MGT 722: Managerial Economics for EMBA
Owen Graduate School of Management
Vanderbilt University
Fall Semester 2014
Professor:
E-mail:
Office:
Website:
Blog:
TAs:
Luke M. Froeb
luke.froeb@owen.vanderbilt.edu
(615) 322-9057
http://www.cengagebrain.com
http://www.managerialecon.com
Sarah Berhalter:
sarah.berhalter@owen.vanderbilt.edu
Lee J Webb:
lee.webb@owen.vanderbilt.edu
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:
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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 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 doing 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.
Class Material
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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.
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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)
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Managerial Econ Blog, http://www.managerialecon.com/
REQUIRED. Please keep up with the blog. 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.
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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://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 6 Blackboard quizzes
Best 5 of 6 Individual HW’s
Best 4 of 5 Group Presentations (slides and memo)
Take home Final Exam covering readings, lectures, MBA Primer
+/- 5%
25%
25%
25%
25%
Quizzes: (Best 5 of 6 scores taken)
There are six scheduled Blackboard quizzes. You may drop one. 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 closed book and closed note, and must be completed individually. You may not use
any other 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 Sarah or Lee J.
Group Homework: (Best 4 of 5 scores taken)
Write a <500 word memo AND a <= 3-page power point presentation written to a decision maker at
one of your companies. The memo and presentation should implicitly answer one of the group
problems at the end of one of the assigned chapters. These are a designed to give you an opportunity
to apply the ideas in class to your own companies.
Choose a problem faced by one of your companies and analyze it by pretending that you are a
consultant hired to fix a problem within your company. You analysis should implicitly answer 3
questions:
1. What’s wrong?
2. How do we fix it?
3. How much will the company save by fixing it, compared to either the status quo or another
alternative solution? This answer should have a specific number with back up support.
Letters, reports, and even short e-mail notes all indicate to others our ability to communicate. Since good
writing follows clear thinking, others will form opinions about your ability and work ethic based upon
written correspondence. Typographical errors, grammatical errors, misspelled words, or an awkward
writing style dramatically reduce the impact of your work no matter how good the content. In particular,
avoid jargon (see article by Alfred Kahn on Bureaucratese), and write in active, not passive voice.
Individual Homework: (Best 5 of 6 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.
Course Honor Code Policy
Students are bound by the Honor Code and the following specific guidelines for all work in this course. All
work is to be YOUR OWN, CREATED AND COMPLETED BY YOU ALONE. When in doubt, ask the professor.
Specific Guidelines:
The following describes the guidelines for Managerial Economics homework, quizzes, and tests:
 Individual Assignment
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.
 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.
 Quizzes are to be completed individually with no outside help. Quizzes are closed-book, closednote assessments. Any deviation from these guidelines is a violation of the Honor Code.
 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.
 Above all, maintain your personal integrity.
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. Failure to do so is not an acceptable excuse.
Course Calendar
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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. (Note: links
to videos for Chapters 1-14 are contained in this syllabus. The other videos are being updated and
links will be included soon!)
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 below and must be read
prior to class, though reading additional blog postings is strongly encouraged. Content from the
blog will be discussed in class and is fair game for quizzes and exams. Additional featured
blogs will be posted on blackboard.
Sample quizzes are short, 5 question quizzes found on coursemate and linked below. These will
not be graded, but should be taken prior to the official scored quiz as they are indicative of the
material you will see. Longer interactive quizzes are also available on coursemate for those who
want additional preparation
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, groupwork, scored quizzes and final exam
Date
August 7
Time period
6:30-7:30pm
Assignments/Quizzes
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"
August 8
1:40-3:10pm
Assigned Reading: Chapters 3-4
Chapter 3 Video
Chapter 3 Sample Quiz
Chapter 3 Featured blog "Can you recognize opportunity
costs?"
Chapter 4 Video
Chapter 4 Sample Quiz
Chapter4 Featured Blog "America's top chef uses
marginal analysis"
6:30-7:30pm
Assigned Reading: Chapters 5-6
Chapter 5 Video
Chapter 5 Sample Quiz
Chapter 5 Featured Blog "Is Nashville's pension fund
doubling down?"
