University of Bahrain
College of Business Administration
Department of Economics and Finance
ECON 340: MANAGERIAL ECONOMICS
Second Semester 2008/09
Instructor:
Dr. Mohammed A. Alwosabi
Office: 2 – 110
Phone: 17438656
E-mail: mwosabi@gmail.com
Office Hours: UTH 9 - 10; and MW 9:30 – 10:30
Prerequisites: ECON 140 and QM 250 or QM 255
Educational Resources:
o Required Textbook and References:
i. Paul G. Keat and Philip K.Y. Young. Managerial Economics: Economic
Tools for Today’s Decision Makers, 5th edition, Pearson-Prentice Hall.
ii. In-class handouts and online notes
o Recommended
i. Economist, Business Week, MEED, GULF and any other economics and
business magazines that cover current issues in GCC countries and Middle
East region
o Internet and World Wide Web:
i. http://www.prenhall.com/keat (Textbook Website). It contains an interactive
study guide on-line and practice test questions. Be sure to select the fifth
edition version of the textbook, not the fourth or sixth edition).
Course Description:
In today's dynamic economic environment, effective managerial decision making requires timely
and efficient use of information. The purpose of this course is to provide students with a basic
understanding of the economic theory and analytical tools that can be applied in decision making
problems faced by public, private and not-for-profit organizations. The goal is to show students
how to combine the scarce economic resources of a business so that these resources are
allocated in the most efficient manner and to enable them to maximize the value of their enterprise.
This course will cover key issues in managerial economics including demand analysis and
estimation, production and cost analysis under different market conditions, forecasting and
decision making under uncertainty. Graphs, mathematics and statistics will be used to explain the
managerial decision making process.
Course Objectives:
Page 1 of 6
Upon completion of this course, students should be able to:
1. Understand the interaction of basic forces of demand and supply that determine the
quantity of goods traded in a market and the price paid for those goods.
2. Calculate and estimate elasticity empirically and predict the effect of a given change in
price on revenue.
3. Use demand estimation to forecast demand trends and change.
4. Describe the relationship between production and costs in the short run and long run.
5. Draw inferences regarding firm behavior and performance at different market structures.
6. Apply techniques of economic analysis to problems facing business managers.
7. Be able to solve problems mathematically and interpret the results economically.
8. Use Excel to determine optimal solutions to a wide variety of problems.
Teaching Methods:
1. Lectures and discussions
2. Problem Solving
3. Case studies
4. Exercises and Assignments
5. Quizzes and Exams
Skills to be developed:
This course helps students in developing the following skills:
1. Oral and written Communication skills that support and enhance managerial
effectiveness through discussion, class participation, essay assignments, and case
study projects.
2. Analytical skills through discussion, raising questions, exams, and assignments
3. Creative thinking skills through encouraging students to solve problems, identify
opportunities and make reliable decisions in routine and unfamiliar or unpredictable
domestic and global environments,
4. Team work through group assignments, and term papers
5. Adaptability to changes through observation of new and changes in the world financial
system.
Grading Scheme:
Test 1 (TBA)
Test 2 (TBA)
Final Examination (15.06.2009 @2:30)
Total
25
25
50
100
Midterms and Final Exams
o Exams will be designed to test the students’ understanding of the course material and
issues, not memorization.
o Students are expected to take the tests. There will be no make-up test given. Instead, that
test’s weight will be added to your final examination.
Page 2 of 6
o
o
o
o
o
o
Students who receive excused absences for midterm test will be given a special
comprehensive final examination that includes any material on which they were not
previously tested. There are no exceptions to this policy.
Students who arrive late for any exam, for any reason, will not be given additional time.
Plan ahead and arrive on time.
Bring your stationary with you. Sharing of stationery and calculators is not permitted during
any test or exam.
Books, notebooks, file folders, or notes are not permitted in exam halls.
Mobile phones are not allowed. You have to keep them outside exam halls.
Instructors will answer no questions in the examination hall.
