MGT 822: Managerial Economics for MMHC
Owen Graduate School of Management
Vanderbilt University
Fall Semester 2012
Professor:
E-mail:
Office:
Website:
Blog:
TA:
Luke M. Froeb
luke.froeb@owen.vanderbilt.edu
(615) 322-9057
http://www.studentdashboard.net
http://www.managerialecon.com
Keri Rich – keri.rich@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, 2nd Edition (Cincinnati:
Southwestern, 2010). (ISBN 0538771240, bundled with the economics module of
MBAPrimer.com)
REQUIRED. This is the text for the class, and corresponds closely to the lectures.

Managerial Economics module of MBA Primer
REQUIRED (BUNDLED WITH TEXTBOOK). This is a hands-on “how to” primer that
teaches the mechanics of costs, demand, marginal analysis, and benefit-cost analysis.
There are primers for Financial Accounting, Managerial Economics, Finance, Accounting,
and Statistics. Be sure to select MBA Primer Online: Managerial Economics Module
3.0, 3rd Edition and NOT any of the other primers. Read the material, do the exercises,
and take the quiz at the end of each chapter. Repeat the quizzes and review the material
until you are comfortable with the concepts and techniques. No deliverables are required
from the MBA Primer, but there are 5 quizzes on Blackboard that are almost identical to
those in the primer. The primer can also be purchased separately from the textbook at:
www.cengagebrain.com
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Student Dashboard, http://www.studentdashboard.net
REQUIRED. Puts all the chapter material: outlines, summaries, blog posts, practice
quizzes, video lectures (only for ch1-12), slides, and links for each chapter of textbook in
one place. You are responsible for all of this material, except the external links, for the
assigned chapters. For the blog, you are responsible for the ten most recent blog posts in
each chapter.
USER: 2012VanderbiltMMHC
PASS: given in class
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Managerial Econ Blog, http://www.managerialecon.com/
REQUIRED. This can be accessed through studentdashboard.net. Please feel free to post
comments. Good comments may help class participation grade.

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://hadm.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.
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:
Answer one of the group HWs 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 an issue faced by one of your companies that is similar to one of the questions at the
end of the relevant chapter. Answer 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.
As professionals, you are all aware of the importance of strong writing skills. 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 poor
diction and an awkward writing style dramatically reduce the impact of your work no matter
how good the content.
In particular, avoid jargon, and write in plain English that both grandparents could understand.
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. 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 150 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.
 Individual Assignment –
An individual assignment must be completed by the student individually, without input
from other students.
 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
Complete required readings and Primer assignments prior to each class.
August 18:
Required Reading: Preface & Chapters 1, 2, 3
MBA Primer:
Introduction: What is Managerial Economics?
Using Economics in Management Decisions
Understanding the Seller’s Costs
Quizzes 1 & 2 must be completed by Tuesday, August 23rd at 11:59PM
August 25:
Required Reading: Chapters 4, 5
MBA Primer:
Understanding the Buyer’s Demand
Understanding Markets and Profit Maximizing
Group HW #1
ODDS
Quizzes 3 & 4 must be completed by Wednesday, August 31st at 11:59PM
September 1:
Required Reading: Chapter 6
Optional Reading: Chapter 7
Group HW #1
EVENS
Quiz 5 must be completed by Wednesday, September 7th at 11:59PM
September 8:
Required Reading: Chapters 8, 9, 10
Group HW #2
ODDS
September 15:
Individual HW #1 Due in class
Required Reading: Chapters 13, 15
Optional Reading: Chapters 11, 12, 14
Group HW #2
EVENS
**Highly Recommended: strategic games exercises on Blackboard
September 22:
Individual HW #2
Required Reading:
Group HW #3
Due in class
Chapters 16, 17
ODDS
September 29:
Individual HW #3
Required Reading:
Optional Reading:
Group HW #3
Due in class
Chapters 19, 20, 21
Chapter 18, 22, 23, 24
EVENS
Online final exam must be completed by Wednesday, October 6th at 11:59PM
Complete your course evaluation through Blackboard.