Economic Analysis for Managers - MBA.pdf

8/10/2019 Economic Analysis for Managers - MBA.pdf

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Department of Business Administration

Course Title: Economic Analysis for ManagersCourse Code: ECO601Pre-requisite Courses: Business EconomicsCredit Hours: Three (3)Semester: Sixth (6)Degree: MBA Program

Course Description:

The course is about the major economic decisions and what are the major concepts to be kept inmind for doing analysis at the managerial level like Demand, Supply and equilibrium,elasticities, Production and cost Analysis, Market structure, Pricing Strategies for the Firm, TheAggregate Model of the Macro Economy.

Course Objectives: This course enables the student to:

1. Understand how markets operate, including the role of competitive market forcesaffecting consumer demand and producer supply and their influence on prices.

2. Understand the effects on firm pricing strategies and other firm conduct and performanceof various industry market structures.

3. Understand the role of influences affecting aggregate expenditure on goods and service,including the role of central bank and financial markets.

4. Understand international balance of payment issues and their impact on foreign marketsand exchange rates.

5. Be able to integrate microeconomic and macroeconomic concepts to analyze the localand international industries.

6. Be able to develop a competitive strategy in a global economy.

L earn in g Outcomes:After completing this course a student will be able to:

1. Be able to integrate microeconomic and macroeconomic concepts to analyze the localand international industries.

2. Be able to develop a competitive strategy in a global economy.3. Analyze the efficient ways of scarce resources.4. To have a complete understanding of demand and supply and its estimation.5. Can analyze the short run and long run production function.


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6. Elaborate the concept of opportunity cost and its use to analyze different investmentalternatives.

7. The Economic problem of allocation and distribution of resources.8. Describe and analyze the total revenue, average and marginal revenue.9. Discuss total cost and its different features.

10. Discuss different examples related to this market structure.11. To understand and apply the measurement of GDP and its components.

12. Be able to use of economic indicators to forecast and set the economic trend.13. Be able to understand and analyze the role of money in economic growth.14. To develop the business strategies keeping the government policies and their impact

on it, i.e. monetary and fiscal impacts.15. To use the effective and flexible policies under different exchange rate regimes.

Teachin g M ethodology:Teaching at Iqra University is learner oriented. Students are involved in lectures, assignedreadings, reference readings, exercises, case studies, presentations, and class discussions. In the

same way, grading tends to focus on the s tudents overall performance and participation in theclassroom activities.

Code of Conduct:Students have to follow the rules stated below to avoid a failing grade in the course:

Understand and follow the University policy regarding attendance. Arrive in and leave the classroom strictly on time. Late arrival will be marked as absence.

If you leave the classroom in the middle of a session even for a short while, you will bemarked absent.

Keep your cell phone off during the class. Do the assigned readings for a class before coming to the class.

Maintain a disciplined, cordial, and respectful attitude towards the teacher and yourfellow students.

Submit your homework on the due date before the class begins. Do not plagiarize from books, journals, or the internet. Do not cheat (make someone else do your work or present work for some other course as

work for this course). The teachers decisions about marks and grade will be final.

Cour se Contents:

Week Topics to be covered Remarks1 Managers and Economics

Microeconomic Influences on Managers

Macroeconomic Influences on Managers

Market Structure


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Circular Flow of Economic Activity

Overview of the Classical and Keynesian economics

2 Demand, Supply and Elasticities Case Study&

Assignment&

Quiz

Why Should Managers Study Supply and Demand?

Expressing Demand Functions

Expressing Supply Curves

Why Should Managers Study Elasticity?

Price Elasticity and Total Revenue

Income Elasticity of Demand

Cross-Price Elasticity of Demand

Examples of Elasticities

3 Techniques for Understanding Consumer Demand and Behavior Case Study&

Quiz Methods of measuring inflation

Expert opinion and Consumer surveys

Test marketing & price experiments & Unconventional methods

Analyses of census and other historical data

Economic Approach to Studying Consumer Demand

Cross-sectional data

Panel data

Time-series data Demand Estimation Issues

4 Production and Cost Analysis in the Short-Run Case Study&

Assignment Accounting vs. Economic Profit & Explicit vs. Implicit Costs

Recognize and account for the law of diminishing returns.

Relationship Between Short Run Production and Cost

Total Revenue, Average Revenue and Marginal Revenue.

Fixed Cost, Variable Cost, Total Cost, Average Cost andMarginal Cost

5 Production and Costs in the Long Run Project

Technology of the Production Process

Economies and Diseconomies of Scale

Methods for Determining Minimum Efficient Scale

6 Market Structure & Pricing Strategies Case Study&

Assignment Market Structure

Examples of various forms of market structure

Lerner Index and The Herfindahl-Hirschman Index

7 Market Structure & Pricing Strategies in Global perspective Case Study& The Kinked Demand Curve Model


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Game Theory Models, and Predatory Pricing Quiz

