Micro Economics for Managers

Class of Course Code Credit : 2013 : SLEC 501 :3 Academic Year Semester Sessions : First : I : 30

AIMS a. To introduce students to principles of microeconomics and their applications in business decision making. b. To enable students to appreciate its relevance to other functional areas of management. Learning Outcomes 1. Will be able to describe the behavior of various economic agents 2. Will be able to discuss how each economic agent optimizes the use of resources in order to maximize returns under constraints 3. Will be able to identify various market structures and analyze how price and quantity are determined therein. Samuelson 4. Will be able to assess and evaluate the market outcomes of managerial decisions.
REFERENCE BOOKS Managerial Economics in a Global Economy Micro Economics Managerial Economics, 8th ed Managerial Economics, 5th ed Manageria Economic Analysis Problem l s , , Cases, 8th e Microeconomics Economics, 18e Managerial Economics AUTHOR / PUBLICATION Salvatore Dominick Thomson South-Western (latest edition) Robert S Pindyck & Daniel Rubinfeld Pearson Hircshey, Mark. South-Western

Samuelson Paul

Truett, Lila J./ Truett, Dale B. John Wiley & Sons 2003 Dr Rao, V Panduranga. IBS Publication Samuelson, Paul A / Nordhaus, William D. Tata McGraw-Hill 2005 Craig, Petersen H / Cris, Lewis W. PHI

Detailed Syllabus

Introduction to Economics: Scarcity and Efficiency, Economic Systems, The Market Mechanism, The economic role of Government. Consumer Behavior: Choice and Utility Theory, Marginal Utility and the Law of Diminishing Marginal Utility, Equilibrium Condition Equal Marginal utilities per rupee for Every Good. An Alternative Approach Substitution Effect and Income Effect, Substitutes and Complements, Derivation of Market Demand, The Paradox of Value. Demand Analysis: The Demand schedule, the Demand curve, Demand shifts, Elasticity of Demand Price Elasticity of Demand, Calculating Elasticities, Elasticity and Revenue, Income Elasticity of Demand, Cross Elasticity of Demand. Production analysis: Basic concepts, The Production Function, Total, Average, Marginal Product, Laws of Diminishing Returns, Returns to scale, Short and Long run, Technological change, diminishing marginal product. Analysis of Costs: Cost concepts, the link between production and costs, Short run and long run cost curves. Economies of scale and scope. Relevant Costs and Benefits, Break Even Analysis and plant sizing. Least cost factor combination for a given output, Expansion Path. Analysis of supply: The Supply Schedule, The Supply Curve, Behind the Supply Curve, Shifts in supply, Price Elasticity of Supply. Equilibrium Analysis: Equilibrium with Supply and Demand curves, Effect of a Shift in Supply or Demand, Interpreting changes in Price and Quantity, Simultaneous Shifts of Supply and Demand, Rationing by Prices. Applying Supply and Demand Impact of a Tax on Price and Quantity, Prices Fixed by Law. Consumer Surplus: Applications of Consumer Surplus. Market Structures : Perfect Competition: Characteristics of a Perfectly Competitive Market, Supply and Demand in Perfect Competition, Short Run and Long Run Equilibrium of the Competitive Firm, Efficiency of Competitive Markets, Effects of Taxes on Price and Output Monopoly: Monopoly - short run and long run equilibrium Price Discrimination, Types of Price Discrimination, Natural Monopolies

Monopolistic Competition, Product Differentiation and types. Oligopoly: Kinked Demand Curve, Cartel Formation, Application of Game Theory, Market-Sharing Cartels, Price Leadership, Price Leadership by a low-cost firm, Price Leadership by dominant firm, Barometric Price leadership. Pricing Practices: Markup Pricing and profit maximization, Price Discrimination, Joint Product Pricing, Transfer Pricing. Markets with Asymmetric Information: Introduction to asymmetric information; Moral hazards, adverse selection, Market Signaling, Principal-Agent Problem. Cases 1. A Small Peek into Big Bs Car Collections: Does Law of Diminishing Marginal Utility Hold Good? 2. Mobile telephony in India : Hungama Unlimited 3. Mobile Telephony in India:Would Cheaper Rates Bring More Profits 4. Gujarat Ambuja : Cost Leader in India Cement Industry 5. OPEC: The Economics of a Cartel (A) 6. OPEC The Economics of a Cartel (B) 7. Perfect Competition under eBay: Fact or Factoid 8. Switzerland, Cuba and India: The Troika of Economic : Problems in Three Economies 9. Tatas Nano: A Small Car with Large Consumer Surplus? 10.Microsoft antitrust case 11.Domestic Airlines in India :Leveraging