GOVERNORS STATE UNIVERSITY
COLLEGE OF BUSINESS AND PUBLIC ADMINISTRATION
DIVISION OF ACCOUNTING, ECONOMICS, FINANCE AND MIS
ECON 3404-01: Managerial Economics: The Economics of the Firm
Spring 2014
Credit Hours: 3
Instructor: Dr. Evelina Mengova
E-mail: emengova@govst.edu
Office: G195
Office Hours: Monday 1:00 – 4:00 p.m. & Wednesday 1:00 – 3:00 p.m.
Time and Place: Monday & Wednesday 10:30 – 11:45 a.m., Room D34110
Catalog Description:
Deals with analysis and theoretical constructs of microeconomics applied to managerial decisionmaking.
Emphasizes consumer demand, production and cost analysis, business behavior, market performance,
and growth equilibrium.
The objective of this course is to introduce a comprehensive set of tools required for a firm's
manager to undertake well informed and efficient business decisions. To this end, the course
integrates the traditional microeconomic analysis with a treatment of contemporary
managerial topics. Emphasis will be on the ability to combine rigorous economic methodology
with managerial perspectives.
Prerequisites: Must be completed prior to taking this course.
The prerequisites for this class are ECON 2301, ECON 2302, MATH 2281 and STAT 3700.
Intended Audience: This course is only for students who have fulfilled their economics,
calculus and statistics requirements. It is not possible to take the prerequisite requirements
concurrent with this course. Students who have not successfully completed all prerequisites
(and recently) may find that a passing grade may not be in their realm of attainment.
Expected Learning Outcomes.
After successfully completing this course, students should be able to:
1. Distinguish marginal impacts from total impacts, and use marginal analysis to determine optimal choice
variables in discrete and continuous settings.
2. Identify the factors in consumer demand and producer supply, and determine a market equilibrium
graphically and algebraically.
3. Apply basic estimation techniques in determining demand and supply functions.
4. Analyze and apply the theory of consumer behavior to determine how consumers make optimal
choices.
5. Calculate various elasticities using point estimates and functional formulas, and use elasticity concepts
to determine the optimal price-quantity combination to maximize revenues and profits.
6. Determine and analyze production and costs in the short and long run.
7. Calculate industry concentration ratios, identifying the different types of market structures, and
determine how a given market structure impacts a firm’s quantity and pricing decisions.
8. Analyze the optimal quantity and pricing decisions of firms in different market structures (perfect
competition, monopoly, monopolistic competition) to achieve profit maximization.
9. Apply the tools of marginal analysis and game theory to determine pricing and quantity strategies for
firms operating in an oligopolistic market structure.
Required Readings:
1. Baye, Michael & J. Prince, “Managerial Economics and Business Strategy” 8th Edition,
McGraw Hill & Irwin, 2013.
2. Selected class handouts to be distributed as needed.
Grading:
Weekly Assignments & Homework (Problem Sets): 10%
Course paper: 10%
Presentation & class participation: 5%
Exam #1: 20%
Exam #2: 20%
Final Cumulative Exam: 35%
Grade =
(Problem Sets)*10% + (Paper)*10% + (Presentation)*5% + (Exam #1)*20% + (Exam #2)*20% +(Final
Cumulative Exam)*35%
Grading Scale:
A (90% to 100%),
B (80% to 89.9%),
C (70% to 79.9%),
D (60% to 69.9%),
F (below 60%)\
Activities/Assignments:
Weekly Assignments & Homework:
You will be completing assignments every week – both in class, and at home. Homework will
be assigned in class, and will be due by the beginning of the next class. Therefore, it is your
responsibility to follow the deadline, and to complete the homework within the deadline.
Homework will not be accepted for credit after the answers are posted.
Written Paper: Company or industry/market analysis.
The paper will be due April 28, 2014 (Monday). No late papers will be accepted. You have
plenty of time to write this paper during the semester, so start early. Have a look at the
Optional Readings for ideas on how to write your paper, and sources. The paper should be no
longer than 5 pages, including references, size 12 script, double spaced. The quality of the
paper matters, not the quantity. You should by no means copy somebody else’s paper – either
your classmate’s paper, or the papers that you use as a source of information. All papers
submitted may be scanned through turnitin.com (or any other similar system) to test for
plagiarism. Any form of plagiarism will automatically result in an “F” grade on the paper.
Presentation and Class Participation:
You will be required to present your paper in class at the end of the semester.
Your attendance in class, and especially your active participation, will have a major influence
upon your grade. We will be doing in-class exercises and going over examples and discussion
materials - therefore you are strongly encouraged to take part. A student must attend at least
80% of all classes, arrive on time, and participate actively in the in-class work, in order to be
successful in this class. If you cannot dedicate the necessary time for this class, please take it in
another semester, when you will be able to.
Exams:
The evaluation of your work will be done using primarily the grades that you obtain on the
exams. You have two (midterm) exams and a final to show how much you know about
Managerial Economics. Exam work is strictly individual. Cheating on the exams will not be
tolerated. The GSU policy applies to plagiarism and cheating. All exams are closed book and
notes; you may use only a simple calculator (no cell phones, i-phones or any other electronic
devices). Attendance at all exams is mandatory.
