MANAGERIAL ECONOMICS

Course Code: CC 103

Faculty: Dr. Mary Joseph T.

COURSE OBJECTIVE
The objective of this course is to make the student understand the application of
economic theory in decision making and to study ramification of managerial
economics in global economy. The course emphasizes strategic managerial decision-
making.

KNOWLEDGE CONTENT
• Provides an understanding of the economic environment and its impact on
strategy formulation
• Offers experiential analysis to understand the challenges of CEOs and General
Managers in adapting to the changing economic environment
• Offers ideas and tools to understand the forces of local and global economies,
including governmental regulations, international relations, global consumers,
global production and international business
• Focuses on the impact of economic policies on managerial decision-making,
by providing an understanding of fiscal policy, and local and global economic
issues affecting business

SKILL CONTENT
After completing the course the student will be able to

• To Understand and evaluate changes in economic phenomena over time.

• Estimate economic changes which affect corporate world.
• Make wise decision in the face of uncertainty in management field.

ATTITUDE CONTENT

The course is expected to build confidence using analysis of economic environment.

REFERENCE

1. Managerial Economics 6th revised edition; D N Dwivedi

2. Managerial Economics; P L Mehta
3. Business Economics; V G Mankar
4. Managerial Economics; Craig Peterson and Cris Lewis
 CLASS PLAN
WEEK MODULE TOPICS TO BE COVERED
Managerial economics –Definition and scope. Steps in
decision making, basic concepts that aid decision making –
incremental concept, discounting concept, opportunity cost
concept, time concept, equi-marginal concept. Application
of these concepts using case lets.
1-4 Module I Demand analysis-Factors affecting demand, equilibrium of
the consumer based on cardinal and ordinal utility,
changes in consumer’s equilibrium-price effect, income
effect and substitution effect. Elasticity of demand,
different types of elasticity, their applications.

Demand forecasting, Methods of forecasting demand for

consumer non durable goods, consumer durables and
5–6 Module II capital goods, uses of demand forecast. National income
and use of National income data for demand forecasting.

Supply - factors affecting supply - Cost analysis – cost

concepts - short run and long run cost curves - why cost
curves are “U” shaped? Laws of returns, Economies of
scale and economies of scope. Production possibility curve,
production function, production function with two variables.
7 – 10 Module III Isoquants, best production possibility.
Cost-Volume-profit analysis - calculation of break-even
point, Margin of safety, calculation of margin of safety,
calculation of output for earning the targeted profit,
calculation of break-even point for multi-product firms.
Uses of break-even analysis for decision- making.
Economics systems. Investment decision under capitalism.
Project evaluation technique, merits and de-merits of each
technique; extended benefit-cost analysis, EIA statement.
11 – 12 Module IV Impact of Fiscal and Monetary policies on resource
allocation. Balance of payment and its impact on the
economy.

Market structure- different types of market-perfect,

imperfect monopoly, duopoly, oligopoly, monopolistic,
monophonic and bilateral monopoly. Price discrimination
under monopoly- conditions for price discrimination, when
13 – 15 Module V price discrimination is profitable?
Pricing – Pricing in practice, different pricing policies,
transfer pricing. Theories of the firm.