Eco320: Managerial Economics
Spring 2009
Professor Tae-Hee Jo
Class Hour
TR 1:40 - 2:55 PM at CLAS B108
Office Hour
Tuesday/Thursday 9:30 - 10:30 AM, 4:00-5:00 PM, and by appointment
Contact
Information
Classroom Bd. B230
Economics & Finance Department
Buffalo State College
ANGEL
I shall be using the ANGEL class page for reading materials, lecture notes, announcements, assignments, email correspondence, etc. Make the habit of checking
the class page regularly.
Prerequisite
Eco202, Eco305, Mat110, or equivalent1
Course
Objective
This course is designed to provide in-depth understanding of the business enterprise
and its activities with an emphasis on the business decision making process, the
organizational structure of the business enterprise and the market, and the macroeconomic outcomes of business activities. Both conventional approaches (so called,
neoclassical microeconomics) and alternative approaches (or heterodox microeconomics) will be presented to critically evaluate theoretical and practical issues.
Required
Textbook
James A. Brickley, Clifford W. Smith, Jr., and Jerold L. Zimmerman (2009), Managerial Economics and Organizational Architecture, 5th edition, McGraw-Hill Irwin.
ISBN: 978-0072828092.2
Supplemental
Textbooks
Occasionally a part (or a chapter) of following books is used for reading and homework assignments. You don’t have to buy them. They are reserved, handed out, or
found on the web.
Phone: (716) 878-6933
E-mail: joth@buffalostate.edu
Web: faculty.buffalostate.edu/joth
• Robert Heilbroner and Lester Thurow (1998), Economics Explained, New York:
Touchstone. (BSC Library Reserve)
• John K. Galbraith (1967), The New Industrial State, Boston: Houghton Mifflin:
(BSC Library Reserve)
• D. Fireside, C, Tilly and Dollars & Sense eds. (2006) Real World Micro, Boston:
Dollars and Sense, 13th edition. (ANGEL)
• D. Fireside, C, Tilly and Dollars & Sense eds. (2006) Real World Macro, Boston:
Dollars and Sense, 23rd edition. (ANGEL)
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If you have not taken any of these courses before, you must talk to the instructor.
The 4th edition (2007) may be used. But note that the lectures are based upon the 5th edition.
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• Thorstein Veblen (1904), The Theory of Business Enterprise, New York: Charles
Scribner’s Sons. Free on-line book:
http://de.geocities.com/veblenite/txt/tbe.txt or
http://cas.umkc.edu/econ/Institutional/Readings/Veblen/TBE/tbe.htm
Grading
Policy
Students will be evaluated according to the following requirements.
•
•
•
•
Class Attendance/Participation 10%.
Homework assignments 20%. Writing 4 short essays.3
Mid-term exam. 30%. March 12 (Thursday). In class.
Final exam 40%. May 12 (Tuesday), 1:40-3:30 AM. In class.
Grading
System
Grade
A
AB+
B
BC+
Percent Score
93-100
90-92
87-89
83-86
80-82
77-79
Grade
C
CD+
D
E
Percent Score
73-76
70-72
67-69
60-66
0-59
Important
Notes
• Students are expected to attend all classes throughout the semester. Attendance
at 90% of lectures is compulsory. Attendance is randomly taken. Do not disregard
the importance of class attendance. It is well known that class attendance and
the final grade are highly correlated.
• Read assigned readings ahead of lectures. Lecture notes are the summary of the
readings. Do not rely solely on lecture notes.
• A late homework assignment is accepted with reduced grades. But no later than
two days after the deadline. Email submission is not accepted.
• No make up exam (for both mid-term and final exams) is offered unless an
acceptable reason is provided in advance (at least a week earlier to the exam).
• Grades are not curved at all. Students are responsible for managing their own
grades. Do not come in at the end of the semester with some reason as to why
you should receive a better grade than that which you have earned.
• I want every class student to come and see me at least once during the semester.
Office visit will be counted as class participation.
Academic
Dishonesty
Policy
Students who engage in plagiarism, cheating on examinations, multiple submission of
the same work, unauthorized collaboration (using the work of another individual),
falsification and/or any other violation of academic integrity will receive an “E”
grade in the course. Read carefully the official policy on academic misconduct at
http://www.buffalostate.edu/academicaffairs/x607.xml
Students with
Disabilities
“Any student who requires accommodations to complete the requirements and expectations of this course because of a disability is invited to make his or her needs
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Guidelines will be provided separately.
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known to the instructor and to the director of the Disabilities Services Office, 120
South Wing, 878-4500.”
Procedures
Regarding
Disruptive
Individuals
“Disruptive behavior by students in my class will not be tolerated. Whenever I deem
a student to be acting in a disruptive or threatening manner, I will exercise my right
to ask that individual to leave the classroom. If refused, I will exercise my right to
notify University Police. The responding officer will determine whether an arrest
should be made or whether a referral to medical or counseling staff is appropriate. If
a student is perceived as a danger to himself, herself, or others, the dean of students
may propose an interim suspension until a hearing is held. Any student removed
from class will have the right to a hearing. (Source: Bulletin, November 30, 2000)
Course Schedule and Readings
Notes for reading materials
Angel: download from Angel
Res: library reserve. Students can borrow reserved books for 2 hours from the library
circulation desk.
