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The course deals with an application of microeconomics principles to business decision making. It examines the factors underlying demand and supply, behavior of firms under various market structures and the role of price system in the economy. This course is designed to introduce the potential business managers to the subject matter of economics, wherein various economic theories and quantitative methods can be applied to business decisions such as pricing, production, profit maximization and so on. More specifically, the course intends not only to provide the students the conceptual framework for optimal decision-making but also to improve the analytical skills, quality of decision-making and the ability to solve economic problems faced by the firms.

An introduction to economics and applicability of microeconomic analysis in decision-making; Techniques of estimation, constrained and unconstrained optimization and their application in managerial decision-making; demand analysis - demand estimation; utility analysis - consumer behavior; Production analysis – short run and long run production functions; Cost analysis – short run cost functions, economies and diseconomies of scale; Break-even analysis; Profit analysis; Pricing strategies; Pricing under market structures such as, perfect competition, monopoly, monopolistic competition and oligopoly.

2. Learning Objectives

· To provide the students a conceptual framework for effective decision-making
· To enable the students to apply quantitative skills such as constrained and unconstrained optimization and estimation techniques
· To inculcate the analytical skills, thereby enhance the ability to apply the concepts in solving economic problems faced by the firms

3. Required Text Books and Reading Material

Text Book

McEachern, William A. and Kaur, S. MICRO ECON, New Delhi: CENGAGE Learning.

Reference Books

1. Baye, Michael R. and Prince, Jeffrey T. (2014) Managerial Economics and Business Strategy, New Delhi: McGraw Hill Education (India) Pvt. Ltd.
2. Frank, Robert H. Microeconomics and Behavior, New York: McGraw-Hill Publishing Company.
3. Varian, Hall R. Intermediate Microeconomics: A Modern Approach, New York: W. W. Norton & Company.

4. Tentative Session Plan

Session Number	Topics/Activities	Reading/case list etc.
Module I	Consumer Behavior and Demand Analysis
1	What is Microeconomics? Studying Microeconomics with some economic principles of decision making. How is Microeconomics different from Business?	Text Book (Chapters: 1-3), Reference Books and Teaching Notes
2	Utility; Indifference curve; Marginal rate of substitution; Budget line; Consumer’s equilibrium	Text Book (Chapter: 6), Reference Books and Teaching Notes
3	The demand-supply framework and the concept of a market	Text Book (Chapter 4) , Reference Books and Teaching Notes
4	Determinants of consumer demand and producer supply	Text Book (Chapter: 2), Reference Books and Teaching Notes
5	The demand curve; price elasticity; cross elasticity; income elasticity, Relationship among price elasticity, total revenue, average revenue and marginal revenue	Text Book (Chapter: 5), Reference Books and Teaching Notes
6	Applications: · Which tax system is better - direct versus indirect tax? · Which subsidy is better – cash versus kind subsidy? · Indexing of social security payments	Text Book (Chapters: 4-6), Reference Books and Teaching Notes
7	Applications · Why do some tennis clubs have an annual membership charge in addition to their hourly court fees? · The welfare effects of changes in housing prices · Can good news for farming be bad news for farmers? · Does drug interdiction increase or decrease drug-related crime?	Text Book (Chapters: 4-6), Reference Books and Teaching Notes
8	Case Study Discussion
Module II	Production Decisions and Cost-Output Relationship This module is elegantly designed to show how the concept of production (technology) function can be used to perform ‘benchmarking’ exercise that is used to enhance firm or business unit performance by evaluating their products, processes, or functions against industry best practice. Though benchmarking has always been plagued by the problem of assigning weights to different outputs and inputs, this problem is solved by presenting the methodology of data envelopment analysis (DEA), a tool of benchmarking. It is shown how useful information about efficiency, productivity, and profitability can be gleaned from this tool of benchmarking.
9	Analysis of production (technology) process; total, marginal, and average product; Input combinations choice; Returns to scale; Production function	Text Book (Chapter: 7), Reference Books and Teaching Notes
10	Various indicators of firm performance (I): Analysis of Technical efficiency, Cost efficiency, Revenue efficiency, Allocative efficiency	Teaching Notes
11	Various indicators of firm performance (II) Analysis of Productivity (and Eco-productivity) growth and its drivers – Technical Efficiency and Technical Change	Teaching Notes
12	Various indicators of firm performance (III): · Analysis of Technological CU and its underlying causal factors · Analysis of Profit and Cost changes and their underlying drivers	Teaching Notes
13	Various concepts of costs: · Cost-output relation in the short run and long-run · Long-run costs, economies of scale and diseconomies of scale · Minimum efficient scale, Firm size, and Plant size · Learning curves, Economies of scale and scope	Text Book (Chapter: 7), Reference Books and Teaching Notes
14	Derived demand for inputs Cost-volume-profit analysis	Text Book (Ch. 5), Reference Books and Teaching Notes
15	Applications of the theory of production · Measuring credit risk/audit risk of company/people · Ratio analysis; stock selection, industry ranking · Evaluation of human resources	Teaching Notes
16	Linking the concept of ‘efficiency’ with ‘Returns to Dollar’, ‘Productivity’ and ‘Profitability’	Teaching Notes
Module III	Pricing under Alternative Market Structures
17	The Organization of the firm and the Nature of industry Pricing in a perfectly competitive market	Text Book (Chapters: 8 & 9), Reference Books and Teaching Notes
18	· Monopoly · Monopolistic competition	Text Book (Chapters: 10&11), Reference Books and Teaching Notes
19	Oligopoly - Sweezy and Cournot models	Text Book (Chapter: 11), Reference Books and Teaching Notes
20	Oligopoly - Stackleberg and Bertrand models	Text Book (Chapter: 11), Reference Books and Teaching Notes

5. Evaluation (five components)

1. Quizzes (two): 20% (= 2 10)
2. Mid-term examination: 25%
3. Assignment: 10%
4. Classroom Participation and attendance: 05%
5. End-term examination: 40%


6. Academic Integrity
Utmost care is taken as to maintain class decorum, follow the exact evaluation norms, conduct fair examinations, fair and transparent evaluation of examination papers, etc. so as to maintain the highest academic integrity.
Created By: Alora Kar on 07/06/2017 at 02:15 PM
Category: MBA(Exe.) 2017-18 T-I Doctype: Document