MGT 822: Managerial Economics for MMHC
Owen Graduate School of Management
Vanderbilt University
Fall Semester 2014
Professor:
E-mail:
Office:
Website:
Blog:
TAs:
Luke M. Froeb
luke.froeb@owen.vanderbilt.edu
(615) 322-9057
http://www.cengagebrain.com
http://www.managerialecon.com
Sarah Berhalter:
sarah.berhalter@owen.vanderbilt.edu
Lee J Webb:
lee.webb@owen.vanderbilt.edu
Course Goals
After completing this class you should be able to:
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Use the rational-actor paradigm to predict firm and individual behavior.
Compute the relevant costs of any decision.
Use marginal analysis to make extent (how much) decisions.
Make investment decisions that increase firm value.
Set optimal prices and price discriminate.
Predict industry-level changes using demand/supply analysis.
Understand the long-run forces that erode profit
Develop long-run strategies to increase firm value.
Use game theory to predict how your actions influence those of others.
Bargain effectively
Make decisions in uncertain environments.
Solve the problems caused by moral hazard and adverse selection.
Align individual and division incentives with the goals of the company.
Manage relationships between upstream suppliers or downstream retailers.
Find unconsummated wealth-creating transactions and devise ways to profitably
consummate them.
Class Material
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Froeb, L. M., Managerial Economics: A Problem-Solving Approach, 3rd Edition (Cincinnati:
Southwestern, 2013). (IBSN13: 978-1-133-28488-8), bundled with Coursemate Printed Access Card)
REQUIRED. This is the text for the class, and corresponds closely to the lectures.
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Cengage Coursemate for Managerial Economics: A Problem-Solving Approach, 3rd Edition.
https://login.cengagebrain.com/cb/login.htm
REQUIRED: [BUNDLED WITH TEXTBOOK] This book comes bundled with Coursemate, an
interactive tool with access to a digital version of the text and additional resources. For every
chapter you will find flashcards, homework solutions, interactive quizzes, video lectures from
Professor Froeb and more. Please become familiar with and utilize this tool as it will assist
with both your understanding and performance in the course. Though no deliverables come from
coursemate, much of the material found in the interactive and sample quizzes for each chapter are
similar to the class quizzes, and completion of them is a great way to prepare.
Note: Use the access code found on the card in the textbook to set up and create your
account. Do not lose or dispose of this card! Once your account has been created, use the link
above to access the log-in page. After logging in, you may be prompted to enter a Course Keyignore it, as that is not required to access the chapter resources on the left. For any issues
setting up the account please contact Sarah (sarah.berhalter@owen.vanderbilt.edu)
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Managerial Econ Blog, http://www.managerialecon.com/
REQUIRED. Please keep up with the blog. You may see homework, quiz, and exam questions that
come directly from the blog. Please feel free to post comments. Good comments count towards
class participation grade; bad comments hurt. When you read a blog post, try to make up a
problem based on the post, and post it in the comments to the blog. A link to the blog and the
content that applies to specific chapters can also be found in Coursemate.
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Economics Interactive Tutorials by Samuel L. Baker, Ph.D., Associate Professor University of South
Carolina, Norman J. Arnold School of Public Health, Dept. of Health Administration
(http://hspm.sph.sc.edu/courses/econ/Tutorials.html)
RECOMMENDED. While these interactive tutorials have a health care focus, they do an excellent
job of introducing basic concepts of economics, especially for students with little background in
economics. They are freely available at the above URL. I strongly urge those of you without a
strong economics background to go through these. No deliverables are required from these
Interactive Tutorials; however, these interactive tutorials are great practice for testing yourself on
the concepts and the quizzes or for those who require additional assistance.
Deliverables & Grading
Class Participation
Best 4 of 5 online quizzes
Best 2 of 3 Individual HWs
3 Group Presentations (slides and memo)
Final Exam covering readings, lectures, MBA Primer
+/- 5%
20%
10%
35%
35%
Group HWs:
Group Homework:
Write a <500 word memo AND a <= 3-page power point presentation written to a decision maker at
one of your companies. The memo and presentation should implicitly answer one of the group
problems at the end of one of the assigned chapters. These are a designed to give you an opportunity
to apply the ideas in class to your own companies.