Markup Pricing and Optimal Markups

First, Second, and Third Degree Price Discrimination

MID-TERM EXAMINATION

8 Measuring Macroeconomic Activity ProjectFeedback The Circular Flow of Economic Activity

Gross Domestic Product and Its Components

Measures of Employment and Unemployment

Major Macroeconomic Policy Issues

9 The Aggregate Model of the Macro Economy Assignment&

Quiz Household Consumption Spending and Aggregate Demand

Business Investment Spending and Aggregate Demand

Implementation Issues in Monetary and Fiscal Policy

Interaction of Fiscal and Monetary Policy

10 The Role of Money in the Macro Economy Case Study&

Quiz Measures of U.S. Money Supply

Simple Deposit Multiplier

Money multiplier

The Central Bank (Federal Reserve)

11 The Role of Money in the Macro Economy Tools of Monetary Policy

ProjectFinal

Submission

Contractionary and Expansionary Monetary Policy

Factors Affecting the Real Money Supply

Equilibrium in the Money Market

Final Project - Submission

12 International and Balance of Payments Issues in the MacroEconomy

Quiz

Exchange Rates

Balance of trade

Equilibrium in the Open Economy

Determinants of Currency Supply and Demand

Policy Examples of International Economic Issues

13 Exchange Rates and International Trade Case Study

The Current, Capital and Financial Account

The Impact of International Trade

Currency Appreciation and Depreciation

Comparative Advantage and Exchange Rates

Trade Agreements and Trade Policy options


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14 Combining Micro and Macro Analysis for Managerial DecisionMaking McDonalds in China Case Study

Economic and Political Issues

Macroeconomic Influences on Managers in China

Wal-Mart in Mexico Revisited

Production and Cost Issues

Macroeconomic Influences on Wal-Mart in Mexico

15 Final Project Feedback and Revision

FINAL EXAMINATION

Rescheduli ng of Cl ass:The teachers at Iqra University are very particular about taking their classes, but in case of an

emergency, an alternate teacher may conduct the class. Students are informed through SMS incase of rescheduling of a class.

Grading Policy:

A Grade: 88 and aboveB+ Grade: 81-87B Grade: 74-80C+ Grade: 67-73C Grade: 60-66F Grade: Below 60

M arks Di stri bution of 100%:

Quizzes ______10_____Assignments/Case Studies: ______15_ ____Project/Project presentations: ______10_____Mid-term ______25_____Final Exam ______40_____Total 100____

Recommended Readings:

1. Economics for Managers, Farnham, Prentice Hall, 2 nd edition (April 12, 2009) ISBN-10:013606552X; ISBN-13; 9780136065524

2. Economics Today, Roger LeRoy Miller, Prentice Hall, 17 th edition (January 10, 2013)ISBN-10: 0132948907; ISBN-13; 9780132948906

3. In addition the teacher may prescribe any additional reading material.


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Reference Books:

1. Economic Growth, David N. Weil, Prentice Hall, 3 rd edition (June 29, 2012) ISBN-10:0321795733; ISBN-13; 9780321795731

2. Essentials of Economics, Paul R. Gregory, Prentice Hall, 6 th edition (April 28, 2004)ISBN-10: 0321238036; ISBN-13: 9780321238030

3. Essential Mathematics for Economic Analysis, Knut Sydsaeter, Peter Hammond, ArneStrom, 4 th edition (August 26, 2012) ISBN-10: 0273760688; ISBN-13: 978-0273760689

4. Intermediate Microeconomics: A Modern Approach, Hal R. Varian, W. W. Norton &Company, 8 th edition (December 3, 2009) ISBN-10: 0393934241; ISBN-13: 978-0393934243

5.

Money, Banking, and the Financial System, R. Glenn Hubbard, Anthony P. O'Brien,Prentice Hall, 2 nd edition (March 25, 2013) ISBN-10: 0133148688; ISBN-13: 9780133148688

6. International Monetary & Financial Economics, Jos Daniels, David VanHoose, PrenticeHall, 1 st edition (December 31, 2012) ISBN-10: 0132461862; ISBN-13: 978-0132461863

7. The Monetary Policy of the Federal Reserve: A History (Studies in MacroeconomicHistory), Robert L. Hetzel, Cambridge University Press, 1 st edition (March 17, 2008)ISBN-10: 0521881323; ISBN-13: 978-0521881326

8. The Great Recession: Market Failure or Policy Failure? (Studies in MacroeconomicHistory), Robert L. Hetzel, Cambridge University Press; 1 st edition (April 16, 2012)ISBN-10: 1107011884; ISBN-13: 978-1107011885

9. Schaum's Outline of Statistics and Econometrics (Schaum's Outline Series), DominickSalvatore, Derrick Reagle, McGraw-Hill, 2 nd edition (January 27, 2011) ISBN-10: 0071755470; ISBN-13: 978-0071755474

10. Schaum's Outline of Introduction to Mathematical Economics, Edward Dowling, McGraw-Hill, 3 rd edition (September 7, 2011) ISBN-10: 0071762515; ISBN-13: 978-0071762519

11. Time-Series-Based Econometrics: Unit Roots and Co-integrations (Advanced Texts inEconometrics), Michio Hatanaka, OUP Oxford (January 25, 1996) ISBN-10: 0198773536; ISBN-13: 978-0198773535

12. Basic Econometrics, Damodar Gujarati, Dawn Porter, McGraw-Hill/Irwin, 5 th edition(October 8, 2008) ISBN-10: 0073375772; ISBN-13: 978-0073375779
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