MBA, ECON5013 (C)

MANAGERIAL ECONOMICS
Spring 2017
Time: 6:30 pm 9:40 pm
Day: Tuesday
Room # B-005

Course Instructor
Dr. G. SAGHIR
ghulam.saghir@ucp.edu.pk

University of Central Punjab

Business School

Students Hours: 14:00-16:00 (from Monday to Friday)

Course Objectives:
Managerial Economics is the application of economic theory and methodology to
managerial decision making problems within various organizational settings such as a
firm or a government agency. The emphasis in this course will be on demand analysis and
estimation, production and cost analysis under different market conditions, forecasting
and decision making under uncertainty. This course will enable the students to investigate
major areas of management decision making in the context of various business oriented
organisations for which economic analysis is a useful input. It shows how an economist's
understanding of certain phenomena may aid in the process of management.

Learning Outcomes:

On completion of this unit, students will be able to:

1. draw on economics to explain the nature of the firm and the problems of its
management;
2. analyse the problems faced by firms in their interaction with consumers and the
market;
3. evaluate strategies for successful selling of a product in a specific market
situation;
4. prepare a response to a specified business problem.;
5. communicate applications of economics to managerial issues and articulate
possible solutions;
6. identify a problem and formulate a proposed solution, using high level economic
reasoning;
 7. participate in group evaluation of a business problem.

Teaching-Learning Methodology
Lectures
Recommended Text / Supplementary Text
Reading material
Periodical watch exercise / Seminars
Term papers

Prerequisites:
Students taking this course are expected to have had some exposure to economics and be
comfortable with basic algebra. Some knowledge of calculus would also be helpful
although not necessary.

Assessment
Final Exam: 40%
Mid-Term Exam: 30%
Assignments: 10%
Quizzes: 15%
Project presentation/Class participation 5%
Recommended Text Book

Dominick Salvatore (2011). Managerial Economics in a global Economy, 7th

Edition, Oxford University Press, USA.

Supplementary Text Books

Michael R. Baye (2007). Managerial Economics and business strategy, 6th
Edition, McGraw Hill.
Peter Cassimatis (1995). Introduction to Managerial Economics, Routledge

Web Resources:

www.sbp.govt.com
www.statpak.gov.pk
http://data.worldbank.org/data-catalog/world-development-indicators
www.finance.gov.pk
www.pide.org.pk
www.ead.gov.pk
www.commerce.gov.pk
Grading policy from fall 2011 onwards

Numerical Letter Grade Grade Point

Equivalence
90% - 100% A 4
86% - 89% A- 3.67
81% - 85% B+ 3.33
77% - 80% B 3.00
72% - 76% B- 2.67
68% - 71% C+ 2.33
63% - 67% C 2.00
58% - 62% C- 1.67
54% - 57% D+ 1.33
Below 50% F 0.00
 Course Outlines and Weekly Distribution of Topics
Sr. No. Topics Week and Activities
1. Introduction
The nature and scope of Managerial
Economics.
Management Problem
Effective Management
1st and 2nd
Theory of firm
The objective of the Firm
Constrains faced by a firm
Business vs. Economic profit
Theories of Economic profit
2. Advanced Demand Analysis
The Market Demand Function
Total and Marginal Revenue
3rd and 4th
Sensitivity analysis
Computation of Price, Income and Cross price
Elasticity of Demand by two Methods Quiz 1
Uses and Application of Price, Income and
Cross-Price Elasticity of demand
Some other Demand Elasticity
3. Advanced Demand Analysis (continue)
Price elasticity, Marginal Revenue and Total 5th
Revenue
Assignment 1
Optimal Pricing Policy under given price
elasticity
4. Economic Optimization
Mathematical tools for derivatives
Unconstrained vs. Constrained Optimization 8th and 9th
The substitution vs. the Lagrange Methods of
Optimization
5. Demand estimation by Regression Analysis 6th
Simple Linear and Multiple Linear Regression
Models
Significance of estimated coefficients and
 model
Use of R2

6. Mid-Term
7. Demand Forecasting
Quantitative Methods for Forecasting
7th
Best Forecasts
Forecasting power of a Regression Model
8. Production Analysis
Production Function
Total, Marginal and average Products in case of 10th and 11th
single and two variable inputs
Marginal Revenue Product and Optimal
Quiz 2
Employment of Inputs
Returns to scale vs. Returns to factor

9. Cost Analysis
Explicit and Implicit Costs
Incremental and Sunk Costs
Short-Run vs. Long-Run Costs 12th
Economies of Scale and Economies of Scope
Learning Curves
Breakeven Analysis Assignment 2
Degree of Operating Leverage

10. Pricing Practices

Markup Pricing and profit maximization Mark
up on costs and price
Optimal markup on price and cost 13th
Price discrimination

11. Risk Analysis

Economics Risk vs. Uncertainty
Various types of risk
Expected Profit of a Project 14th and 15th
Absolute vs. Relative Risk
Beta as Measure of Risk
Managerial Applications

12. Economics of Strategy--the Quest to Slow Profit 16th

Erosion
Porters five forces and diamond frame work
 Critical points of Product life cycle
Corporate and Competitive Strategies
13. Presentations
14. Revision 17th
15. Final Exam 18th