Choose a problem faced by one of your companies and analyze it by pretending that you are a
consultant hired to fix a problem within your company. You analysis should implicitly answer 3
questions:
1. What’s wrong?
2. How do we fix it?
3. How much will the company save by fixing it, compared to either the status quo or another
alternative solution? This answer should have a specific number with back up support.
Letters, reports, and even short e-mail notes all indicate to others our ability to communicate. Since good
writing follows clear thinking, others will form opinions about your ability and work ethic based upon
written correspondence. Typographical errors, grammatical errors, misspelled words, or an awkward
writing style dramatically reduce the impact of your work no matter how good the content. In particular,
avoid jargon (see article by Alfred Kahn on Bureaucratese), and write in active, not passive voice.
Individual HW’s:
Like the Group HW’s, the Individual HW Questions are found at the back of each chapter, and
are similar to those that will appear on the Final Exam. The assignments will be posted on
blackboard a week before their due date. To make sure that you understand the material, try
these questions on your own. If you cannot do them, you need help in the class. Ask
questions in class. Ask questions of your classmates. Explain your answers to your friends or
classmates (There is an old saying in economics—you never learn economics until you teach
it to someone else.). You are allowed to discuss the questions with your classmates, but do
not look at their written HW. Everything you turn in is to be your own work. Get help
from classmates or from class TAs. If you would like to set up time with a TA to answer
questions you have about the material, please email them directly (copy me on the e mail).
Do not expect them to give you the answers or to verify that you have the right answer.
Learning this material is hard work, and the only way you can learn it is by doing the
questions yourself. If you cannot answer the question in less than 250 words, then you don’t
understand the question.
If you have any questions about grades submit your question in writing to me.
Course Honor Code Policy
Students are bound by the Honor Code and the following specific guidelines for all work in this
course. All work is to be YOUR OWN, CREATED AND COMPLETED BY YOU ALONE. When in
doubt, ask the professor.
Specific Guidelines:
The following describes the guidelines for Managerial Economics homework, quizzes, and tests:
 Blackboard Quizzes – Do these on your own. Any communication about the Blackboard
quizzes between a student who has taken the quiz, and one who has not, is a violation of
the Owen Honor Code. Do not print out the quizzes, even after you have taken them. I do
not want hard copies floating around because I may use these in other programs and in
subsequent years.
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Individual Assignment
On individual homework assignments in this class, you may discuss the concepts and questions
with your classmates, but do not look at or copy their written work. Each assignment is to be
prepared and completed by the individual. In short, all work submitted must be your own.
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Data Sources and Tools
Each student is responsible for following assignment instructions with respect to what
data sources and tools may be used. If outside sources are used, proper citations are
REQUIRED. Materials from prior courses at Owen or similar courses at other institutions
are prohibited unless specifically authorized by the professor. Again, when outside
sources are used, they should be cited appropriately by the student.
Overarching Guidelines
 Plagiarism, which includes the unauthorized use of previous years’ materials (e.g.,
examinations, case analyses, homework assignments, quizzes, etc.), is a violation of the
Honor Code.
 Written deliverables must use appropriate citations to signify when arguments
or analyses rely on the ideas or insights of others, including any of the readings in the
class pack. It is not necessary to reference the case study you are preparing a written
analysis of.
 Quizzes are to be completed individually with no outside help. Quizzes are closed-book,
closed-note, closed-browser assessments. Any deviation from these guidelines is a
violation of the Honor Code.
 Any use of analyses or any other material in any format from previous offerings of this
course, other courses taught at Vanderbilt or other universities, or on the Internet, is a
violation of the Honor Code. This includes the use of materials in multiple classes without
consent of the instructors.
 Above all, maintain your personal integrity.
If you are in doubt as to the type or amount of collaboration allowed on an assignment, it is
always your responsibility to consult with the professor. Failure to do so is not an acceptable
excuse.
Course Calendar
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Assigned chapters and videos must be completed prior to class. Discussion each session will be focused around
these resources, so come prepared and expect to be cold-called. (Note: links to videos for Chapters 1-14 are
contained in this syllabus. The other videos are being updated and links will be included soon and posted on
blackboard!)