Chapter 6 Video
Chapter 6 Sample Quiz
Chapter 6 Featured Blog
Homework
August 9
August 23
7:50-11:00am
3:20-4:50pm
Group HW #1
All Groups
Quizzes 1 (Ch 1-4) and 2 (Ch 5&6) must be completed
by Thursday, August 14th at 11:59pm
Assigned Reading: Chapters 7-8
Chapter 7 Video
Chapter 7 Sample Quiz
Chapter 7 Featured Blog "If there is no scope, just say
nope"
Individual HW # 1
Due in Class
Chapter 8 Video
Chapter 8 Sample Quiz
Chapter 8 Featured Blog "Demographic changes shift
housing demand"
5:00-6:30pm
September 6
7:50-9:20am
Assigned Reading: Chapters 9-10
Chapter 9 Video
Chapter 9 Sample Quiz
Chapter 9 Featured Blog "Making people pay for their
prejudices"
Group HW #2
Odd Groups
Individual HW #2
Due in Class
Chapter 10 Video
Chapter10 Sample Quiz
Chapter 10 Featured Blog "Business School Strategy"
9:30-11:00am
September 20
11:50-1:20pm
Group HW #2
Even Groups
Quizzes 3 (Ch 7&8) & 4 (Ch 9&10) must be completed
By Thursday, September 11th at 11:59PM
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"
Individual HW #3
Due in Class
Chapter 12 Video
Chapter 12 Sample Quiz
Chapter 12 Featured Blog "Psychological Pricing in
action"
1:30-3:00pm
October 4
1:30-3:00pm
Group HW #3
Odd Groups
Assigned Reading: Chapters 13-14
Chapter 13 Video
Chapter13 Sample Quiz
Chapter 13 Featured Blog "Do Tourists pay more than
locals?"
Chapter 14 Video
Chapter14 Sample Quiz
Chapter 14 Featured Blog: Antitrust "Common Sense
Guidelines"
3:10-4:40pm
Group HW #3
Even Groups
Quiz 5 (Ch 11-14) must be completed
by Thursday, October 9th at 11:59PM
October 18
7:50-9:20am
Assigned Reading: Chapters 15-16
Chapter 15 Sample Quiz
Chapter 15 Featured blog "How to win the game of
chicken"
Individual HW #4
Due in Class
Chapter16 Sample Quiz
Chapter16 Featured blog "Bankruptcy gives cities
bargaining power"
November 1
3:20-4:50pm
Assigned Reading: Chapters 17-18
Chapter 17 Sample Quiz
Chapter 17 Featured Bog "Cell phones, driving and
decision errors"
Individual HW #5
Due in Class
Chapter 18 Sample Quiz
Chapter 18 Featured Bog "The winner's curse in Yahoo
display options"
November 1
(cont)
November 15
5:00-6:30pm
11:50-1:20pm
Assigned Reading: Chapters 19-20
Chapter 19 Sample Quiz
Chapter19 Featured Blog "Advice for selling on eBay"
Group HW #4
Odd Groups
Individual HW #6
Due in Class
Chapter 20 Sample Quiz
Chapter 20 Featured Blog "Why Seat Belts Kill"
1:30-3:00pm
December 6
7:50-9:20am
Group HW #4
Even Groups
Quiz 6 (Ch 15-20) must be completed by
Thursday, November 20th at 11:59PM
Assigned Reading: Chapters 21-23
Chapter 21 Sample Quiz
Chapter 21 Featured Blog "Admonish or Applaud
Employee Outsourcing"
Chapter 22 Sample Quiz
Chapter 22 Featured Blog "Can functionally organized
banks see risk?"
Chapter 23 Sample Quiz
Chapter 23 Featured Blog "Shirking at Hotels"
9:30-11:00am
Final Exam Review: (Exam will be made available online
on Wednesday, December 10)
December 13
Group HW #5
All Groups
FINAL EXAM must be completed by