BUSINESS
ECONOMICS
ECO-535
School of Business & Economics
Program
MBA (P)
Credit Hours
03
Resource Person
Dr. Rukhsana Kalim
E-mail
drrukhsana@umt.edu.pk
Recommended Texts
1. “Economics: Theory and Practice” (7th edition) 2004 by Patrick J.
Welch and Gerry F. Welch (W&W)
2. “Macroeconomics” by Mankiw N.7th edition, (2010).
Additional Books
1. Principle of Microeconomics (2001) by Mankiw N.G
2. Macroeconomics, 2007, by Olivier Blanchard.
3. Economics: Principles, Problems and Policies by Campbell R
McConnel and Stanley L. Brue (M&B) 2005, McGraw Hill Irwin
4. Macroeconomics: Theories and Policies 8th edition, 2005 by Froyen
R.T.
5. Economics (2005) by Samuelson N.
6. Economics: Principles and Application by Mankiw 2007.
Assessment Scheme
Quizzes
Assignments
Case Study
Class Participation
Midterm
Final
15%
15%
05%
10% (Discussion, Home Take Exercises)
25%
30%
Course Description: This course is an economist' kit of tools for MBA students that can be used
to understand the basics of economics. It covers micro-and macroeconomic issues that are
essential for managers and professionals. The course starts with basic microeconomic concepts
such as demand, supply, elasticities, production and cost. Having established the solid ground of
the basics of microeconomics, parts of macroeconomics including national income accounts,
aggregate demand, aggregate supply, concepts of inflation and unemployment, major
macroeconomic policy operations will be dealt with. After completing the course the participants
will be able to apply principles of economics to solve economic problems being faced by both
public and private sectors of Pakistan. .
Learning Objectives:
Sr#
1
2
3
Course Learning Objectives
Link with Program Learning
Objectives
Develop sound understanding of Students are equipped with the knowledge
Microeconomic basics.
of standard firm behavior that will help
them in understanding larger perspective
of business best practices
To enable students to analyze the Students will be able to select efficient
functioning of the firms
business practices for their firms
To understand and analyze business Understand the nature of the market, price
conditions.
strategy and competitive environment.
Learning Outcomes
It is expected that after the completion of the course students will be able to:
 Understand the key elements involved in business decisions.
 Understand the strategies of the firm
 Understand the nature of the market, price strategy and competitive environment.
 Comprehend the functioning of the economy.
 Analyze the role of fiscal and monetary policy in stabilizing the economy.
TEACHING METHODOLOGY:

Recommended Books Reading

Lectures / Presentations

Assigned Problems

Knowledge Sharing Sessions

Assignments / Special Topics

Websites / Internet Search

Research Based Material

Handout Material

Reading Recommended Material
QUIZZES/ ASSIGNMENTS

To assess the understanding of the knowledge shared in the class, assignments and
quizzes will be taken. The objective of quizzes and assignments is to strengthen the
conceptual knowledge and to develop the analytical skills among the students on the
assigned topics. Quiz may be in the form of MCQs, short questions numeric or graphs.
No Make up Quiz/assignment will be taken.

Assignments must be submitted on due date; late submission will be penalized. Take
home problems and exercises must be completed before the next class session.
Participant Responsibilities

Regular attendance and participation in class activities.

Practicing discipline in the Class

Advance chapter reading of the relevant topic.

Submission of assignments and other exercises on time.

It will be ensured that all assignments submitted to the resource person are original
contributions of the participants.

No plagiarism in quizzes and assignments otherwise the case to be sent to disciplinary
committee
TESTS AND GRADING: To assess the understanding of the knowledge shared in the class,
assignments and quizzes will be taken. The objective of quizzes and assignments is to strengthen
the conceptual knowledge and to develop the analytical skills among the students on the assigned
topics. Quiz may be in the form of MCQs, short questions numeric or graphs. No Make up
Quiz/assignment will be taken. Assignments must be submitted on due date; late submission will
be penalized. Take home problems and exercises must be completed before the next class
session.
CONSULTANCY SERVICE
You are welcome to discuss your academic issues with me during my office hours. You
may request for an appointment if the office hours do not fit into your schedule.
Calendar of Activities
Semester Spring 2013
We
ek
Topics to be
covered in the course
Learning
Objective
of this topic
Basic principles of Economics
1-3
 What do economists study?
 Scarcity and Choice
 Trade offs
 Efficiency and Equity
 The opportunity cost
 The Production Possibilities Frontier
 Micro versus Macro Economics
 Positive Versus Normative Analysis
Conclusion
To understand the
basic concepts of
economics.
The Market Forces of Demand and
Supply




4-6
Demand Schedule
Law of Demand
Demand Curve
Individual Demand and market
demand
Shifts in the demand curve

Supply
 Supply Schedule
 Law of Supply
 The Supply schedule and the
 Supply curve
 Individual Supply versus Market
supply
 Shifts in Supply
Market Equilibrium
Supply and Demand: Government
Regulations
7-8



