MGT 322: Managerial Economics
Owen Graduate School of Management
Vanderbilt University
Fall 2012 Mod II Syllabus
Professor:
Class Blog:
E-mail:
Office:
Office Hours:
Luke M. Froeb
http://managerialecon.com
luke.froeb@owen.vanderbilt.edu
(615) 322-9057
T/Th 3:30-4:30, or by appointment
Head TA:
Additional TAs:
Brock Hardisty brock.hardisty@owen.vanderbilt.edu
Keri Rich, Sarah Weng, Mitch Evans, Emma Gardner, Stephanie Dozier, Elizabeth
Jensen, Cole Luby, Ajuma Imaji, Hoang Lan HuyenTonNu, Kelsey Duggan
Course Goals
After completing this class you should be able to:
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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 and downstream retailers
Find unconsummated wealth-creating transactions and devise ways to profitably consummate
them
Class Materials
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Froeb, L. M., Managerial Economics: A Problem-Solving Approach, 2nd Edition (Cincinnati:
Southwestern, 2010). (ISBN 0538771240, bundled with the economics module of MBAPrimer.com)
REQUIRED. This is the text for the class, and corresponds closely to the homework and lectures.
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Managerial Economics module of MBA Primer
REQUIRED (BUNDLED WITH TEXTBOOK). This is a hands-on “how to” primer that teaches the
mechanics of costs, demand, marginal analysis, and benefit-cost analysis. There are primers for
Financial Accounting, Managerial Economics, Finance, Accounting, and Statistics. Be sure to select
MBA Primer Online: Managerial Economics Module 3.0, 3rd Edition and NOT any of the other
primers. Read the material, do the exercises, and take the quiz at the end of each chapter. Repeat
the quizzes and review the material until you are comfortable with the concepts and techniques.
No deliverables are required from the MBA Primer, but there are 5 quizzes on Blackboard that are
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almost identical to those in the primer. The primer can also be purchased separately from the
textbook at: www.cengagebrain.com
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Student Dashboard, http://www.studentdashboard.net
REQUIRED. Puts all the chapter material: outlines, summaries, blog posts, practice quizzes, video
lectures (only for ch1-12), slides, and links for each chapter of textbook in one place. You are
responsible for all of this material for the assigned chapters. For the blog, you are responsible for
the five most recent blog posts in each chapter, and all posts that are made during mod II.
USER: 2012VanderbiltMBA
PASS: Owen
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Managerial Econ Blog, http://www.managerialecon.com/
REQUIRED. This can be accessed through studentdashboard.net. Please feel free to post
comments. Good comments may help class participation grade.
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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://hadm.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 learning the
concepts and the quizzes.
Deliverables & Grading
Class participation
Best 5 of 7 Blackboard quizzes
Best 5 of 7 Individual HWs
Cumulative Final Exam
10%
25%
25%
40%
If you have any questions about the grades you receive, submit your questions in writing to Professor 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.
Your participation grade will be based on the your contribution to the class, including:
 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 class participation requires the reading and review of the assigned class material. Do not come
to class unless you have read these materials.
Blackboard Quizzes
Weekly quizzes will be posted on Blackboard and must be completed by Sunday night at midnight.
Quizzes are timed and will shut off at midnight, so do not wait until late Sunday night to begin the quiz.
Quizzes 1-4 are similar to quizzes 1-4 in the MBA Primer. The MBA Primer quizzes do not count towards
your grade and you may take them as many times as you wish. The Blackboard quizzes count toward your
grade and once you log on, you do not get a second chance.
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All quizzes are individual assignments and any communication relevant to the quiz before, during, or after
taking it is a violation of the Owen Honor Code. Quizzes are closed book and closed notes and you may not
use any other resources (e.g. Internet) during the quiz. Copying or printing any portion of the quiz is a
violation of the Owen Honor Code.
You will be able to see your score at the end of each quiz, but you will not be able to see which questions
you missed or the correct answers to any of the questions. The answers to each week’s quiz will be
reviewed at the following Wednesday’s lunchtime TA session. Please attend this session if you have any
questions about the previous week’s quiz.
