandforafirmsparticular product.

Elasticityofdemand
Pages99116inChapter3analysestheresponsivenessinthequantitydemanded ofacommoditywithregardstochangeinforcessuchasprice,consumerincome, andcrossprice(orrelatedcommodityprices).

Demandestimation
Pages 138146 in Chapter 4 discusses the marketing research approaches for the purpose of estimating demand for a firms commodity. The reading examines the generaldifficultiesinderivingademandcurve.

SelfstudyforWeek3:

Readand/orreviewthelecturenotesforeachtopic Readthetextbookpagesindicatedundereachtopic

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Week4:

IntroductiontoRegressionAnalysisandDemandForecasting Topics

Basicsofregressionanalysis
Pages147150inChapter4providesabasicintroductiontoregressionanalysisand howtheregressionequationisconstructed.

Usingregressionanalysistoestimatedemand
Pages167171inChapter4entailhowafirmconductsregressionanalysisforthe purposeofestimatingademandcurve.Theauthordiscussesthestepsinvolvedin determiningtheappropriateregressionmodelfordemandestimation.

Demandforecasting
Pages 186214 in Chapter 5 provides a synopsis of the various quantitative and qualitativemethodsthatfirmsutilisetodevelopaccurateeconomicforecasts.The abilitytoforecastdemandandsalesareessentialfororganisationsintheplanning ofresourcesandproduction.

SelfstudyforWeek4:

Readand/orreviewthelecturenotesforeachtopic Readthetextbookpagesindicatedundereachtopic

DiscussionQuestions:

SubmitDQ2bySundaypriortoweek4

Week5: ProductionandInnovation Topics

Productiontheory
Pages 232236 in Chapter 6 analyses the basic production function that the firm must address with regards to the levels of labour and capital.

Productionestimation
Pages 236258 in Chapter 6 outlines and discusses the approach to estimating production for a firm with one or two variable inputs. The reading also explores the Law of Diminishing Returns and its relation to production.

Innovation
Pages 262269 in Chapter 6 discuss the meaning and importance of the innovation process with regards to the production of the firm. Product and process innovation are explained, and the Open Innovation Model is examined for future significance.

SelfstudyforWeek5:

Readand/orreviewthelecturenotesforeachtopic Readthetextbookpagesindicatedundereachtopic

Week6: CostAnalysisandEstimation

Costtheory
Pages 280308 in Chapter 7 examines the nature of costs of production the differences between accounting and economic costs.

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Short/LongrunandEconomiesofScale
Pages 290-308 in Chapter 7 examines Total, average, and marginal cost curves are explained for both the short-run and the long-run. Examining costing in view of economies of scale. The Chapter also looks at the Learning curve and the minimising of costs through international management.

Costestimation
Pages 309315 in Chapter 7 provides a look at the methods for estimating costs for a firm and explore plant size, economies of scale, economies of scope, and the learning curve. Consideration is also given to supply chain management and break-even analysis.

SelfstudyforWeek6: Readand/orreviewthelecturenotesforeachtopic Readthetextbookpagesindicatedundereachtopic

DiscussionQuestions: Week7: Marketstructure Topics

SubmitDQ3bySundaypriortoweek6

Perfectcompetition
Pages 340345 in Chapter 8 introduce the perfect competition market structure. Youwillalsoexaminehowtodeterminepriceandoutputforthefirm.

Monopoly
Pages 346360 in Chapter 8 outlines and discusses the monopoly structure. You will explore the sources for monopoly power and analyse the effects of product variation and operational expenses.

Monopolisticcompetition
Pages 346360 in Chapter 8 outlines and discusses the monopolistic competition structure. Here you will analyse the effects of product variation and operational expenses under monopolistic competition.

Oligopolyandmarketconcentration
Pages 370374 in Chapter 9 presents the various forms of the oligopoly and the sourcesthatleadtosuchamarketstructure.Youwillalsobeintroducedtomethods forcomputingthemarketconcentrationofanindustrytodeterminethedegreeto whichitisdominatedbyafewlargefirms.