Price Ceiling
Price Floor
Effect on market Outcome
To understand the
operation of the
market. How does
market achieve
equilibrium?
Factors affecting
the equilibrium.
To understand the
market operation
and impact of
government
intervention on
Readings
Link with course
learning objectives
Develop familiarity
with the application
of economics to
everyday business
Teaching
Method
Assessment Criteria
Welch
Chapter 1
Lecture and
Discussion
Take Home Exercise: Review
Questions 1,2, and 6, from
W&W pp. 23-25
Case 1: Production
Possibilities W& W, page 21
Provide relevance
of market
conditions at micro
level to form basis
of the working of a
firm
Welch
Chapter 3
Assignment #1
Exercise:
Review questions 2, 3 & 5
from W&W page 98-99
Lecture and
Class
Discussion
Relate business
with public policy
making
Welch
Chapter 3
Case study # 2 (W&W) p.101
Lecture
Quiz #1
Conclusion
markets
Elasticity of Demand and Supply
Prepare students to
undertake business
analysis


9-10
11-12
Price elasticity of demand
Calculation of the Price Elasticity:
Point Elasticity and Average
Based Formula
 Factors Affecting Price Elasticity
of Demand
 Price Elasticity and Total Revenue
 Price Elasticity of Supply
 Factors Affecting Price Elasticity
of Supply
Conclusion
The Production Function and the Costs
of Production
 The Production Function
 Efficient Method of Production
 Production Function and Types of
Costs
 Short run cost analysis
 Long run Costs
 The Law of Diminishing Returns
 Economies and Diseconomies of
Scale
Conclusion
To comprehend the
concept and
application of
elasticity
To familiarize
students with
different type of
costs behavior in
the short-run and
long-run
The Theory of Firm and Market
Structure: Competitive market



13-14



The meaning of Competition
Demand for an Individual’s Firms
Product
Profit maximization and
competitive firm’s supply curve
Short-run Equilibrium of the Firm
(Economic Profit, Loss, and
Breakeven)
The supply curve in the
competitive market.
Long-run equilibrium of the firm
Welch
Chapter 3
To understand
different market
structure with
particular focus on
competitive market
operation
Lecture
Group
Discussion
Impart the
importance of
effective cost
analysis for good
business
management
practices
Welch
Chapter
12
Brief the students
regarding basics of
business
competition
Welch
Chapter
13
Exercise: Applications of
supply demand and elasticity
W&W pp. 94-95
Quiz # 2
Assignment # 2
Lecture
Lecture
Group
Discussion
From W&W p. 363
A group of 3-4 participants will
present a case study assigned by
the resource person.
Problems and Exercises
Conclusion
15-16
17-18
Monopoly and Monopolistic
Competition
 Monopoly
 Demand Curve for the Monopolist
 Profit Maximization/Equilibrium
in Monopoly
Monopolistic Competition
 Feature of the Market
 The short-run equilibrium (profit
or Loss)
 The long-run equilibrium
 Monopolistic versus perfect
competition
 Price Discrimination
Conclusion
Oligopoly
 Characteristics of Oligopoly
 Behavior of a Firm in an
Oligopolistic Market
 Mutual Interdependence
 Leadership pricing
 Kinked Demand Curve
Conclusion
Present the case for
peculiar market
failure outcomes
Welch
Chapter
13
To understand the
nature of monopoly
and monopolistic
competition
Problems and Exercises
Lecture
Group
Discussion
Quiz #3
Assignment #3
To comprehend the
collusive and non
collusive
arrangements by
firms
Representation of
additional cases of
market failure.
Welch
Chapter
13
Lecture
Group
Discussion
MID TERM
Case Study#3
Part II: MACRO ECONOMICS
19-22
Introduction to Macroeconomics
 The Circular Flow Model
 National Income Accounts:
GDP
 Real GDP and Nominal
GDP
 The GDP Deflator
 The Components of
Expenditure
 Other Measures of Income
GNP, NNP, National
The measure the
performance of the
economy
Bring relevance to larger
economic profile of a
country to business
performance
Mankiw,
Chapter
2&3
Lecture
Data Analysis
Assignment#4
Income,
Personal Income,
Disposable
 Measuring the Cost of
Living: The consumer Price
Index
 The CPI versus GDP
Deflator
Conclusion
23-24
25-26
27-28
The Goods Market: Short run
Analysis
 The composition of GDP
 The Consumption
Function
 The Investment Function
 Government Spending
 The Determination of
Equilibrium Output/
Keynesian Cross
 The Effect of Increase in
Government Spending on
Equilibrium Output
 The Investment
Multiplier
 Equality in Savings and
Investment
Financial Market
 The Demand for Money
 The Determinants of
Interest rate
 The supply of Money
Equilibrium in Financial
Market
Unemployment, Inflation and
To understand the
function of the economy
at macro level
Fryon
Chapter 3
To understand the
equilibrium of national
output in the economy.
To see the role of interest
on demand for
investment
Relate specific economic
Class Exercise
Quiz #4
Lecture
Class Exercise
Lecture
Class Exercise
Fryon
Chapter 3
To understand the
functioning of financial
market
What is meant by
Lecture
Welch
Growth
29-30
Fiscal and Monetary policy
unemployment? To
measure the cost of living.
How economies grow?
conditions with doing
business
How do economies face
instability and what is the
role of fiscal policy in
stabilizing the economy
How does monetary
policy affect the
functioning of the
economy
Develop relationship
between government
policies and economic
conditions for a good
business environment
Relate money markets to
the economic conditions
of a business
Chapter 4
Mankiw
Chapters
4,6 and 7
Mankiw
Chapter 9
& 10
Welch
Chapter 8
Mankiw
Chapter
10
Group
discussi
on
Lecture
Case
study
Quiz #4
Class Exercise