BEM-I-V10

BEM-I-V10
(PGCBM 2010-11 : Term-I)

Basic Economics for Managers
Part I: Microeconomics
(Faculty: Prof. Biresh K. Sahoo)

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OBJECTIVE
The objective of this course is to acquaint the students with basic concepts and techniques of microeconomic analysis and their applications to managerial decision-making. Microeconomic analysis explains the behaviors of individual decision-making units such as business firms and consumers. The emphasis is on elucidating how the tools of standard price theory can be employed to formulate a decision problem, establish a decision criterion, and generate some of the information required to evaluate the alternative courses of action, and, finally, choose among the alternatives.

METHOD OF EVALUATION
Assignments : 50%
End-term examination : 50%
Total : 100%

TOPICS
Module I: Interdependence and the Gains from Trade
This module considers the reasons for economic interdependence. The principle of “trade can make everyone better off” explains why people trade with their neighbors and why nations trade with other nations. What exactly do people gain when they trade with one another? Why do people chose to become interdependent?

I.1 Absolute advantage

I.2 Opportunity cost and comparative advantage

I.3 Comparative advantage and trade

Module II: Consumer Behavior and Demand Analysis
The purpose of this module is to acquaint with the basic concepts of economic theory of consumer behavior, the demand function and demand curve, demand elasticities and their applications and techniques of demand estimation.

II.1 The demand-supply framework and the concept of a market

II.2 Determinants of consumer demand and producer supply

II.3 Utility; Indifference curve; Marginal rate of substitution; Budget line; Consumer's equilibrium

II.4 The demand curve; price elasticity; cross elasticity; income elasticity

II.5 Relationship among price elasticity, total revenue, average revenue and marginal revenue

II.6 Applications of the theory of consumer – total willingness to pay, consumer surplus, cash subsidy, kind subsidy, direct tax, indirect tax

I.6.1 Which tax system is better - direct versus indirect tax?

II.6.2 Which subsidy is better – cash versus kind subsidy?

II.6.3 Indexing social security payments

II.6.4 Why do some tennis clubs have an annual membership charge in

addition to their hourly court fees?

II.6.5 The welfare effects of changes in housing prices

II.6.6 Can good news for farming be bad news for farmers?

II.6.7 Does drug interdiction increase or decrease drug-related crime?

Module III: Production Decisions and Cost-Output Relationship
The focus of this module is to clarify the nature of economic costs and their relationship to choice of output and technology.

III.1 Analysis of production process; total, marginal, and average product

III.2 Input combinations choice; Returns to scale; Production function; Isoquant; Production possibility frontier

III.3 Various concepts of costs

III.4 Cost-output relation in the short run and long-run

III.5 Long-run costs and economies of scale

III.6 Learning curves, Economies of scale and scope

III.7 Cost-volume-profit analysis

III.8 Applications of the theory of production

II.8.1 Measuring credit risk/audit risk of company/people

II.8.2 Ratio analysis; stock selection, industry ranking

II.8.2 Performance evaluation of employees

Module IV: Pricing under Alternative Market Structure
This module discusses standard pricing rules under different assumptions about the structure of the market in which the firm operates. It also examines certain pricing practices such as mark-up pricing, product line pricing and their relationship with optimal pricing rules of economic theory.
IV.1 The Organization of the firm and the Nature of industry

IV.2 Perfect competition

IV.3 Monopoly

IV.4 Monopolistic competition

IV.5 Oligopoly

Reference
Satya P Das (2007), Microeconomics for Business, Sage Publication, New Delhi
Created By: Bijoy Kar on 02/04/2010 at 12:29 PM
Category: PGCBM Doctype: Document

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