Blog posts associated with each chapter can be found on coursemate or through the link at the beginning of the
syllabus. Featured blog posts for each chapter are noted below and must be read prior to class, though reading
additional blog postings is strongly encouraged. In addition to the featured posts below, students are
responsible the content of any new postings (8/1/14 and beyond). Content from the blog will be discussed in
class and is fair game for quizzes and exams.
Sample quizzes are short, 5 question quizzes found on coursemate and linked below. These will not be graded,
but should be taken as preparation for the official scored quizzes as they are indicative of the material you will see.
Longer interactive quizzes are also available on coursemate for those who want additional preparation
Coming to class prepared (readings and videos) and ready to participate, keeping up with blog entries
(featured and new) and taking the quizzes associated with each chapter are the best ways to prepare and do
well in this class. This preparation will set you up for success on all homework, groupwork, scored quizzes and
the final exam
Date
August 16
Time period
8:00am3:00pm
Assignments/Quizzes
Assigned Reading: Preface and Chapters 1-3
Chapter 1 Video
Chapter1 Sample Quiz
Homework
Chapter 2 Video
Chapter 2 Sample Quiz
Chapter 2 Featured blog "For those of you who get
queasy during economics class"
Chapter 3 Video
Chapter 3 Sample Quiz
Chapter 3 Featured
opportunity costs?"
Quiz 1
August 21
5:50-9:00pm
blog
"Can
you
recognize
Quiz 1 must be completed
by Wednesday, August 20th at 11:59pm
Assigned Reading: Chapters 4-5
Chapter 4 Video
Chapter 4 Sample Quiz
Chapter4 Featured Blog "America's top chef uses
marginal analysis"
Group HW #1 (ODDS)
Chapter 5 Video
Chapter 5 Sample Quiz
Chapter 5 Featured Blog "Is Nashville's pension fund
doubling down?"
Quiz 2
August 28
5:50-9:00pm
Quiz 2 must be completed
by Wednesday, August 27th at 11:59pm
Assigned Reading: Chapters 6,8
Chapter 6 Video
Chapter 6 Sample Quiz
Chapter 6 Featured Blog "Did Netflix raise its prices
Group HW #1 (EVENS)
enough?"
Chapter 8 Video
Chapter 8 Sample Quiz
Chapter 8 Featured Blog "Demographic changes shift
housing demand"
Quiz 3
Sept 4
5:50-9:00pm
Quiz 3 must be completed by Wednesday, September
3rd at 11:59pm
Assigned Reading: Chapters 9-10
Chapter 9 Video
Chapter 9 Sample Quiz
Chapter 9 Featured Blog "Making people pay for their
prejudices"
Group HW #2 (ODDS)
Chapter 10 Video
Chapter10 Sample Quiz
Chapter 10 Featured Blog "Business School Strategy"
Quiz 4
Sept 11
5:50-9:00pm
Quiz 4 must be completed by Wednesday, September
10th at 11:59pm
Assigned Reading: Chapters 13-14
Chapter 13 Video
Chapter13 Sample Quiz
Chapter 13 Featured Blog "Do Tourists pay more than
locals?"
Group HW #2 (EVENS)
Individual Homework 1
Due in class
Chapter 14 Video
Chapter14 Sample Quiz
Chapter 14 Featured Blog: Antitrust "Common Sense
Guidelines"
Quiz 5
Sept 18
5:50-9:00pm
Quiz 5 must be completed by Wednesday, September
17th at 11:59pm
Assigned Reading: Chapters 15-16
Chapter 15 Featured blog "How to win the game of
chicken"
Group HW #3 (ODDS)
Individual Homework 2
Due in class
Chapter16 Featured blog "Bankruptcy gives cities
bargaining power"
Sept 25
5:50-9:00pm
Assigned Reading: Chapters 19, 20,21
Chapter19 Featured Blog "Advice for selling on eBay"
Chapter 20 Featured Blog "Why Seat Belts Kill"
Group HW #4 (EVENS)
Individual Homework 3
Due in class
Chapter 21 Featured Blog "Admonish or Applaud
Employee Outsourcing"
Online Final exam must be completed by Wednesday, October 1st at 11:59PM
Complete your course evaluation through blackboard