Managerial Economics
ECO 6655
Summer 2012
T/TH 3:30-5:50 Bibb Graves 211
Instructor: Jennings Byrd, Ph.D.
Email: wjbyrd@troy.edu
Office Hours:
Office Location: Bibb Graves 209
Office Telephone: 334.808.6205
First Term: T/TH 1:30 – 3:30
Second Term: MW 9:30 – 10:30
T/TH 1:30 – 3:30
Prerequisites
BUS 5503 and BUS 5505 or Principles of Microeconomics and Statistics equivalents.
While math courses such as algebra and calculus are not a prerequisite for this course, we will be
making extensive use of algebra and calculus. Math is essential for a great deal of economic analysis,
in particular, the type of analysis encountered in managerial economics. I will devote a fair amount
of time in each lecture (where needed) explaining the math behind the concept/principle/theory.
Description
A study of the decision-making process of business firms in the resource allocation process. Both the
functioning of markets and the decisions of firms in a variety of market structures are considered.
Various theories of the firm are used to study the optimal decision-making rules for business firms
under conditions of uncertainty.
Objectives
On completion of the course, the student should be able to:
1. Apply microeconomic models to real-world managerial problems using basic calculus techniques,
as well as statistics and/or linear programming as appropriate. Use function maximization,
minimization, and optimization to determine optimal price and production levels for a firm.
2. Synthesize price theory, optimization, and elasticity concepts to solve managerial problems within
the four market structures.
3. Apply demand theory and estimation to managerial decision-making.
4. Apply cost theory and estimation to product pricing and production levels.
5. Demonstrate familiarity with the literature on microeconomics.
6. Explain the concept, applications, and implications of competitive advantage, including the
importance of aligning core products with core competencies and core values.
Purpose
To provide strong familiarity with the theories and quantitative techniques of managerial economics,
i.e., applied microeconomic analysis. In particular, these theories and techniques will be used to show
how optimal economic solutions are reached by managers who operate firms in various market
environments. The aspects of economics which are relevant to the managerial decision-making
processes are stressed. The basic techniques of calculus will be applied when solving various
problems.
Textbook
Hirschey, M. (2009 or current). Managerial Economics. Mason, OH: South-Western/Cengage
Learning.
Course Web: http://troy.blackboard.com/webapps/portal/frameset.jsp
The course web page will serve as the materials intermediary. All homework assignments will be
posted on blackboard. I may also post answer sheets or other supplemental material here as well.
Supplements
I will spend some time during the course explaining how to use Excel to conduct statistical analysis.
However, you may also use R or some other statistical package to conduct statistical analysis if you
so desire. If you choose to use a statistical package, besides Excel, please inform me prior to your
use; this will allow me to check the accuracy of your work. In addition, I will want all printouts of
your results including any code you programmed.
Exams
There will be two exams given during the semester, one midterm covering selected chapters and a
final exam. The midterm will count 20% towards your final grade with the final exam worth 20%.
These exams will consist of short answer questions that will test you on the theory and empirical
analysis discussed in class. You will be given one hour and fifteen minutes to complete the midterm.
You will have an entire class period to take the final exam. Short answer questions from homework
assignments will serve as a good guideline as to the style of questions I will ask on the exams.
Quizzes
Two quizzes will be assigned during the term. They will cover multiple chapters, but will not be as
comprehensive as an exam. They will be short answer and will reflect lecture notes and homework
assignments. Each quiz is equally weighted. I will allow approximately 45 minutes – 1 hour for the
completion of each quiz.
Homework
Over the course of the semester, you will be given one comprehensive homework assignment. This
assignment will cover multiple chapters as it will be a business problem to solve. It will contain
estimation and analysis.
Grading Policy
A
B
C
D
F
90 – 100
80 – 89
70 – 79
60 – 69
0 – 59
Grade Distribution
Homework
Quizzes (2)
Midterm
Final
20%
30%
25%
25%
Attendance
It is expected that you attend every lecture. I do not formally take attendance nor do I consider it in
determination of your grade. However, as an MBA student you should exhibit professionalism and
the responsibility that goes along with it. In addition, you should arrive on time and prepared for
every class. Coming to class late is disrespectful to me and to other students. If you are running late
because of work, spouse, child, etc. send me an email to let me know.
Academic Dishonesty
Cheating and plagiarism are very serious. I will not tolerate any form of cheating. This includes the
use of solution manuals, test banks, texting during an exam, programmed answers, or any other
creative way you may come up with. If you are caught cheating you will receive an automatic F for
the course and may face further academic action.
Additional Services
AMERICANS WITH DISABILITIES ACT: Troy University supports Section 504 of the
Rehabilitation Act of 1973 and the Americans with Disabilities Act of 1990, whiich insure that
postsecondary students with disabilities have equal access to all academic programs, physical access
to all buildings, facilities and events, and are not discriminated against on the basis of disability.
Eligible students, with appropriate documentation, will be provided equal opportunity to demonstrate
their academic skills and potential through the provision of academic adaptations and reasonable
accommodations. Students with disabilities, or those who suspect they have a disability, must register
with the Disability Services Coordinator in order to receive accommodations. Students currently
registered with the Disability Services Office are required to present their Disability Services
Accommodation Letter to each faculty member at the beginning of each term. If you have any
questions, contact the Office of Adaptive Needs Program (Eldridge Hall), or call 670-3220/3221.
Cell Phones and Other Electronic Devices
Turn your cell phone off or put it on vibrate prior to entering the classroom. Texting or accessing
your Facebook page is extremely rude and disrespectful to me and to other students. If you feel the
need to constantly access your phone then do not expect me to answer any questions about material
you missed. Computers are an acceptable form of note taking as well. However, as this class is more
analytical in nature (i.e. lots o’ math) it will be difficult for you to efficiently put equations and
problems into your computer. This means that you are likely accessing the internet or working on
some other project. In this case, see my rule about answering questions above.
Chapter Outline
Part 1: OVERVIEW OF MANAGERIAL ECONOMICS.
1. Nature and Scope of Managerial Economics
2. Economic Optimization
3. Demand and Supply
Part 2: DEMAND ANALYSIS AND ESTIMATION.
4. Demand Analysis
Part 3: PRODUCTION AND COMPETITIVE MARKETS
7. Production Analysis and Compensation Policy
8. Cost Analysis and Estimation
10. Competitive Markets
11. Performance and Strategy in Competitive Markets
Part 4: IMPERFECT COMPETITION.
12. Monopoly and Monopsony
13. Monopolistic Competition and Oligopoly
14. Game Theory and Competitive Strategy
Part 5: ‘Metrics
5. Demand Estimation
6. Forecasting
The schedule below is tentative. Ideally, I would like to move at this pace to ensure there is in depth
coverage of material. However, I prefer quality over quantity, i.e. I prefer you fully understand a
handful of topics rather than barely understand all topics.
Tentative Schedule
Week
1
1
2
2
3
3
4
4
5
5
6
6
7
7
8
8
Lecture
1
1
3
4
5
6
7
8
9
10
11
12
13
14
15
16
Topic/Chapter
Introduction, Chapter 1
Chapter 2
Chapter 3
Quiz (Ch. 2 and 3) Chapter 4
Chapter 7
Chapter 8
Chapter 12, Review
Midterm (Ch. 4, 7, 8, 12)
Chapter 14
Chapter 13
Chapter 10
Quiz (Ch. 13, 14)
Chapter 11
Chapter 5
Chapter 5/6
Final (Ch. 5,6, 10, 11)