Course
Description

Managerial Economics is the branch of economics which analyzes how individual consumers, workers, savers, business managers and business firms deal with the problems of society from the perspective that incentives are important. This is the heart of economics. Consumers decide how much of various goods to purchase, workers decide decide what jobs to take, and business people decide whether or not to enter a market or perhaps exit. While producing they decide how many workers and other resources to hire, what technology to employ, how much output to produce, and in some cases, how much to charge.

The analyzes in this course focus on how these people attempt to achieve their goals. Understanding how consumers and producers behave and how their behavior interacts will help you to understand how the economic process determines what goods will be produced and what quantities, who will produced them, how they will be produced, how they will be distributed (divided up) among potential consumers, and also how the economy, through the market systems, accommodate changes in tastes and preferences, technology and other factors.

The answers to these basic questions as they are answered by the individual decision makers and in the aggregate, defines the economic environment of society. Managerial economics studies the way in which these numerous small (micro) decisions mesh to determine the workings of the entire economy in such a way as to make the analysis helpful to business people who are trying to make good decisions for their businesses. Adam Smith referred to this process, as it worked itself out in a free enterprise economy, as being directed by an "individual hand" and claimed that it worked itself out beneficently.

We will be concerned with the process of price determination in different types of market structures, whether they be competition, monopolistic competition, oligopoly or some special pricing situations.

Prices are determined within the framework of the market system. In the competitive market structure prices of goods and services and factor inputs are determined by the forces underlying Demand and Supply. Because prices are so important to individual decisions, microeconomics is sometimes called price theory.

The recent collapse of communism in many parts of the world had two distinguishing characteristics. First the decline of authoritative political systems has been replaced by a new thrust towards democracy. Second, the market system has replaced planned economies. When economic decisions are determined by market forces - not authority, individuals have much more freedom to pursue their own goals, find and reach their potential and pursue happiness. Not all the chapters in the textbook are covered by this course guide. Please feel free to examine any chapters in the textbook that appeal to you, and pass any questions you might have on to your instructor.

This course is divided into three parts. The first part is Lessons 1-3 and covers Chapters 1-3 of the text, reviews some algebra and differential calculus concepts and their use in solving unconstrained and constrained optimization problems, and then the economic concepts of Demand and Supply and their interaction.

Part 2 examines the consumer and the business firm in more detail. Chapters 4-5 analyzes consumer behavior. It then aggregates (i.e. "adds up") individual's demands to get total Demand. Chapters 7 and 8 analyzes the business firm in much the same way as chapter 4 analyzes the consumer. Part 2 also examines the considerations of a firm as it purchases and combines factors to produce its output. The physical and technical aspects of the relationship between the quantities of the factors of production (land, labor, capital, and entrepreneurship) and quantity of output produced is studied in Chapter 7 of Lesson 5. Lesson 5 also covers Chapter 8 in the text where different measures of costs are defined, examined and used in both the short-run and long-run planning horizons to help the manager of the firm make good decisions for his firm, such as as how to produce, how much to produce, what price to charge, and whether or not to stop producing.

Part 3 might be called Market Structures or Industrial organization. Price and quantity determination are examined in four primary market structures: namely, competition, monopoly, monopolistic competition, and oligopoly. This is done in Lessons 6-9, which cover 10-13 and 15 in the text.

The course addresses the problems of both large and small businesses in our complex economic system, with the aid of mathematical and statistical tools and microeconomic theory. It estimates demand and cost conditions and establishes criteria and conditions for efficient production. The decisions of how much each factor (labor and capital) to employ, how much output to produce, and sell: and what price to charge, are examined within a profit-maximizing context for a number of market structures: namely competition, monopoly, monopolistic competition, and several versions of oligopoly.

Regular assignments of multiple-choice questions and problems, will be submitted, marked and used in compiling the grade for the course. The student is expected to develop an appreciation of the mathematical models and techniques of microeconomics and be able to use then successfully to solve specific and relevant business problems. The grade for this course will be based on the assignments, midterm, and final exam.

Methods of Course Instruction

• Writing Assignments

• Midterm exams

• Final exams

Materials

Required

Text(s)
Hirschey, Mark, Managerial Economics, 12th ed., Southwestern, 2009. Student edition. ISBN 13: 978-0324-58886-6. ISBN 10: 0-324-58886-0

Additional or Optional Materials
For students who may need more help with problems than what can be offered in class, there is a Study Guide (ISBN: 0-324-28895-6) for the 11th edition of the text. This Study Guide has notes on the text and additional practice questions some of which are worked out. It is important that problems be done using the techniques and processes described and stated by the instructor, rather than the technique described in the text or text guide. Students, however, might find the Study Guide useful, especially if they are having difficulty with the lessons. There is an electronic version of the Study Guide to accompany the 12th edition of the text available through the website for the text. (ISBN-13: 9781439042120).

You will need a calculator for the lesson assignments and examinations. If you do not have a basic business calculator, you may purchase one from Ed Map along with your textbook.

Alternative source where materials can be obtained
Ed Map


Note: The books for the course are in stock at College Bookstore, (740) 594-3505. Click here for online ordering.

Exams
Requirements

2 exams - Proctoring required

How are exams to be taken: proctored exams, traditional pen and paper not online

Dates of Exams

Midterm Examination - 4th week

Final Examination - 10th week