Profitabilityandefficiency
Pages383393inChapter9examinetheimplicationsofprofitabilityandefficiency on the oligopolistic firm. Porters strategic framework should help you to better understand the strategic challenges that firms face as they attempt to maximise sales.

Firmarchitecture
Pages 394402 in Chapter 9 provides a look at the alternatives for organising, operating,andrespondingtochange.Theidealfirmanditsgeneralcharacteristics areexaminedalongwiththeriseofthecreativeandvirtualcorporations.

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SelfstudyforWeek7: Week8: StrategicdecisionsandDominantEquilibriums Topics

Readand/orreviewthelecturenotesforeachtopic Readthetextbookpagesindicatedundereachtopic

Gametheoryandstrategicbehaviour
Pages 416429 in Chapter 10 examine game theory and its application to explainingandpredictingthestrategicbehaviouroffirms.

Strategicbehaviourandinternationalcompetitiveness
Pages429432inChapter10incorporatetheimplicationsofactionbyinternational firms in making strategic decisions as well as the possibility of government interaction.

DominantStrategyandNashEquilibrium
Pages 416429 in Chapter 10 analyses the Nash equilibrium and the prisoners dilemmaasenhancementstogametheory.

PriceandNonpriceCompetition
Pages 416429 in Chapter 10 examines the prisoners dilemma and considers the decisionelementofcompetition,throughbothpricingandnonpricingcompetition, indifferingmanagementdecisionmarkets.

SelfstudyforWeek8: Readand/orreviewthelecturenotesforeachtopic Readthetextbookpagesindicatedundereachtopic

DiscussionQuestions: Week9: Pricing Topics

SubmitDQ4bySundaypriortoweek8

Pricingstrategy
Pages441448inChapter11examinetheissuesofmultipleproductsproducedby afirmindeterminingpricelevels.Youwillexploretheinterrelationshipsofdemand andproductionforsuchproductsaswellasfixedandvariablejointproduction.

Pricediscrimination
Pages449457inChapter11discussestheconceptofpricediscriminationandhow the ability to discriminate affects pricing strategy. International price discrimination, or dumping, is also considered along with the possible trade restrictionsthatgovernmentsmayimpose.

TransferPricing
Pages 465-476 in Chapter 11 discusses the concept of transfer pricing as alternative methods of pricing strategy.

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Pricingpractices
Pages465476inChapter11providesalookatthealternativesforpricing,suchas bundling,andskimming.

SelfstudyforWeek9: Week10: RegulationoftheEconomy Topics

Readand/orreviewthelecturenotesforeachtopic Readthetextbookpagesindicatedundereachtopic

Theroleofgovernment
Pages 494509 in Chapter 12 examine the role of government through the economictheoryofregulationandthepublicinteresttheoryofregulation.Youwill explore various ways that governments have regulated competition and their effectsonbusinessdecisionsandconsumers.

Enforcementofcompetition/antitrustlaws
Pages 510517 and 518 in Chapter 12 outlines and discusses the major antitrust laws that have been developed and how the legal system has interpreted these lawsbasedonorganisationalstructureorbusinessconduct.

Deregulation
Pages 517 and 519520 in Chapter 12 briefly examines the negative effects that governmentregulationhascreatedandthegrowingcallforgovernmentstoloosen the restrictions on business practices. The reading also introduces the benefits of deregulation.

Regulationofinternationalcompetition
Pages 519523 in Chapter 12 examine the reasons that governments enact trade restrictionsoninternationalorganisations.Theserestrictionsprotectdomesticfirms from exporters that can charge lower prices; however, these restrictions are generallynotbeneficialtoconsumers.

Taxationanditseffects
Pages523525inChapter12provideabrieflookatthereasonsthatgovernments impose corporate taxes on certain industries or products. You will find that taxes cangreatlyinfluencetheamountofinvestmentinacountryaswellastheabilityto generaterevenue.

