Managerial Economics is a key branch of economics at graduate level. This is basically applied microeconomics though it uses macroeconomic variables also. The subject matter deals with the economic theory and its application in business management. The course provides a unifying theme of managerial decision making around the theory of the firm. It examines the process whereby a firm can reach optimal managerial decisions in the face of constraints in today‟s dynamic market. It covers a variety of topics such as demand Analysis, Estimation and forecasting, market structure, production and cost analysis, pricing practices, economic optimization and risk analysis. A strong grasp of the principles that govern the behavior of economic agents (firms, individuals and government) is a vital managerial talent.
The course provides practical guidelines to students to analyze in depth the managerial decisions in the market. It enables students to comprehend the complexity, risk element, and key success in business.
A sound background of mathematical and statistical tools makes the understanding of the subject matter more interesting and easier.
After completing this course participants must be able to:
Understand the key role of managers in decision making
Analyze firm‟s decision making process
Examine how a firm achieves its aims and objectives most efficiently
Understand functioning of different markets
Meet the challenges of the risky businesses
Formulate price strategies in different markets
Become confident in making managerial decisions
CALENDAR ACTIVITIES Session
The nature and scope of Managerial Economics.
Theory of firm
The objective of the Firm
Constrains faced by a firm
Business vs. Economic profit
Theories of Economic profit
Advanced Demand Analysis
The Market Demand Function
Total and Marginal Revenue
Computation of Price, Income and Cross price Elasticity of Demand by two Methods
Uses and Application of Price, Income and Cross-Price Elasticity of demand
Some other Demand Elasticity
Advanced Demand Analysis
Price elasticity, Marginal Revenue and Total Revenue
Optimal Pricing Policy under given price elasticity
Demand estimation by Regression Analysis
Simple Linear and Multiple Linear Regression Models
Significance of estimated coefficients and model
Use of R2
Quantitative Methods for Forecasting
Forecasting power of a Regression Model
Mathematical tools for derivatives
Unconstrained vs. Constrained Optimization
The substitution vs. the Lagrange Methods of Optimization
Total, Marginal and average Products in case of single and two variable inputs
Marginal Revenue Product and Optimal Employment of Inputs
Returns to scale vs. Returns to factor
Explicit and Implicit Costs
Incremental and Sunk Costs
Short-Run vs. Long-Run Costs
Economies of Scale and Economies of Scope
Degree of Operating Leverage
Markup Pricing and profit maximization
Mark up on costs and price
Optimal markup on price and cost
Economics Risk vs. Uncertainty
Various types of risk
Expected Profit of a Project
Absolute vs. Relative Risk
Beta as Measure of Risk
Mark Hirschey (2009), “Managerial Economics”, Thomson: South Western
William F. Samuelson, Stephen G. Marks (2003), Managerial Economics Fourth Edition, Wiley.
Lila J. Truett and Dale B. Truett (19989), Managerial Economics: Analysis, Problems, Cases , International Thomson Publishing
Micheal Baye (2002), “Managerial Economics and Business Strategy”, Irvin Publishers.
Dominick Salvatore (latest edition), “Managerial Economics in a Global Economy”, McGraw Hill.
Petersen, Lewis and Jain (2006), “Managerial Economics” Pearson: Education.
Abdul R. Butt (2006), “Least Squares Estimation of Econometric Models”, (Revised Edition), National Book Foundation, Pakistan.