Economic Analysis for Management

ABOUT THE COURSE:Economic Analysis for Management is a course which focuses on application of microeconomics to business. Microeconomics is the branch of economics which studies individual (consumer or producer) behaviour when faced with a set of constraints. As a manager in a firm, you will have to take decisions on how much of a good to produce, which product lines to keep in operation, what technology to use in producing the good, how much of various inputs to use in producing the good, and crucially, what price to charge for the good. The various models that we will develop in this course will make an attempt to answer the above mentioned decision problems, and will also facilitate in evaluating price intervention policies. We will approach this subject from both a theoretical and applied perspective.INTENDED AUDIENCE: MBA/MSc (Economics)/MComINDUSTRY SUPPORT: Manufacturing, Services, Consulting

Syllabus

Week 1: Introduction to Microeconomics for Managers, Fundamentals of Demand and Supply, Market Equilibrium, Factors affecting Demand and Supply, Comparative Statics
Week 2:Price Elasticity of Demand, Elasticity and Revenue Maximization, Marginal Analysis I
Week 3:Marginal Analysis II
Week 4:Theory of Consumer Behavior I – Preferences, Utility, Indifference Curves, Marginal Rate of Substitution, Budget Constraint
Week 5:Theory of Consumer Behavior II – Optimal Choice, Market Demand curve, Income Effect and Substitution Effect, Two applications of the theory of consumer behavior
Week 6:Producer Theory I – Inputs and Production Function, Law of Diminishing Returns, Marginal Rate of Technical Substitution, Returns to Scale
Week 7:Producer Theory II – Cost Minimization in the Long Run and Short Run, Input Demand curves
Week 8:Producer Theory III – Cost Curves in the Short Run and Long Run, Economies of Scale
Week 9:Market Structure I – Perfect Competition; Short Run supply curve, Long Run supply curve
Week 10:Welfare Analysis in competitive markets
Week 11:Market Structure II – Monopoly and its Regulation, Natural Monopoly, Regulating a natural monopoly
Week 12:Capturing surplus – different types of price discrimination