Chittagong University Center for Business Administration
Faculty of Business Administration
University of Chittagong
MBA Program
Course Title- 615: Managerial Economics
Course Objective: The purpose of this course is to provide students with a basic understanding of the
Economic theory and analytical tools that can be used in decision making problems. Moreover the
course will impart the students with the knowledge of economic concepts, direct managerial
applications, and analytical skills through integrating the knowledge of economic theory with decision
making process and practices.
Learning outcome:
Upon completion of this course the students will be able to
1. Determine the price and quantity at which companies yield will be maximum
2. Determine the relationships production, costs, and profits
3. Set market prices at different contingent market situation.
4. Make decisions in uncertain condition.
Course Outline:
Mid-Term:
1. Introduction to Micro to Managerial Economics: Economics defined, Micro and Macro
Economics – an overview, relationship between economic theory and managerial decision, the
nature and objective of firms, the concepts of profit, alternative objectives of firm, the decision
making model, and constraints of decision making.
2. Basic Tools: Functional relationship, Economic model, Calculus and optimization, Regression
analysis.
3. Demand Theory and Analysis: Individual and market demand, total and marginal revenue,
Elasticity of Demand: Price, Income and Cross elasticity of demand.
4. Demand Estimation: Development of model, Data collection, Choice of functional form,
Estimation and interpretations using regression techniques, Problems with regression analysis:
Omitted variables, Identification & Multicollinearity.
5. Production Theory: Production function, short run production and law of diminishing returns,
long-run production, least cost factor combination, expansion path, returns to scale, economies
of scale and scope, estimation of production function.
Final-Term:
6. Cost Theory: The economic concept of cost, short and long-run cost function, marginal and
average costs, profit contribution analysis, Operation leverage and estimation of cost function.
7. Profit Maximization under Different Market Structure: Market structures, Perfect competition,
Monopoly, Monopolistic competition, Oligopoly, Profit maximization in short and long runs,
Evaluation of markets.
8. Pricing Decisions: Pricing of goods and services, Price discrimination, Pricing of multiple
products, product bundling, peak-load pricing, cost plus pricing, pricing of inputs, pricing
under different market structures, economic rent, labor unions, minimum wages laws.
9. Decision Making under Uncertainty: The concepts of risk and uncertainty, risk and decision
making, adjusting business decision for risk, decision tree analysis.
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Basic Text:
Managerial Economics – James R. McGuigen & R. Charles Moyer (Third Edition).
Reference Books:
1. Managerial Economics – Mark Hirschey and James L. Pappas.
2. Managerial Economics – H. Craig Peterson & W. Cris Lewis.
3. Managerial Economics – Samualson, W.F. and Marks, S.G.
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Lecture Plan:
Lectures
1-4
5-9
10-12
13
14-18
19-22
23
24-26
27-31
32-36
37-40
41-44
45
Contents
Introduction to Micro to Managerial Economics: Economics defined,
Micro and Macro Economics – an overview, relationship between
economic theory and managerial decision, the nature and objective of
firms, the concepts of profit, alternative objectives of firm, the decision
making model, constraints of decision making.
Basic Tools: Functional relationship, Economic model, Calculus and
optimization, Regression analysis.
Demand Theory and Analysis: Individual and market demand, total and
marginal revenue, Elasticity of Demand: Price, Income and Cross elasticity
of demand.
Class Test
Demand Estimation: Development of model, Data collection, Choice of
functional form, Estimation and interpretations using regression
techniques, Problems with regression analysis: Omitted variables,
Identification & Multicollinearity.
Production Theory: Production function, short run production and law of
diminishing returns, long-run production, least cost factor combination,
expansion path, returns to scale, economies of scale and scope, estimation
of production function.
Class Test and Review
Cost Theory: The economic concept of cost, short and long-run cost
function, marginal and average costs, profit contribution analysis,
Operation leverage and estimation of cost function.
Profit Maximization under Different Market Structure: Market structures,
Perfect competition, Monopoly, Monopolistic competition, Oligopoly,
Profit maximization in short and long runs, Evaluation of markets.
Pricing Decisions: Pricing of goods and services, Price discrimination,
Pricing of multiple products, product bundling, peak-load pricing, cost plus
pricing, pricing of inputs, pricing under different market structures,
economic rent, labor unions, minimum wages laws.
Decision Making under Uncertainty: The concepts of risk and uncertainty,
risk and decision making, adjusting business decision for risk, decision tree
analysis.
Game Theory and Strategic Behavior: Introduction to game theory, game
theory and oligopoly, strategic behavior.
Class Test and Review
Semester Evaluation:
In course evaluation
20 marks
(Class test/Participation/Presentation/Assignment/Quiz.)
Mid-Term Examination
40 marks
Final-Term Examination
40 marks
Total
100 marks
Wish you best of luck
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