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ECO404 : Managerial Economics

Course Overview

Course Synopsis

This course in managerial economics is specifically designed for students of Management and Economics. It would provide them an understanding of economic concepts and economic environment influencing managerial decisions. The course would introduce the students to the application of statistical as well as mathematical tools for making decisions. The objective of the course is to demonstrate how applications of economic theory can improve decision making. The approach involves introducing managerial economics first and then using these principles to analyze decisions faced by managers. Principles from economics and business are developed and integrated with emphasis on management decision-making and policy formation.

Course Learning Outcomes

After the completion of this course, the students will be able to:

  • Analyze the quantitative demand analysis in the light of the applications of elasticity, cross price elasticity, income elasticity and explain the relation between price elasticity and pricing policy.
  • Describe the indirect and direct methods of demand estimation, demand forecasting using the regression analysis.
  • Explain the concepts of research and development, importance of short-run cost function, long-run cost function, the learning curve and their application in the managerial environment.
  • Develop the understanding of the theories of production estimation and cost estimation.
  • Know the techniques for identifying risk and risk management in the Financial Institutions.
  • Analyze and examine the output decisions of managers in perfectly competitive markets, monopoly, monopolistic competition and oligopoly.
  • Know Capital Budgeting Decisions and carry out investment analysis to manage assets and capital.
  • Know the rational for Government involvement in Market Economy.

Course Calendar

Introduction to Managerial Economics1Handouts1
Definitions of Managerial Economics1Handouts1
Scope of Managerial Economics1Handouts2
Theory of Firm1Handouts3
Present Value1Handouts3
Profits of the Firm1Handouts3
Theories of Profit1Handouts4
Economic Optimization Process2Handouts5
Revenue Relations2Handouts6
Profit Relations2Handouts7
Cost Relations2Handouts8
Geometric Relations2Handouts9
Economic Optimization with Calculus3Handouts10
Rules of Differentiation3Handouts11
Derivative of a Derivative3Handouts12
Partial Derivative3Handouts13
Lagrangian Method3Handouts13
Interpretation of Lagrangian Method3Handouts14
Demand Analysis4Handouts15
Law of Demand4Handouts15
Demand Curve Determination4Handouts16
Demand Function4Handouts17
Constrained Maximization4Handouts18
Supply Analysis5Handouts21
Law of Supply5Handouts21
Shifts and Movement in Supply Curve5Handouts22
Market Equilibrium5Handouts23
Market Disequilibrium5Handouts24
Short Run Analysis5Handouts24
Long Run Analysis5Handouts25
Quiz # 01
Demand Sensitivity Analysis6Handouts27
Elasticity and Revenue Relations6Handouts28
Constant Price Elasticity of demand6Handouts29
Cross Price Elasticity6Handouts30
Income Elasticity of Demand6Handouts31
Elasticity and Managerial Decision Making6Handouts32
Demand Estimation7Handouts33
Identification Problem7Handouts33
Consumer Survey Approach7Handouts34
Consumer Clinics Approach7Handouts35
Market Experiments Approach7Handouts35
Regression Analysis7Handouts36
Steps in Regression Analysis8Handouts38
Ordinary Least Square8Handouts40
Tests of Significance8Handouts42
Assumptions of Regression Analysis9Handouts44
Coefficient of Determination9Handouts44
Coefficient of Correlation9Handouts46
Multiple Regression model9Handouts47
Problems in Regression Analysis9Handouts49
Demand Forecasting10Handouts50
Forecasting Techniques10Handouts50
Time Series Analysis10Handouts52
Trend Analysis and Projection10Handouts53
Trend Projection11Handouts57
Seasonal Variations11Handouts61
Ratio to Trend Method11Handouts61
Smoothing Techniques12Handouts63
Moving Average Method12Handouts64
Exponential Technique12Handouts65
Barometric Technique12Handouts67
Econometric Methods13Handouts71
Single Equation Model13Handouts71
Multiple Equation Systems13Handouts72
Reduced Form Equations13Handouts73
Sample Mean Forecast Error Analysis13Handouts75
Quiz # 02
Mid Term Exams
Production Analysis14Handouts76
Law of Diminishing Returns14Handouts80
Stages of Production14Handouts80
Marginal Rate of Technical Substitution15Handouts84
Ridge Lines15Handouts85
Optimal Input Combination15Handouts86
Expansion Path15Handouts88
Returns to Scale16Handouts90
Output Elasticity16Handouts91
Homogenous Production Function16Handouts91
Estimation of Production Functions16Handouts92
Cobb Douglas Production Function16Handouts93
Profit Maximization Problem17Handouts96
Cost Minimization Problem17Handouts97
Quiz # 03
Explicit and Implicit Costs18Handouts100
Opportunity Cost18Handouts101
Short Run and Long Run Costs18Handouts102
Short Run Cost Curves18Handouts102
Long Run Cost Curves19Handouts107
Minimum Efficient Scale19Handouts111
Economies of Scale19Handouts112
Cost Elasticity19Handouts113
Economies of Scope19Handouts116
Break Even Analysis20Handouts118
Degree of Operating Leverage20Handouts121
Learning Curve20Handouts122
Implications of Learning Curves20Handouts123
Graded Discussion Board
Estimation of Cost Functions21Handouts127
Engineering Technique21Handouts131
Game Theory31Handouts199
Prisoners Dilemma31Handouts200
Nash Equilibrium31Handouts203
Games in Economics32Handouts208
Repeated Games32Handouts209
Price Discrimination33Handouts213
Conditions of Price Discrimination33Handouts213
Types of Price Discrimination33Handouts213
Pricing Practices34Handouts220
Production Interrelations34Handouts221
Joint Product Pricing34Handouts224
Transfer Pricing Strategy35Handouts227
Transfer Pricing with Perfect Competition35Handouts229
Transfer Pricing with Imperfect Competition35Handouts231
Pricing Rules of Thumb35Handouts232
Risk Analysis40Handouts257
Measuring Risk40Handouts258
Utility Theory and Risk Analysis41Handouts263
Basic Valuation Model41Handouts266
Certainity Equivalent Approach41Handouts268
Decsion Trees42Handouts271
Game Theory and Risk Analysis42Handouts274
Quiz # 04
Capital Budgeting43Handouts279
Net Present Value43Handouts282
Capital Rationing43Handouts283
Internal Rate of Return43Handouts284
Project Selection44Handouts286
Cost of Capital44Handouts289
Investment Opportunity Schedule44Handouts292
Government in Market Economy45Handouts295
Market Failure45Handouts295
Public Goods45Handouts302
Final Term Exams
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