Jstor: access through http://www.jstor.org.
Web: free on-line materials.
If anyone has a problem in getting reading materials, contact the instructor.
Week 1
Jan. 27, 29
Economy, Economics, and Managerial Economics
Readings:
• Ch.1 Introduction
• Heilbroner and Thurow. Economics Explained, Ch.1 (ANGEL)
• Frank, E. “The Ideology of the Free Market”, in Real World Micro, Ch.1.3 (ANGEL)
• Green, T. (2008) “Thought Control in Economics”. Adbusters, July/August.
(ANGEL)
• Sashi Sivramkrisha (2003), “Towards a Post-Autistic Managerial Economics”,
Post-Autistic Economics Review, No. 20.
(http://www.paecon.net/PAEReview/issue20/Sivramkrishna20.htm)
Week 2
Feb. 3, 5
Behavior and Decision
Readings:
• Ch.2 Economists’ View of Behavior
• Durning, Alan. “Enough is Enough” in Real World Micro, Ch.3.3 (ANGEL)
• Henry, J. F. (2007), “Bad” Decisions, Poverty, and Economic Theory: The Individualist and Social Perspectives in Light of “The American Myth,” Forum for
Social Economics, 2007, 36, 17-27 (ANGEL)
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Week 3
Feb. 10, 12
The Firm, Market, and Industry
Homework assignment #1 (Feb. 10. Due on Feb. 19)
Readings:
• Ch.3 Markets, Organizations, and the Role of Knowledge
• Real World Micro, Ch.4 (ANGEL)
• Economics Explained, Chs.12, 14 (ANGEL)
• Galbraith, J.K. (1967), The New Industrial State, Ch.7 (Res)
• Veblen, T. (1904), The Theory of Business Enterprise, Ch. 3 (web)
Week 4
Feb. 19 (No class on 17)
Demand and Consumption
Readings:
• Ch.4 Demand
• Veblen, T. (1898) The Theory of Leisure Class, Ch.4. (http://cas.umkc.edu/
econ/Institutional/Readings/Veblen/TLC/tlcchap04.html)
• Galbraith, J.K. (1967). The New Industrial State, Ch. 18. (Res)
Week 5
Feb. 24, 26
Production and Costs
Homework assignment #2 (Feb. 24. Due on Mar. 3)
Readings:
• Ch.5 Production and Cost
• Real World Micro, Ch.4 (ANGEL)
Week 6
Mar. 3, 5
Market Structure
Readings:
• Ch. 6 Market Structure
• Real World Micro, Ch.5 (ANGEL)
Week 7
Mar. 10, 12
Review (10) and Mid-term Exam (12, Thursday)
Problem set will be distributed and reviewed on Mar. 10.
Week 8
Mar. 17, 19
Pricing, Investment, and Financing
Readings:
• Ch. 7 Pricing with Market Power
• Jo, T. (2007), “Microfoundations of the Business Enterprise.” (ANGEL)
Week 9
Mar. 24, 26: Spring Break
Week 10
Mar. 31, Apr. 2
Business Strategy
Readings:
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• Ch. 8 Economics of Strategy: Creating and Capturing Value
• Ch. 9 Economics of Strategy: Game Theory
• Shapiro, N. (1991), “Firms, markets, and innovation”, Journal of Post Keynesian
Economics 14(1), 49-60. (ANGEL)
Week 11
Apr. 7, 9
Corporate Governance
Homework assignment #3 (April 7. Due on April 14)
Readings:
• Ch. 18 Corporate Governance
• Real World Micro, Ch.7 (ANGEL)
• Galbriath, J.K. (1967), The New Industrial State, Ch.3 (Res)
Week 12
Apr. 14 (No class on 16)
Integration, Outsourcing, and Multi-national Corporations
Readings:
• Ch. 19 Vertical Integration and Outsourcing
• O’Rourke, D. “Sweatshops 101”, in Real World Macro. (ANGEL)
• Moss, S. (1981), An Economic Theory of Business Strategy, Ch.7 “Uncertainty,
Exchange and Integration”, (ANGEL)
Week 13
Apr. 21, 23
Regulation and Control
Homework assignment #4 (Apr. 21. Due on Apr. 28)
Readings:
• Ch. 21 Understanding Business Environment: The Economics of Regulation
• Real World Micro, Ch.7 (ANGEL)
• Keynes, J.M. (1926) “The End of Laissez-Faire.” (Web: http://www.panarchy.
org/keynes/laissezfaire.1926.html)
Week 14
Apr. 28, 30
Business Enterprises, Business Cycles, and Welfare
Readings:
• Veblen, T. (1904), The Theory of Business Enterprise, Ch. 7 (web)
• Minsky, H. (1992), “The Financial Instability Hypothesis”, Working paper #72,
The Jerome Levy Economics Institute of Bard College. (ANGEL)
• Keynes, J.M. (1930), “Economic Possibilities for our Grandchildren,” in Essays in
Persuasion, New York: W. W. Norton & Co., 1963, pp. 358-373. (web: http://
marxists.org/reference/subject/economics/keynes/1930/our-grandchildren.
htm)
Week 15
May 5, 7: Review of weeks 8-14
Problem set will be distributed and discussed on May 5.
Week 16
May 12 (Tuesday): Final Exam. 1:00-2:50 PM
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