MANAGERIAL ECONOMICS
Course code
Course title
Type of course
Stage of study
Year of study
Semester
ECTS
Lecturer
Study form
Courses to have prior this course
Course language
ECO107
Managerial Economics
Compulsory
Undergraduate
Second
Fall
6 credits; 24 hrs. lectures, 24 hrs. practice, 112 hrs. individual
work, 2 hrs. of consultations
Assoc.prof. dr. Zina Gaidiene
Full-time
Microeconomics
English
Annotation
Managerial Economics course is the synthesis of microeconomic theory and decision making in practice. The course
covers such topics as optimal decisions, demand analysis, production and cost analysis, decision making under
uncertainty, asymmetric information, value of information, bargaining, auctions, etc. Some mathematical techniques are
used in this course, but understanding the logic of decisions is more emphasized. As the course teaches students how to
make better business decisions, various case studies are analyzed as well.
Aims of the course
This is a course in the basics of Microeconomics, designed for bachelor’s degree program students in management and
business administration. The objective is – to provide theoretical information and practical skills, necessary for studying
the principles for market economic actions; the behaviour of independently acting participants in the economy, and the
decisions they make; and economic substantiation of economic actions in different types of markets. Skills in conducting
microeconomic analyses and optimisation are developed in this course
INTENDED LEARNING
OUTCOMES
STUDY SUBJECT LEARNING
OUTCOMES
STUDY METHODS
ASSESSMENT OF
LEARNING OUTCOMES
LO9: Will be able to analyze
a company or an
organization as an integral
unit, which strives for certain
goals in a market or social
environment by effectively
distributing their finite
resources among objects
and business activities and
obtains synergies from
coordinated function
planning, organization and
management.
SLO1 Be acquainted with major
topics in managerial economics,
Lectures,
seminars,
individual study
Midterm test, final exam
SLO2 Be more confident while
participating in firm decision
making process
Lectures,
seminars,
individual study
Midterm test, final exam
SLO3 Have developed skills, that
are need for strategic decision
making and decision making
under uncertainty
Lectures, seminars,
individual study
Midterm test, final exam
SLO4 Be able to apply demand
analysis in optimal pricing
decisions
Lectures, seminars,
individual study
Midterm test, final exam
SLO5 Understand the value of
information
Lectures, seminars,
individual study
Midterm test, final exam
SLO1 Be acquainted with major
topics in managerial economics,
Lectures,
seminars,
individual study
Midterm test, final exam
SLO2 Be more confident while
participating in firm decision
making process
Lectures,
seminars,
individual study
Midterm test, final exam
SLO3 Have developed skills, that
are need for strategic decision
making and decision making
Lectures, seminars,
individual study
Midterm test, final exam
LO14: Will have developed
the insights and skills,
necessary to analyse and
structure business financial
information, to make
financial forecasts and apply
valuation models, supporting
value-adding business
decisions.
1
under uncertainty
SLO4 Be able to apply demand
analysis in optimal pricing
decisions
Lectures, seminars,
individual study
Midterm test, final exam
SLO5 Understand the value of
information
Lectures, seminars,
individual study
Midterm test, final exam
Quality Issues
The lecturer assures a variety of teaching and learning methods, interim knowledge assessment, supply of learning
material to students and discussions of individual and group work in class during and after the course.
Cheating Issues
The ISM regulations on academic ethics, including cheating (see, ISM Bakalauro studijų reglamentas, Kaunas: 2006) are
fully applied in the course during the entire semester.