Attendance and class participation:
o Attendance is an expectation for all students. Hence, come on time, switch off your mobile,
and be a good participant in the class activities.
o There is a positive relationship between class attendance and performance in the course.
o It is expected that all students present on a given day be attentive, polite, and not a source
of disturbance to the instructor or any student. Questions and comments, of course, are
always encouraged.
o If you miss a class it is your responsibility to find out what material or assignments were
presented in class.
o Office hours are devoted only to clarify unclear points not to repeat class lectures.
o Please go over the material to be covered in a particular lecture before coming to class.
o It is very important that you keep up with the material and take part in class discussion. I
want this to be a semester long dialogue between us.
o Even though a student’s grade is not dependent on class attendance and participation, they
will become a factor when making decision on borderline cases.
Academic Dishonesty:
o All students are expected to maintain a high standard of ethics in their academic activities.
Hence, any form of academic dishonesty is considered a serious matter.
o Academic dishonesty such as cheating, plagiarism, fabrication, and forgery will not be
tolerated and will be dealt with in accordance with the university regulations.
Responsibilities:
o I believe the main purpose of education is to teach students to think effectively. As you
interact with the course contents, you should learn general intellectual skills, such as
observing, classifying, analyzing, and synthesizing.
o I see my primary responsibility to guide, and motivate you as a group of committed and
dedicated students in this learning process, and to determine the extent to which you have
mastered the material covered in this course. I am committed to this task.
o By signing up for this course, you have accepted the responsibility of being an active
learner and of participating in the classroom discussion. If you are not committed expect
your grade to reflect this. However, I want to see everyone does well. I expect you to work
hard in this class and every class. That’s part of the reason why you are here.
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Don't miss an exam. Do your homework. Read the assigned chapter before you do the
homework.
Don't cram all your studying in the night before the exam, for you will not only be too tired to
think, you will not be able to process all the information.
o
o
TENTATIVE COURSE OUTLINE
Topic #
1
2
3
Topics Covered
1. Introduction to Managerial Economics
• What is managerial economics?
• Firms and their goals (Economics and noneconomics)
• Review of mathematical concepts
2. Demand and Supply Analysis from Theory to
Practice
• Market demand and supply
• Determinants of Demand & Supply
• Market equilibrium & comparative statics
• The mathematics of supply and Demand
• Deriving demand curve from demand functions
3. Demand Analysis: Elasticity
• Price elasticity of demand
• Mathematical examples & problems
• The determinants of elasticity
• Demand elasticity and revenue
• Other elasticities of demand
• Net or combined effect of elasticities
• Elasticity of supply
• Mathematical examples and problems
Page 4 of 6
Chapters
Chap. 1 and Chap. 2
Note: For review of
mathematical concepts
visit
www.prenhall.com/keat
Chap. 3
& Appendix 3A
Chap. 4
4
5
6
4. Demand Estimation
• Overview of regression analysis
• Interpretation of regression results (simple and
multiple regression
• R-squared, Two-tailed t-tests
• The F-test
• Mathematical examples and problems
• Problems in use of regression analysis
5. The Theory and Estimation of Production
• Production functions
• Total, average, and marginal product
• Law of diminishing returns
• Three stages of production
• Optimal input use (single & multiple)
• The long run and returns to scale
• Estimation of production function
• Functional Forms,
• Cobb-Douglas Production function
• Problems and Examples
6. Cost Analysis
• Definitions and examples of explicit, implicit and
opportunity costs, economic costs and profits
• Relationship between production & costs
• Short-Run Cost Functions & Forms
• Long run cost functions,
• Scale economies
• Problems and Examples
• Mathematics of short-run cost functions
Page 5 of 6
Chap. 5
Chap. 6
& Appendix 6A
Appendix 6B
Chap. 7
& Appendix: 7A
7
8
9
7. Market Structure: Perfect Competition & Monopoly
• Market structures and characteristics
• Firm behavior in competitive markets
• Normal & economic profit
• Pricing and output decisions in competition
• Competition problems and examples
• Overview of monopoly markets
• Pricing and output decisions in monopoly
• Problems and examples: monopoly
• Break-Even analysis
8. Market Structure: Monopolistic Competition and
Oligopoly
• Overview of monopolistic competition
• Pricing and output decisions in monopolistically
competitive markets
• Overview of oligopolistic markets.
• Market rivalry and mutual interdependence
• Competing in imperfectly competitive markets
9. Special Pricing Practices:
• Cartel arrangements
• Price leadership
• Price discrimination
• Non- marginal pricing
• Multi-product pricing
GOOD LUCK
Page 6 of 6
Chap. 8
& Appendix 8A
Chap. 9
Chap. 10