HW Assignments
Each week’s homework assignment will be posted to Blackboard at the beginning of the week. Completed
HW assignments should be dropped off in the box on the 3rd floor by 5pm on Friday. Many of the
questions are taken from the end of the chapters in the textbook, so as you read, if you cannot answer
these questions on your own, ask questions in class or in the TA sessions. If you cannot answer the
question in less than 150 words, then you don’t understand the question.
All homework assignments are open book and open notes, but are individual assignments. You may
discuss the concepts of the homework problems with your classmates, but do not look at their written
homework. Everything you turn in is to be your own work. 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 150 words, then
you don’t understand the question.
To ensure anonymity in grading, each student will be assigned a unique identification number to be used
on all homework assignments. Put only your number and not your name on your homework. Each
question will be graded by the same TA to ensure consistency in grading.
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 each Friday from noon until 3pm to discuss the prior week’s quiz and
homework, as well as to answer any questions about course material. Please see the complete schedule in
the syllabus for locations.
TAs are also available for free, individual help by appointment. Appointments can be made by contacting
a TA directly or by contacting the TA scheduler, Sarah Weng (sarah.weng@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 sharing of tests or quizzes, or suspiciously-similar
individual homework, you will be handed over to your peers on the Honor Council. This will trigger a
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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 is to be your own.
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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.
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Quizzes are to be completed individually with no outside help. Quizzes are closed-book, closed-note,
closed-browser assessments. Any deviation from these guidelines is a violation of the Honor Code.
By submitting required assignments, you are confirming that you have abided by the Honor Code.
COURSE CALENDAR
Complete all readings and Primer assignments prior to each class.
Week 1
October 15: Introduction
Assigned Reading:
Textbook: Preface & Chapters 1-2
On Blackboard: “The Economics of Organizations”
MBA Primer:
Introduction: What is Managerial Economics?
October 17: Benefits, Costs, and Decisions
Assigned Reading:
Chapter 3
MBA Primer:
Using Economics in Management Decisions
HW #1 due Friday, October 19 by 5pm
Week 2
October 22: Extent Decisions & Investment Decisions
Assigned Reading:
Chapters 4-5
MBA Primer:
Understanding the Seller’s Costs
October 24: Simple Pricing
Assigned Reading:
Chapter 6
MBA Primer:
Understanding the Buyer’s Demand
HW #2 due Friday, October 26 by 5pm
Quizzes 1 & 2 must be completed by Sunday, October 28 at midnight
Week 3
October 29: Economies of Scale and Scope & Understanding Markets and Industry
Changes
Assigned Reading:
Chapter 7-8
MBA Primer:
Understanding Markets and Profit Maximizing
October 31:
Strategy and Long-run Relationships Between Industries
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Assigned Reading:
Chapters 9-10
HW #3 due Friday, November 2 by 5pm
Quizzes 3 & 4 must be completed by Sunday, November 4 at midnight
Week 4
November 5: Foreign Exchange, Trade, and Bubbles
Assigned Reading:
Chapters 11-12
November 7: Price Discrimination
Assigned Reading:
Chapters 13-14
HW #4 due by Friday, November 9 at 5pm
Quiz 5 must be completed by Sunday, November 11 at midnight
Week 5
November 12: Strategic Games
Assigned Reading:
Chapter 15
November 14: Bargaining
Assigned Reading:
Chapter 16
HW #5 due by Friday, November 16 at 5pm
Quiz 6 must be completed by Sunday, November 18 at midnight
****FALL BREAK****
Week 6
November 26: Auctions & Making Decisions with Uncertainty
Assigned Reading:
Chapters 17-18
November 28: Moral Hazard and Adverse Selection
Assigned Reading:
Chapters 19-20
HW #6 due by Friday, November 30 at 5pm
Quiz 7 must be completed by Sunday, December 2 at midnight
Week 7
December 3: Aligning Incentives of Employees and Divisions with Goals of Firm
Assigned Reading:
Chapters 21-23
December 5: Course Review
Assigned Reading:
Chapter 24
HW #7 due by Friday, December 7 at 5pm
Final Exam Date & Time TBA
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Stephanie Dozier
Brock Hardisty
Keri Rich
Kelsey Duggan
Nicholas Luby
Hoang Lan Huyen TonNU
Mitch Evans
Ajuma Imaji
Sarah Weng
Managerial
Economics
TAs 2012
Emma Gardner
Lizzi Jensen
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