Topics:
Week/Date
TOPICS
1
Lecture # 1: Economic Decision Making (decision
making steps (defining problem, determining the objective,
analyzing alternatives, predicting consequences, making a
choice, performing sensitivity analysis); public and private
decisions)
2
Lecture #2: Optimal Decisions Using Marginal Analysis
(a simple model of the firm; marginal and sensitivity
analysis; optimization techniques)
3
4
5
6
Lecture #3: Demand Analysis and Optimal Pricing
(determinants of demand; elasticity of demand; optimal
pricing)
Lecture #4: Production (production concepts; SR&LR
production; optimal use of an input; returns to scale; leastcost production; measuring production functions; multiple
plants and multiple products)
Lectures #5: Cost Analysis (relevant costs; SR&LR costs;
returns to scale; economies of scope; cost analysis and
optimal decisions)
Lecture #6: Decision Making under Uncertainty
(uncertainty and probability; expected value; decision trees;
sequential decisions; expected utility and risk aversion)
COURSE HOURS
Theory Practice
READING
2
2
[1], chapter 1
2
2
[1], chapter 2
2
[1], chapter 3,
[2], chapter 4
2
[1], chapter 6,
[2], chapter 6
2
2
2
2
[1], chapter 7, [2],
chapter 7
2
2
[1], chapter 8
2
7
8
Mid-Term Exam (from topic 1 to topic 5 inclusive)
(Guidance during practice time)
Lecture #7: The Value of Information (imperfect
information; Bayes’ theorem; intuitive prediction; optimal
stopping and optimal sequential decisions; the value of
additional alternatives)
Lectures #8&9: Game Theory and Competitive Strategy
(equilibrium strategies; market entry; bargaining; sequential
competition; repeated competition; evolutionary strategies)
2
4
2
4
[1], chapter 9
[1], chapter 13,
[2], chapter 11
Group presentations and discussion.
Group presentations and discussion.
2
Lecture
#10:
Asymmetric
Information
and
Organizational Design (adverse selection; signalling;
principals, agents and moral hazard; organizational design)
9
[1], chapter 15, [2],
chapter 11
4
2
2
[1], chapter 16
10
11
Lecture #11: Bargaining and Negotiation (resolving
disputes; differences in values; contingent contracts;
multiple-issue negotiations; negotiation strategy)
2
2
Group presentations and discusion.
Lecture #12: Auctions and Competitive Bidding
(advantages of auctions; bidder strategies; expected
auction revenue; competitive procurement; spectrum
auctions)
2
2
24
24
[1], chapter 17
Group presentations and discusion.
Total:
Individual work and assessment:
TYPE
Homework
Mid-term exam
Participation in lectures and seminars
Final exam
Total:
TOTAL HOURS
EVALUATION, %
24
34
54
100
15
30
15
40
100
Course requirements:
Mid-term exam. The mid-term exam will be held on the 8 th week of the semester and will account for 30 percent of the
final mark. It will cover topics 1 to 5 inclusive. Students will have to answer multiple choice or/and open questions and to
solve some mathematical tasks.
Homework/group presentation. A group of 3 to 5 students will have to perform the assigned case study analysis and to
present it in seminar. Each group of students will be critically opposed at least by two other groups (teams). This course
task will count 15 percent of the final mark. Detailed guidelines and other information will be provided during the course.
Participation in lectures and seminars. In order to ensure high quality of studies and to promote active participation
during the course, lecturer will assess the performance of students. Every week (without any notice in advance) students
will have to be prepared to answer oral or written questions, asked by lecturer. This assessment will count 15 percent of
the final mark.
Final exam. It will be held at the end of semester and count 40 percent of the final mark. The exam will cover topics 6 to
11 inclusive. Students will have to answer multiple choice or/and open questions and to solve some mathematical tasks.
For detail exam regulations, see ISM Bakalauro studijų reglamentas.
The retake of exam will be held at the end of semester and count 70 percent of the final mark. It will cover all topics (from
topic 1 to topic 11 inclusive). Evaluation received for homework and participation in lectures will not be annulled.
Literature
1.
2.
Samuelson, W. F. and Marks, S.G. (2006). Managerial Economics, 5 th edition. New York: John Wiley &
Sons, Inc. (ISM library)
Paul G. Keat, Philip K.Y. Young (2005). Managerial Economics. Economic Tools for Today’s Decision
Makers, 5th edition. Upper Saddle River: Prentice Hall. (ISM library)
Extra material for Managerial Economics course will be found in ISM intranet.
3