MGT 322: Managerial Economics
Owen Graduate School of Management
Vanderbilt University
Fall 2014 Mod II Syllabus
Professor:
E-mail:
Office:
Office Hours:
Website:
Blog:
Head TA:
Additional TAs:
TA Office Hours:
Luke M. Froeb
luke.froeb@owen.vanderbilt.edu
(615) 322-9057
TBD
http://www.cengagebrain.com
http://www.managerialecon.com
Sarah Berhalter: sarah.berhalter@owen.vanderbilt.edu
Lee J. Webb, Edward Waud, Matt McCall, Kyle Holden, Rachel Hayden, Ashley
Schuering, Allison Parish, Kristen Stieger
TBD
Course Goals
If you do the work for this class, you will be able to use economics to solve business problems. In
particular, you will be able to:















Use the rational-actor paradigm to predict firm and individual behavior.
Compute the relevant costs of any decision.
Use marginal analysis to make extent (how much) decisions.
Make investment decisions that increase firm value.
Set optimal prices and price discriminate.
Predict industry-level changes using demand/supply analysis.
Understand the long-run forces that erode profit
Develop long-run strategies to increase firm value.
Use game theory to predict how your actions influence those of others.
Bargain effectively
Make decisions in uncertain environments.
Solve the problems caused by moral hazard and adverse selection.
Align individual and division incentives with the goals of the company.
Manage relationships between upstream suppliers or downstream retailers.
Find unconsummated wealth-creating transactions and devise ways to profitably consummate
them.
You learn economics only by solving problems
Learning economics is similar to learning math or physics—the only way to learn is by doing problems.
Reading material is helpful, but the only way to learn this is by working through the problems.
WARNING: for you creative types, do not fool yourself that you learning by following lectures and the
readings. Instead, work on problems: HW, quizzes, practice quizzes, and end of chapter questions. You
will pass if you put in the work on the problems- it is the best way to succeed in this course.
Class Material

Froeb, L. M., Managerial Economics: A Problem-Solving Approach, 3rd Edition (Cincinnati:
Southwestern, 2013). (IBSN13: 978-1-133-28488-8), bundled with Coursemate Printed Access Card)
REQUIRED. This is the text for the class, and corresponds closely to the lectures.

Cengage Coursemate for Managerial Economics: A Problem-Solving Approach, 3rd Edition.
https://login.cengagebrain.com/cb/login.htm
REQUIRED: [BUNDLED WITH TEXTBOOK] This book comes bundled with Coursemate, an
interactive tool with access to a digital version of the text and additional resources. For every
chapter you will find flashcards, homework solutions, interactive quizzes, video lectures from
Professor Froeb and more. Please become familiar with and utilize this tool as it will assist
with both your understanding and performance in the course. Though no deliverables come from
coursemate, much of the material found in the interactive and sample quizzes for each chapter are
similar to the class quizzes, and completion of them is a great way to prepare.
Note: Use the access code found on the card in the textbook to set up and create your
account. Do not lose or dispose of this card! Once your account has been created, use the link
above to access the log-in page. After logging in, you may be prompted to enter a Course Keyignore it, as that is not required to access the chapter resources on the left. For any issues
setting up the account please contact Sarah (sarah.berhalter@owen.vanderbilt.edu)

Managerial Econ Blog, http://www.managerialecon.com/
REQUIRED. Please keep up with the blog- students are responsible for featured content and any
content added from the beginning of the academic year (August). You may see homework, quiz,
and exam questions that come directly from the blog. Please feel free to post comments. Good
comments count towards class participation grade; bad comments hurt. When you read a blog
post, try to make up a problem based on the post, and post it in the comments to the blog. A link
to the blog and the content that applies to specific chapters can also be found in
Coursemate.

Economics Interactive Tutorials by Samuel L. Baker, Ph.D., Associate Professor University of South
Carolina, Norman J. Arnold School of Public Health, Dept. of Health Administration
(http://hspm.sph.sc.edu/courses/econ/Tutorials.html)
RECOMMENDED. While these interactive tutorials have a health care focus, they do an excellent
job of introducing basic concepts of economics, especially for students with little background in
economics. They are freely available at the above URL. I strongly urge those of you without a
strong economics background to go through these. No deliverables are required from these
Interactive Tutorials; however, these interactive tutorials are great practice for testing yourself on
the concepts and the quizzes or for those who require additional assistance.
