Punjab College of Commerce

Course Code: Program: M.com Credit Hours: 3

Course Title: Managerial Economics First Semester Total Sessions: 32

Course Description: Managerial Economics is a key branch of economics at graduate level. This is basically applied microeconomics though it uses macroeconomic variables also. The subject matter deals with the economic theory and its application in business management. The course provides a unifying theme of managerial decision making around the theory of the firm. It examines the process whereby a firm can reach optimal managerial decisions in the face of constraints in todays dynamic market. It covers a variety of topics such as demand Analysis, Estimation and forecasting, market structure, production and cost analysis, pricing practices, economic optimization and risk analysis. A strong grasp of the principles that govern the behavior of economic agents (firms, individuals and government) is a vital managerial talent. The course provides practical guidelines to students to analyze in depth the managerial decisions in the market. It enables students to comprehend the complexity, risk element, and key success in business. A sound background of mathematical and statistical tools makes the understanding of the subject matter more interesting and easier. Learning Objectives: After studying this course the students should be able: a. Understand the key role of managers in decision making b. c. Analyze firms decision making process Examine how a firm achieves its aims and objectives most efficiently

d. e. f. g.

Understand functioning of different markets Meet the challenges of the risky businesses Formulate price strategies in different markets Become confident in making managerial decisions

Recommended Text Book: Managerial Economics by Dominick Salvatore Supplementary Text Books:

Course Contents: The Fundamentals of Managerial Economics 1. Goals and Constraints 2. The Nature and Importance of Profits 3. Understanding Incentives 4. Understanding Markets 5. Time and Value of Money 6. Marginal Analysis 7. Basic Calculus: The Calculus of Optimization Demand and Supply 1. Demand 2. Consumer Surplus 3. Supply 4. Producer Supply 5. Market Equilibrium 6. Price Ceilings and Price Floors 7. Comparative Statics: Changes in Demand and Supply

8. Price Elasticity of Demand 9. Price Elasticity, Total Revenue, and Marginal Revenue 10. Factors Affecting Price Elasticity 11. Cross Price elasticity 12. Income Elasticity of Demand 13. Other Elasticities 14. Elasticities for Non-linear Demand Functions Costs of Production and the Organization of the Firm 1. The Production Function 2. Profit-Maximizing Input Usage 3. Isoquants and Isocosts 4. Cost Minimization and Optimal Input Substitution 5. The Cost Function 6. Long-run Costs and Economies of Scale 7. Multiple Cost Functions and Economies of Scope 8. Methods of Procuring Inputs and Optimal Input Procurement 9. Managerial Compensation and the Principal-Agent Problem Market Structures: Pricing and Output Decisions 1. The Nature of Industry 2. Perfect Competition 3. Monopoly 4. Monopolistic Competition Game Theory and Pricing Strategies 1. Simultaneous Move, One Shot Games 2. Basic Pricing Strategies 3. Strategies that Yield Even Greater Profits 4. Pricing Strategies for Special Cost and Demand Structures

5. Pricing Strategies in Markets with Intense Price Competition The Economics of Information and the Role of Government in the Marketplace 1. Asymmetric Information 2. Auctions 3. The Role of Government in the Marketplace