SelfstudyforWeek10: Readand/orreviewthelecturenotesforeachtopic Readthetextbookpagesindicatedundereachtopic

DiscussionQuestions: SubmitDQ5bySundaypriortoweek10

ProjectProposal&Outline: SubmityourProjectProposal

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Week11:

RiskAnalysis Topics

Measuringrisk
Pages 533543 in Chapter 13 examine the methods for measuring risk and the conceptsthatareessentialforconductingriskanalysis.

Dealingwithrisk
Pages 544556 in Chapter 13 discuss the importance of the managers attitude towardsriskwithregardstodecisionmaking.Youwillalsoexaminehowtoadjust thevaluationmodelforriskrelatedtoinvestmentanalysisandhowdecisiontrees andsimulationarebeingusedtoassistwithcomplexdecisionssubjecttorisk.

Uncertainty Pages 556569 in Chapter 13 examine how decisions are made under conditions of uncertainty. This rather subjective process can be aided with the use of some objective decision rules: the maximin criterion and the minimaxregretcriterion.

SelfstudyforWeek11: Week12: InvestmentDecisionsandCapitalBudgeting

Readand/orreviewthelecturenotesforeachtopic Readthetextbookpagesindicatedundereachtopic

Capitalbudgeting
Pages580592inChapter14provideanoverviewofthecapitalbudgetingprocess andthevariousstepsthatareinvolved.

CapitalRationingandtheProfitabilityIndex
Pages 580592 in Chapter 14 examine the important concepts of cash flows, net presentvalue,andinternalrateofreturninevaluatinginvestmentprojects.

Thecostofcapital
Pages592601inChapter14explorethetwogeneralfundingsourcesavailableto firmsandhowtocalculatethecostofeach.Asthesefundingsourcesarevitalfor undertaking capital projects, firms must use the cost of capital to discount cash flowsandalsoasabenchmarkagainsttheinternalrateofreturnforaproject.

ReviewingInvestmentProjectsAfterImplementation

SelfstudyforWeek12: Week13: FinalProjectReport FinalProject:

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Readand/orreviewthelecturenotesforeachtopic Readthetextbookpagesindicatedundereachtopic

SubmityourFinalProjectReport

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9.

STUDENTEVALUATION
Market research and industrial links have identified Management Economics as an important source of information in enhancing management techniques in an integrated economic environmentthatallorganisationsworkin.(TherearenoUEQsasthisisanewunit).

10. LEARNINGRESOURCES
Handouts and tutorial instructions will be provided. In addition, the following books are recommended:

10.1 CoreMaterials
RequiredReadingeither/or: Salvatore, D. (2006). Managerial economics in a global economy. 6th ed. New York: OxfordUniversityPress.ISBN13:9780195307191. Salvatore, D. (2003). Managerial economics in a global economy. 5th ed. London: ThomsonLearning.ISBN13:9780324171877.[338.5024658SAL]

10.2 OptionalMaterials
Baye, M.R. (2010). Managerial economics and business strategy. 7th ed. New York: McGrawHill/Irwin.ISBN13:9780073375687.[338.5024658BAY] Boyes,W.(2011).Managerialeconomics:marketsandthefirm.2nded.Mason:South WesternCollege.ISBN13:9780618988624.[] Hirschey, M. (2009). Managerial economics. 12th ed. Mason: SouthWestern College. ISBN13:9780324584844.[] Hirschey, M., & Pappas, J.L. (2002). Fundamentals of managerial economics. 7th ed. FortWorth:DrydenPress.ISBN13:9780324183313.[658.15HIR] Mansfield, E., Allen, W.B., Doherty, N., & Weigelt, K. (2009). Managerial economics: theory, applications, and cases. 7th ed. New York: W.W. Norton. ISBN13: 978039 3114430.[338.5024658] Wall, S., & Griffiths, A. (2008). Economics for Business and Management. 2nd ed. Harlow:FinancialTimesPrenticeHall.ISBN13:9780273713678.[]

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OtherMaterials
London South Bank Universitys Intranet and computer based resources, CLSD LSBU library.

TheEconomistmagazines,journals&relevantarticlesinboardsheetnewspapers. ManagerialEconomicsBlackboardSite.

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