Deliverables & Grading
Class participation
Best 5 of 7 Online quizzes
Best 5 of 7 Individual HWs
Cumulative Final Exam
10%
15%
35%
40%
If you have any questions about the grades you receive, submit your questions in writing to Luke Froeb.
Class Participation
To help reinforce the concepts from the assigned readings and homework, students will be required to
participate in class discussions and should expect to be called upon at random.
We use assigned seating to track class participation. You can earn up to three participation points in each
class: You will receive one point for being on-time and sitting in your assigned seat, an additional point if
you participate in class discussions, and two additional points if your comment(s) and/or question(s)
significantly contribute to your classmates’ learning experience.
Your participation grade can also be impacted by:
 Preparedness for class, as evidenced by the quality of your answers
 Classroom behavior/attentiveness (i.e. no laptops or cell phones in class)
 Commenting on the blog (meaningful blog comments or posts will also be rewarded with
participation credit- an option for those who are less comfortable speaking out in class)
Meaningful class participation requires the reading and review of the assigned class material. Do not
come to class unless you have read these materials.
If you need to miss a class or attend another section due to a schedule conflict, please notify your
instructor via email before the start of class. You will receive zero points if you miss a class without prior
written notification.
You are not allowed to use electronic devices (e.g., laptops, cell phones, tablets) during class. You will
lose one point for each violation of the no electronic devices policy.
At the end of the mod, we will compute your participation average and convert it to a participation grade
ranging between 0 and 100.
Quizzes (Best 5 of 7 Scores Taken)
There are seven scheduled Blackboard quizzes. You may drop two. The quizzes will be based on
material covered in class, end of chapter questions, homework problems and coursemate material.
Class attendance, understanding of assignments and completion of the sample and interactive quizzes
at the end of each related chapter in coursemate are the best ways to prepare for these quizzes.
Online quizzes are open book and open note, and must be completed individually using only current
course material and resources. You may not use any external resources during the quiz. This includes
additional online resources, copies of quizzes from earlier years and your classmates.
Your score will be posted on Blackboard. Quizzes and solutions will be posted on blackboard once the
time window has closed. If you have a question about a problem you missed, please make an
appointment to meet with one of the TAs.
HW Assignments (Best 5 of 7 Scores Taken)
Individual Homework questions will be posted to Blackboard at the beginning of the week. To make
sure that you understand the material, first try these questions on your own. If you cannot do them,
you need help in the class. Ask questions in class. Ask questions of your classmates. Explain your
answers to your friends or classmates (There is an old saying in economics—you never learn
economics until you teach it to someone else). You are allowed to discuss the questions with your
classmates, but do not look at their written HW. Everything you turn in is to be your own work.
Get help from classmates or from class TAs. If you would like to set up time with a TA to answer
questions you have about the material, please email them directly (copy me on the email). Do not
expect them to give you the answers or to verify that you have the right answer. Learning this
material is hard work, and the only way you can learn it is by doing the questions yourself. If you
cannot answer the question in less than 250 words, then you don’t understand the question.
Homework is to be turned in on the third floor by 2pm on the day it is due. Electronic
Submissions will not be accepted.
Final Exam
Information on the final exam will be provided towards the end of the mod. A practice final exam will be
posted and exam review sessions will be offered prior to the test. The final exam includes material from
the whole course, as well as blog postings during the mod.
TA Office Hours
TAs will hold office hours TBD. The TAs are available to discuss the prior week’s quiz and homework, as
well as to answer any questions about course material.
TAs are also available for free, individual help by appointment. Appointments can be made by contacting
a TA directly or by contacting the Head TA, Sarah Berhalter (sarah.berhalter@owen.vanderbilt.edu) who
will assign the appropriate person based on your needs.
Course Honor Code Policy
Do not lie, cheat or steal.
If I or any of the TAs find evidence of cheating, like suspiciously-similar individual homework, you will be
handed over to your peers on the Honor Council. This will trigger a lengthy judicial process that may lead
to failure of the course, suspension, or expulsion.
There is no group work assigned in this course. All work submitted is to be your own.