Optional (but recommended) Readings and Internet Resources:
The Economist : http://www.economist.com
The Wall Street Journal: http://www.online.wsj.com/public/us
Financial Times: http://www.ft.com/home/us
The World Bank: http://www.worldbank.org
The IMF: http://www.imf.org
Organization for Economic Co-operation and Development (OECD)
United States Bureau of Labor Statistics
United States International Trade Commission
World Trade Organization (WTO)
Student Responsibilities:
All Economics courses require a large amount of work. This course is no exception. Students
should expect to spend many hours mastering the material. Working on practice problems
provides students with the opportunity to use critical thinking and improve their
mathematical abilities to solve Economics problems. There is no substitute for solving
problems in Economics. In general, most students will have to spend between 9 to 12 hours per
week working on the course (reading the book, studying the material/PowerPoint slides,
working on the problem sets/homework, and preparing for the exams).
Each topic covered includes an overview, practice exercises, and homework. It also includes a
list of learning objectives. The students should pay close attention to these learning objectives,
as they are expected to master them by the end of the chapter. These objectives will be the
basis for the questions in the homework and exams. The book chapters should be followed in
the order listed, and the student should try to master the material in one chapter before
moving on to the next.
Course information:
1. Add/Drop Policy: You should comply with the GSU policy for add-drop and withdrawals.
2. I will start teaching on time and will appreciate it, if all students are in class before that.
Therefore, students are expected to arrive in class before the start of the lecture. Please inform
me, if you have to arrive late or leave early. It is also not appropriate to leave the class for a
break and return without a valid reason.
3. During the class, the use of cellular phones and laptops (ipads, etc.) is strongly
discouraged. Please switch off your cellular phones, as they can disturb the class.
4. Students are responsible for everything said in class, including any material not covered in
the book, exam dates and any changes in the reading assignments. If you miss all or part of a
class, be sure to find out from another student all the relevant material.
5. Attendance at all exams is mandatory. The professor must be notified in advance of any
unusual problem, which makes a student's taking of an exam at the scheduled time
impossible. Only rarely are such excuses accepted, in which case a prompt make-up exam will
be given. Excuses must be in writing on official letterhead stationery (that of a doctor, a funeral
director, etc.) All excuses must have an official phone number, which will be called for routine
verification of the excuse.
6. No exceptions are made to the Final Exam date.
7. “Incomplete” is virtually never given.
8. Any Academic Dishonesty by the students will be treated in accordance with the university
policy. Anyone caught cheating under any circumstances will automatically receive an “F”
grade.
Academic Dishonesty Statement:
Students are expected to fulfill academic requirements in an ethical and honest manner. This
expectation pertains to the following: use and acknowledgement of the ideas and work of
others, submission of work to fulfill course requirements, sharing of work with other students,
and appropriate behavior during examinations. These ethical considerations are not intended
to discourage people from studying together or from engaging in group projects. The
university policy on academic honesty appears in the catalog appendix, which can be found on
the website at http://www.govst.edu/catalog/appendix.htm
Disability Statement:
As a part of its commitment to providing all students equal access to university programs and
facilities, GSU complies with the American with Disabilities Act and Section 504 of the
Rehabilitation Act. If you have specific physical, psychiatric, or learning disabilities and
require accommodations, please notify the Director of Access Services for Students with
Disabilities (ASSD) during the first week of the term so that your needs may be appropriately
met. To provide documentation and register, contact the ASSD Director in person in Room
B1215; or send an email to assd@govst.edu; or call 708/235-3968. If you already are registered,
please privately contact the ASSD Director to discuss your specific accommodations.
GSU Mission Statement:
Governors State University is committed to offering an exceptional and accessible education
that imbues students with the knowledge, skills, and confidence to succeed in a global society.
GSU is dedicated to creating an intellectually stimulating public square, serving as an
economic catalyst for the region, and being a model of diversity and responsible citizenship.
Course Topic:
1. Introductions Syllabus
2. The Fundamentals of Managerial Economics Baye: Chapter 1
3. Market Forces: Demand and Supply Baye: Chapter 2
4. Quantitative Demand Analysis Baye: Chapter 3
5. The Theory of Individual Behavior Baye: Chapter 4
6. EXAM #1 Chapters 1, 2, 3, 4.
7. The Production Process and Costs Baye: Chapter 5
8. The Organization of the Firm Baye: Chapter 6
*** Spring Break. ***
9. The Nature of Industry Baye: Chapter 7
10. Managing in Competitive, Monopolistic and
Monopolistically Competitive Markets
Baye: Chapter 8
11. EXAM #2 Chapters 5, 6, 7, 8.
12. Basic Oligopoly Models Baye: Chapter 9
13. Game Theory: Inside Oligopoly Baye: Chapter 10
14. Presentations of papers
15. FINAL CUMULATIVE EXAM All chapters covered.