MBA5001: Managerial Economics: Course Outline
Academic Year: 2009/10
Instructor: Professor Lim Chin
Aims & Objectives
A good grasp of microeconomic analysis of the firm and the markets is vital for
managerial decision making, for designing and understanding of public policiess,
and more generally for appreciating how a modern economy functions.
Topics include
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Markets and prices
Consumer behavior and market demand
Choice under uncertainty
Theory of the firm and cost of production
Analysis of competitive markets
Market power: its implication on pricing behavior
Monopolistic competition & oligopoly
Game theory and applications (Managing risk & uncertainty, managing
conflict & cooperation, managing risk & uncertainty, managing asymmetric
information)
Externalities and public goods
Instruction in the course is mainly through lectures and class discussions.
Equally important is the solving problem sets and assignments which will be
given regularly throughout the course. Students will be continually evaluated
through performance in assignments, and in-class tests
Topics to be discussed
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Basics of a Market Economy
Positive and normative analysis
Competitive vs non-competitive markets
Market mechanism
Supply and demand
Elasticities of supply and demand
Government intervention in markets
2. Consumer Behaviour
 Consumer preferences
 Budget constraints
 Consumer choice
 Individual demand & market demand
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Consumer surplus
Choice under uncertainty
Demand for risky assets: trade-off between risk and return
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Production and Costs of Production
Technology: returns to scale, law of diminishing returns
Short run cost functions
Long run cost functions
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Profit Maximization & Competitive Supply
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Marginal Revenue and Marginal Costs
Profit Maximizing output and supply curve
Market supply curve
Long run output and long run supply
Contestable Market
Analysis of Competitive Markets
Consumer Surplus
Producer Surplus
Measure of Market efficiency
Government intervention and impact on market efficiency
Market Power: Monopoly and Monopsony
Monopoly and monopoly power
Sources of monopoly power
Social costs of monopoly power
Monopsony and monopsony power
Antitrust laws and market regulation
Pricing with Market Power
Capturing consumer surplus
Price discrimination
Advertising
Auctions
Monopolistic Competition and Oligopoly
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Monopolistic competition
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Oligopoly models
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Game Theory & Applications
Managing conflict and cooperation
Managing risk and uncertainty
Managing imperfect information
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Adverse selection
Screening
Signallng
Moral Hazard
Principal Agent problems and contract design
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Externalities and Public Goods
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Externalities
Externalities and property rights
Externality and market failures
Correcting market failures
Common Property resource
Public goods
Students will be assessed through the following mechanisms:
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Assignments = 20%
Test 1 = 40%
Test 2 = 40%
Title/Author
Edn/Year/ISBN Publisher
COMPULSORY READINGS
1. Microeconomics by Robert S. Pindyck & Daniel L. Edition: 7th
Rubinfeld
Year: 2009
2. Ivan Png and Dale Lehman, Managerial Economics,
Asia Pacific Edition.
3rd edition
3. Lecture Notes
4. Other readings assigned during course
Aims & Objectives | Modes | Syllabus | Asessment | Text & Readings
Pearson
Prentice
Hall
Blackwell