Specific Guidelines:
The following describes the guidelines for Managerial Economics homework, quizzes, and tests:
 Individual Assignments
On individual homework assignments in this class you may discuss the concepts and questions
with your classmates, but do not look at or copy their written work. Each assignment is to be
prepared and completed by the individual. In short, all work submitted must be your own.
 Quizzes
Quizzes are to be completed individually with no outside help, including internet sources. Quizzes
are open-book, open-note assessments, limited to only current course material. Any
deviation from these guidelines is a violation of the Honor Code.
 Data Sources and Tools
Each student is responsible for following assignment instructions with respect to what data
sources and tools may be used. If outside sources are used, proper citations are REQUIRED.
Materials from prior courses at Owen or similar courses at other institutions are prohibited unless
specifically authorized by the professor. Again, when outside sources are used, they should be
cited appropriately by the student.
Overarching Guidelines
 Plagiarism, which includes the unauthorized use of previous years’ materials (e.g., examinations,
case analyses, homework assignments, quizzes, etc.), is a violation of the Honor Code.
 Written deliverables must use appropriate citations to signify when arguments or analyses rely on
the ideas or insights of others, including any of the readings in the class pack. It is not necessary
to reference the case study you are preparing a written analysis of.
 Any use of analyses or any other material in any format from previous offerings of this course,
other courses taught at Vanderbilt or other universities, or on the Internet, is a violation of the
Honor Code. This includes the use of materials in multiple classes without consent of the
instructors.
 Copyrighted material is intellectual property, so illegally copying the textbook for this class is
theft. The penalty for violating the honor code ranges from failure in the course, suspension or
permanent expulsion.
 Above all, maintain your personal integrity.
By submitting required assignments, you are confirming that you have abided by the Honor Code.
If you are in doubt as to the type or amount of collaboration allowed on an assignment, it is always
your responsibility to consult with Professor Froeb or Sarah Berhalter. Failure to do so is not an
acceptable excuse.
Course Calendar




Week
Week 1
Assigned chapters and videos must be completed prior to class. Discussion each session will be focused
around these resources, so come prepared and expect to be cold-called. Videos cover the content in the
chapter in a little more detail- it is up to you to decide which method you prefer when preparing for class.
Blog posts associated with each chapter can be found on coursemate or through the link at the beginning of
the syllabus. Featured blog posts for each chapter are noted in the syllabus and on OAK and must be read
prior to class, though reading additional blog postings is strongly encouraged. In addition to the featured
posts below, students are responsible the content of any new postings (8/1/14 and beyond). Content
from the blog will be discussed in class and is fair game for quizzes and exams.
Sample quizzes are short, 5 question quizzes found on coursemate and linked in the syllabus and on OAK.
You will need your coursemate login to access these quizzes. These will not be graded, but should be
taken as preparation for the official scored quizzes as they are indicative of the material you will see. Longer
interactive quizzes are also available on coursemate for those who want additional preparation. I do not
have access to these and they will not be graded- so feel free to take them as many times as you like. This is
the best way to prepare for the graded quizzes.
Coming to class prepared (readings and videos) and ready to participate, keeping up with blog
entries (featured and new) and taking the quizzes associated with each chapter are the best ways to
prepare and do well in this class. This preparation will set you up for success on all homework, scored
quizzes and the final exam
Class (Date)
Class 1
October 20
Class 2
October 22
Week 2
Homework #1
Quiz #1
Class 3
October 27
Class 4
October 29
Homework #2
Quiz #2
Assignments/Quizzes
Introduction
Assigned Reading: Preface and Chapters 1-2
Chapter 1 Video
Chapter1 Sample Quiz
Chapter 2 Video
Chapter 2 Sample Quiz
Chapter 2 Featured blog "For those of you who get queasy during
economics class"
Benefits, Costs and Decisions
Assigned Reading: Chapter 3
Chapter 3 Video
Chapter 3 Sample Quiz
Chapter 3 Featured blog "Can you recognize opportunity costs?"
Due Friday, October 24th by 2pm
Must be completed by Sunday, October 26th at 11:59pm
Extent and Investment Decisions
Assigned Reading: Chapters 4-5
Chapter 4 Video
Chapter 4 Sample Quiz
Chapter4 Featured Blog "America's top chef uses marginal analysis"
Chapter 5 Video
Chapter 5 Sample Quiz
Chapter 5 Featured Blog "Is Nashville's pension fund doubling
down?"
