Course Outline: Managerial Economics (ESB 1001)

Area: Economics, Strategy and Business | Credit: 3

Programme: PGDM | Duration: June to September, 2019 | Term: I
_______________________________________________________________________
Instructor(s) Name : Paramita Mukherjee
Email : p.mukherjee@imi-k.edu.in
Phone (Extn no.) : 033 6652 9667
Meeting Hours : By prior appointment through email.
_______________________________________________________________________

Course Description
The main focus of the course is to make the students aware about how economic concepts can be
used for managerial decision making. The course provides the basics of microeconomic tools
and their applications in managerial decision making. It encompasses concepts like market
demand and supply, the theories of production and cost using examples from different sectors of
the economy. It also discusses different forms of market, e.g. competitive and imperfectly
competitive markets such as monopoly, oligopoly etc., competitive strategies and strategic
interactions of firms through game theory and their pricing strategies. Emphasis will be on
applications of these theories. The students, after completing the course, will have a grasp on
how economists think about business problems and will be able to apply tools from the course to
a variety of these problems and connect real life scenarios with the things learnt regarding how a
market works.

Course Objectives

 Demonstrate an understanding of the economic principles in managerial decision-

making.
 Be familiar with the principles of rational decision-making behaviour
 Be able to analyse and interpret economic data for use in decision-making
situations and provide solutions highlighting key data and assumptions
 Have a clear idea about the basis on which economic policies are made

Mapping between Course Objectives and Program Objectives

Program Objectives Course Course Course Course

Objective 1 Objective 2 Objective 3 Objective 4
Program Objective 1.1
Demonstrate enhanced oral and
written communication
capability in business situations.
Program Objective 1.2
Demonstrate capability to make
effective presentations related
to business cases and research
I
through correct and precise use
of language leading to logical
conclusions.
Program Objective 1.3 √ √
Demonstrate awareness of
socioeconomic environment,
both domestic and international
Program Objective 2.1 √ √
Demonstrate values for ethical
decision making
Program Objective 2.2 √ √
Demonstrate ability to discern
between ethical and non-ethical
practices in business situations.
Program Objective 3.1 √ √ √
Demonstrate enhanced
analytical thinking in business
situations.
Program Objective 3.2 √ √
Demonstrate ability to solve
business problems based on
analytical thinking.
Program Objective 4.1 √ √
Demonstrate understanding of
general management and
functional areas of business
organizations.
Program Objective 4.2 √ √ √
Demonstrate ability to apply
concepts, tools and techniques
of gen. management as well as
functional areas to real life
situations.

Pedagogy
Lectures, in-class discussions, numerical and conceptual applications, case analysis and Group/
Individual assignments/projects.
It is strongly recommended that every student keeps abreast of current economic issues and
debates. An excellent source of global information is The Economist. Reading either The
Economic Times or Business Line or any other financial newspaper daily is a must.

Limited number of tutorials may be arranged based on students’ requirements. See students’
handbook for details in this regard.

II
Evaluation Criteria

Evaluation Component Weightage

Mid Term Examination 20
End Term Examination 30
Quiz 20
Project Presentation/Viva 30

Mid Term (20) : Mid Term will be conducted after 10 classes. It will be of 1.5 hours’
Duration.
End Term (30) : End Term will be conducted after 18 classes. It will be of 2 hours’
duration
Quiz (20) : At least 2 quizzes will be conducted having equal weights. Quizzes may or may not
be pre-announced. There will not be any make-up quiz for surprise quizzes.

Project Presentation/ Viva (30) : The group project topics will be given around 16th session.
The powerpoint presentation in hard copy, for each group should be sent within the deadline (to
be communicated in due course) and then group viva will be conducted.

Resources

The textbook forms the basic reading material for the course. In addition, the participants are
also supposed to go through the readings recommended in the course outline. Course participants
are also required to regularly go through academic journals, business magazines and websites.
Cases will be discussed during the course.

Text book: Stiglitz and Walsh, Economics, Student Edition in India, W.W. Norton

Reference books:

i. Mark Hirschey, Managerial Economics, Cengage Learning India

ii. Pindyck, Rubinfeld and Mehta, Microeconomics, Pearson and Prentice Hall
iii. O’Sullivan, Sheffrin and Perez, “Microeconomics: Principles, Applications and Tools”,
Pearson
Apart from these, articles from newspapers/ Economist etc. will be referred as and when
required.

Internet resources: There are several web sites that have interesting economic information and
analysis, viz. www.ft.com (Financial Times), www.economist.com (The Economist). For
economic data, Indian government web sites are good: http://home.nic.in and www.rbi.org.in.

III
Detailed Session Plan

Session
Topic/s Readings/Tasks
No.
1 Introduction to Managerial Economics : S&W, Chapters 1 and 2
Basics of Economic Analysis, Key Concepts and
Overview

23456 Market Demand and Supply S&W, Chapters 3 and 4

Demand and Supply Analysis, Equilibrium and Conceptual and
comparative statics, Elasticity, Elasticity and Revenue, numerical applications
Government Intervention
Case discussion:
Alusaf Hillside Project
(HBS Case)
QUIZ 1

7 and 8 Consumer Behaviour, Individual Demand and S&W, Chapter 5

derivation of market demand, consumer surplus Discussion/Solution of
applications
9 - 10 Theory of Production S&W, Chapter 6,
Applications
Production function, average and marginal
productivity, one and more variable inputs, returns to
scale

MID-TERM

10-11 Theory of Cost : short and long run cost curves S&W, Chapter 6,
Applications
Case discussion: Lille
Tissages (HBS Case)
12- 13 Market Structure: Perfect Competition – definition, S&W, Chapters 7 and
short and long run equilibrium; break even and some parts of 10
shutdown points. Application

QUIZ 2

14- 15 Imperfect Markets: Monopoly and Monopolistic S&W, Chapters 11 and

Competition – short and long run equilibrium of a 12
monopolist, comparison with perfect competition; Conceptual and

IV
Session
Topic/s Readings/Tasks
No.
antitrust policies; role of competition commission in numerical applications
India; equilibrium under monopolistic competition

16-17 Oligopoly, Game Theory of Strategic Behaviour : S&W, Chapters 12 and

Prisoners’ dilemma, Nash equilibrium, illustration 14
with business situations, discussion of select oligopoly
forms, cartels
18 Pricing Practices: Mark-up, Price Discrimination, S&W,
Peak-load Off-load Pricing. Two-part Tariff, Handouts (parts of
Dumping, Bundling Chapter 15, M Hirschey)

19-20 Project Viva

END-TERM

Academic integrity

a) Plagiarism is the use of or presentation of ideas, works that are not one’s own and which
are not common knowledge, without granting credit to the originator. Plagiarism is
unacceptable in IMI Kolkata and will invite penalty. Type and extent of penalty will be at
the discretion of the concerned faculty.

b) Cheating means using written, verbal or electronic sources of aid during an examination/
quiz/ assignment or providing such assistance to other students (except in cases where it
is expressly permitted by the faculty). It also includes providing false data or
references/list of sources which either do not exist or have not been used, having another
individual write your paper or assignment or purchasing a paper for one’s own
submission. Cheating is strictly prohibited at IMI Kolkata and will invite penalty as per
policies of the Institute.

TUTORIALS:

Tutorial 1: Equation of a Straight Line, slope of equation, numericals on demand and

supply, elasticity (around session 6/7)

Tutorial 2: Problems on Theory of Cost (around session 11/12)

Tutorial 3: Problems on Perfect Competition (around session 14)

Tutorial 4: Game Theory and Oligopoly (around session 17)