EA-I-P09

EA-I-P09
(PGDM 2009-2011: Term-I)

Microeconomics for Managers

Course Instructor: Dr. Biresh K Sahoo

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
Quizzes (Known & Surprise) : 20%
Assignments : 10%
Classroom participation : 05%
Mid-term examination : 30%
End-term examination : 35%
Total : 100%

TOPICS
Module I: 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.

I.1 Utility; Indifference curve; Marginal rate of substitution; Budget line; Consumer's equilibrium

I.2 Revealed preference

I.3 The demand-supply framework and the concept of a market

I.4 Determinants of consumer demand and producer supply

I.5 The demand curve; price elasticity; cross elasticity; income elasticity

I.6 Relationship among price elasticity, total revenue, average revenue and marginal revenue

Module II: 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.

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

II.2 Input combinations choice; Returns to scale; Production function

II.3 Various indicators of firm performance:

a) Analysis of Technical efficiency, Cost efficiency, Revenue efficiency, Allocative efficiency; Productivity growth, Technical progress, and Capacity utilization (CU)
b) Analysis of Productivity (and Eco-productivity) growth and its drivers; Analysis of Technological CU and its underlying causal factors; and Analysis of Profit and Cost changes and their underlying drivers

II.4 Various concepts of costs

II.5 Cost-output relation in the short run and long-run

II.6 Long-run costs and economies of scale

II.7 Minimum efficient scale, Firm size, and Plant size

II.8 Learning curves, Economies of scale and scope

II.9 Derived demand for inputs

II.10 Cost-volume-profit analysis

Module III: 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.
III.1 The Organization of the firm and the Nature of industry

III.2 Pricing in a perfectly competitive market

III.3 Monopoly

III.4 Monopolistic competition

III.5 Oligopoly

III.6 Pricing strategy

Module IV [Course on Independent Study]
This module has a flexible structure with the instructor choosing a few topics from among a selection topics covered such as follows:

IV.1 Efficiency and Productivity Analysis

IV.2 Scale Economies

IV.3 Economics of advertising

IV.4 Product quality decisions

IV.5 Game theoretic approaches to oligopoly

IV.6 Public enterprise pricing

IV.7 Pricing and output under demand uncertainty

IV.8 Economics of Information

Students who wish to conduct empirical study under my supervision on the aforementioned areas in any industry are most welcome for their summers.

Reading Lists
Michael R. Baye, Managerial Economics and Business Strategy, McGraw-Hill International Edition (Prescribed Text Book).
Robert H. Frank, Microeconomics and Behavior, New York: McGraw-Hill Publishing Company.
Hall R. Varian, Intermediate Microeconomics: A Modern Approach, New York: W. W. Norton & Company.
Gregory N. Mankiw, Microeconomics, International Student Edition.
Created By: Debasis Mohanty on 05/11/2009 at 11:00 AM
Category: PGP-I Doctype: Document

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