Simple Pricing
Assigned Reading: Chapter 6
Chapter 6 Video
Chapter 6 Sample Quiz
Chapter 6 Featured Blog "Did Netflix raise its prices enough?"
Due Friday, October 31st by 2pm
Must be completed by Sunday, November 2nd at 11:59pm
Week 3
Class 5
November 3
Class 6
November 5
Week 4
Homework #3
Quiz #3 & 4
Class 7
November 10
Class 8
November 12
Week 5
Economies of Scale/Scope & Understanding Markets
Assigned Reading: Chapters 7-8
Chapter 7 Video
Chapter 7 Sample Quiz
Chapter 7 Featured Blog "If there is no scope, just say nope"
Chapter 8 Video
Chapter 8 Sample Quiz
Chapter 8 Featured Blog "Demographic changes shift housing
demand"
Strategy and Long Run relationships between industries
Assigned Reading: Chapters 9-10
Chapter 9 Video
Chapter 9 Sample Quiz
Chapter 9 Featured Blog "Making people pay for their prejudices"
Chapter 10 Video
Chapter10 Sample Quiz
Chapter 10 Featured Blog "Business School Strategy"
Due Friday, November 7th by 2pm
Must be completed by Sunday, November 9th at 11:59pm
Foreign Exchange, Trade and Bubbles
Assigned Reading: Chapters 11-12
Chapter 11 Video
Chapter11 Sample Quiz
Chapter 11 Featured Blog "Bloodbath in Euro affects US interest
rates and trade deficit"
Chapter 12 Video
Chapter 12 Sample Quiz
Chapter 12 Featured Blog "Psychological Pricing in action"
Price Discrimination
Assigned Reading: Chapters 13-14
Chapter 13 Video
Chapter13 Sample Quiz
Chapter 13 Featured Blog "Do Tourists pay more than locals?"
Homework #4
Quiz #5
Class 9
November 17
Chapter 14 Video
Chapter14 Sample Quiz
Chapter 14 Featured Blog: Antitrust "Common Sense Guidelines"
Due Friday, November 14th by 2pm
Must be completed by Sunday, November 16th at 11:59pm
Strategic Games
Assigned Reading: Chapter 15
Class 10
November 19
Chapter 15 Video
Chapter 15 Sample Quiz
Chapter 15 Featured blog "How to win the game of chicken"
Bargaining
Assigned Reading: Chapter 16
Homework #5
Quiz #6
Chapter 16 Video
Chapter16 Sample Quiz
Chapter16 Featured blog "Bankruptcy gives cities bargaining power"
Due Friday, November 21st by 2pm
Must be completed by Sunday, November 23rd at 11:59pm
Nov 24-30
Thanksgiving Break
Week 6
Class 11
December 1
Auctions and Making decisions with uncertainty
Assigned Reading: Chapters 17-18
Chapter 17 Video
Chapter 17 Sample Quiz
Chapter 17 Featured Bog "Cell phones, driving and decision errors"
Class 12
December 3
Chapter 18 Video
Chapter 18 Sample Quiz
Chapter 18 Featured Bog "The winner's curse in Yahoo display
options"
Moral Hazard and Adverse Selection
Assigned Reading: Chapters 19-20
Chapter 19 Video
Chapter 19 Sample Quiz
Chapter19 Featured Blog "Advice for selling on eBay"
Week 7
Homework #6
Quiz #7
Class 13
December 8th
Chapter 20 Video
Chapter 20 Sample Quiz
Chapter 20 Featured Blog "Why Seat Belts Kill"
Due Friday, December 5th by 2pm
Must be completed by Sunday, December 7th at 11:59pm
Aligning Incentives of Employees and Divisions with Firm Goals
Assigned Reading: Chapters 21-23
Chapter 21 Video
Chapter 21 Sample Quiz
Chapter 21 Featured Blog "Admonish or Applaud Employee
Outsourcing"
Chapter 22 Video
Chapter 22 Sample Quiz
Chapter 22 Featured Blog "Can functionally organized banks see
risk?"
Chapter 23 Video
Chapter 23 Sample Quiz
Chapter 23 Featured Blog "Shirking at Hotels"
Class 14
December 10th
Homework #7
Mod 2
Exam Period
Course Review
Assigned Reading: Chapter 24
Due Friday, December 12th by 2pm
COMPREHENSIVE FINAL EXAM