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Lal Bahadur Shastri Institute of Management, Delhi

Post Graduate Diploma in Management (Part Time)


Semester II

Course code: 312001 Course Title: Managerial Economics


Academic Session: 2015-18 Instructors: Prof. Megha Chandhiok

COURSE OBJECTIVES:
1. Acquaint the students with basic principles of microeconomics and their applications in
business decision making.
2. To introduce international dimension into managerial economics to reflect the
globalization of consumer tastes, production and distribution in todays world

COURSE CONTENT

Module Session Topic & Readings


n No
o .
.
I 1 Introduction to Managerial Economics: Economics and managerial
decision making; Important Economic concepts and terms,
Concept of Economic profit and Accounting profit; Economic
goal of the firm and business decision making.

Readings
1. H. Craig Peterson & W. Cris Lewis, Sudhir K Jain (2006);
Managerial Economics; 4rd ed., Chapter -1
2. Dominic Salvatore (2012); 7th Ed., Managerial Economics:
Principles and Worldwide Applications, Chapter -1

Exercises
Terminology of Basic Concepts to be prepared by students.
Caselet Two Wheeler Industry.
Caselet on Economic and Accounting profit.

1
II 2-3 Demand Analysis: Market demand, Market Supply, Market
equilibrium, Demand concepts, Types of demand,
determinants of market demand.

Consumer behavior: Utility analysis and Indifference curve analysis;


Price, Income and Substitution effects,
Demand analysis for various products and situations; Elasticity of
demand, (price, income, cross price, advertising); Elasticity of
Substitution, Using elasticity in decision making process.
Readings

1. Dominick Salvatore (2012); 7th Ed., Managerial Economics:


Principles and Worldwide Applications, Chapter -3
2. Paul G. Keat & Philip K. Y. Young (2005): Managerial
Economics; 6th ed. Chapter 3&4
3. Principles of Economics, 4th edition by N Gregory Mankiw-
Ch 4, 5, 7, 21)

III 4-5 Demand Forecasting/Applications: Application of techniques of


demand forecasting, Qualitative techniques and quantitative
techniques.
Readings
1. Dominick Salvatore (2012); 7th Ed., Managerial Economics:
Principles and Worldwide Applications, Chapter -5
2. Sampath Mukherjee: Business Economics; Chapter 12

IV 6-8 Production and Cost Analysis: Isoquants and Isocost line,


Expansion path, The short run and long run production function; Law
of variable proportions (Returns to factor) and Returns to Scale, Cobb
Douglas Production function, The importance of production functions
in managerial decision making.

Cost concepts: short run and long run cost functions, Cost-Output
Relationships, Cost of multiple products, Break-even point,
Economies of Scale-internal and external, The Learning Curve
Economics of Scope, Cost Volume Analysis-an economic perspective.
Readings
1. H. Craig Peterson & W.Cris Lewis, Sudhir K Jain(2006);
Managerial Economics; 4rd ed., Chapter -6,7
2. Dominic Salvatore (2012); 7th Ed., Managerial Economics:
Principles and Worldwide Applications, Chapter -6,7
3. Paul G. Keat & Philip K. Y. Young (2005): Managerial
Economics; 6th ed. Chapter 7&8;
Exercises:
Caselet: Call centers: Applying the production function to a service

VI 9-11 Market Analysis: Market Structures: Competition and market types

2
in Economic analysis, Perfect and Pure Competition, Imperfect
Competition, Monopoly, Monopolistic Competition, Oligopoly: Basic
features, pricing and output decisions under different kinds of
competitive situations, Collusive (Tacit and explicit collusion
:Centralized Cartel and Market Sharing Cartel) and non - collusive
Oligopoly, Price leadership: Barometric price leader ship and
Dominant price leadership
Readings
1. H. Craig Peterson & W. Cris Lewis, Sudhir K Jain(2006);
Managerial Economics; 4rd ed., Chapter -8,9
2. Dominick Salvatore (2012); 7th Ed., Managerial Economics:
Principles and Worldwide Applications, Chapter -8,9
3. More, Pal & Gupta; Managerial Economics; 2nd Ed, Chapter-5
Tata McGraw Hill Pub. Ltd. New Delhi

V 12 Pricing Practices
Pricing of Multiple Products; Price Discrimination: Degrees of price
discrimination; Peak load pricing; Cost plus or Markup pricing; Price
Skimming; transfer pricing.

Readings
1. Dominic Salvatore (2012); 7th Ed., Managerial Economics:
Principles and Worldwide Applications, Chapter -11
2. H. Craig Peterson &W. Cris Lewis; Managerial Economics; 3rd
ed. Chapter-12
Case: The London 2012 Olympic Games, Harvard Case Study, 2010

VII 13-14 Market and Competitive Analysis: Competitors and Competition,


Porters structural analysis model.
Reading
Cherunilam Francis (2007), Business Environment-text and cases,
Himalaya Publishing.
Case: Toyota Motor Corp.: Launching Prius by Forest
Reinhardt, Dennis Yao, Masako Egawa, Jan 13, 2006, Harvard
Case Study
15 Two classes for group presentation

Presentation of End term Project: To be decided by the concerned course instructor

PEDAGOGY
The teaching methodology used in this course will be a judicious mix of lectures,
numerical problems, Caselets, assignments, discussions and presentations by the students.

EVALUATION PARAMETERS
The course will be evaluated on the following basis:

3
End Term Examination: 50 Marks
Internal Examination: 50Marks
( division of marks to be decided by the course instructor)

LEARNING RESOURCES:

Recommended Readings:
1. Dominick Salvatore (2012), 7th Ed., Managerial Economics: Principles and
Worldwide Applications, Oxford University Press
2. Paul G. Keat & Philip K. Y. Young: Managerial Economics (2005), 6th ed.,
Pearson Publication
3. Managerial Economics-Text and Cases, P.L Mehta , 4th Edition, S. Chand and
sons
4. Suma Damodaran (2010), 2nd edition Oxford University Press, New Delhi
5. A. Koutsoyiannis (1979), Modem Micro Economics ; 2nd ed. Macmillan
Press, Hong Kong
6. Managerial Economics; More, Pal & Gupta: 2nd ed. Tata McGraw Hill Pub.
Ltd. New Delhi
7. Managerial Economics; Samuelson W.F. & Marks S.T; The Dryden Press 3 rd
ed.
IMPORTANT

Students, especially with non-economics background, are advised to consult the


following dictionaries for enhancing the understanding of the concepts and terms
used in managerial economics. These are available in the library at LBSIM.

1. The New Palgrave A Dictionary of Economics (Four Volumes)


2. Dictionary of Economics, Donal Rutherford
3. Macmillan Dictionary of Modern Economics

INDIVIDUAL ASSIGNMENT
Glossary of terms to be prepared
Exercises
a) Elasticity and Market Structure
b) Production Analysis
Exercises on Caselets
GROUP ASSIGNMENT: Real life Project on Economic Analysis for a product of
choice. This project should be submitted in report form and presentations to be made as
per the schedule given.

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