Institute of Management

Course Pack

MBA-132 Managerial Economics

June - August 2019

Course Anchor : Dr. A. Shivakanth Shetty

Faculty Members
Dr. Kavita Mathad
Dr. R.Hemalatha
Dr. Malini Nair
Dr. Anuradha A
Dr. Shivakanth Shetty
Dr. Subburaj
Dr. Sangeetha M

1
 COURSE PLAN – Managerial Economics MBA 132
SECTION I
Semester I Class MBA

Course Code MBA 132 Course title Managerial Economics

Hours 30 Hours per week 3

Faculty name Dr. A. Shivakanth Shetty Contact details +7975878482

Class policies  Before the class, students are expected to read the relevant chapters
and (from the text book), case study, or news articles in Session Content
guidelines and come prepared.
 Individual analysis of cases, followed by group learning during the
class hours using case study method would be enabled;
 Interactive mode of learning/discussions during the class will be
observed
 Active participation in class and completion of case study and
research based assignments, prescribed in the course plan is
expected.
 Late submissions will attract penalty; Loss of 1 mark for each day’s
delay
 All members of the academic groups are expected to contribute
towards class preparation and group assignments; Should members
of the group face any issue, they must report to the faculty-in-charge
well in advance. For CIAs, the freeloading members will be marked
zero , without prior warning.

Course This course is offered in first trimester to equip students with the art of
Description managerial decision making at the firm level. Managerial Economics
introduces the student to the concepts of markets, pricing and managerial
decision making. The primary objective of this course is to discuss the
fundamental principles of microeconomics and how these principles can
be applied to managerial decision making.

The first part focuses on essential concepts such as scarcity and efficiency,
problems of economic society, demand analysis, elasticity, consumer
behaviour, producer behaviour, and cost analysis. The second part of the
course focuses on advanced topics in economic analysis, with a focus on
strategic behaviour of the business firms, different kinds of market
structures and pricing strategies.

Course The main objective of the course is to make students learn the application
Objectives of economic concepts and theories in business decisions and managerial
decision making.

2
 Course Knowledge: (CL 01) (CL02)
Outcomes  Application of economic analysis and techniques in solving
managerial problems.
 Combine micro economics with various quantitative methods
in a problem solving and decision making.
 Use economic analysis in identifying and evaluating decision
alternatives.
 Understanding the competitive environment of firms.
 Examining the factors that influence firm performance.
Skills : (CLO 13) (CLO 15)
 Usage of Excel in analyzing economic information
 Estimation of Demand using Excel
 Preparation and Presentation of Industry Reports

Attitude : (CL0 21) (CLO 23)

 Design optimal combinations for use of scarce resources with
the marginal cost – benefit analysis.
 Evaluate and compare the various types of market structures
and use them when planning price policy in industry,
 Understand and appreciate the production dynamics –
including cost, revenue and profit considerations

Level of Knowledge

 Understand basic concepts and practical application in

relevance
 Learning the art of decision making and integrate with other
inter-disciplinary subjects
 Useful in understanding the optimal combination and trade off
with available alternatives

COURSE SYLLABUS: Managerial Economics

Unit I Introduction (4 Hrs)

Introduction to Managerial Economics-Economic Systems-Principles of managerial
economics, Integration with other managerial decision making process-Tools and analysis of
optimization-role of Government, private**, Competition Vs Cooperation. Relationship with
other management subjects*.

Unit II Demand and Supply Analyses (Application) (6 Hrs)

Definition of demand, Law of demand and its determinants and exceptions, movement along
the demand curve and shift in demand curve. Demand and supply relationship*. Definition
of supply, Law of supply, Movement along the supply curve and shift in supply
curve, Factors affecting supply, Market equilibrium and pricing, floor price and ceiling price.
Application of demand and supply analyses: Concepts of elasticity, degree, determinants &
types,practical implication,Relationship of Revenue and elasticity of demand, Demand

3
forecasting and its use in demand. Qualitative and Quantitative interpretation of demand
techniques-model specification using regression and OLS.

Unit III Consumer Behaviour (Application) (6 Hrs)

Introduction to Consumer behavior, Utility, Cardinal approach, Ordinal approach,
Consumer’s equilibrium using Indifference curve analysis and Consumer surplus,
Application of Indifference curve analyses.

Unit IV Analyses of Production, Costs and Revenues (5 Hrs)

Production functions, Law of Variable proportions, returns to scale and economies of scale.
Producers surplus- Costs , Isoquants, Least cost combination types of costs , Short run costs
and long run cost, Revenue Analysis –TR, AR and MR, and break even analysis, ( case study)
Unit V Market structures and decision making (09 Hours)
Market types, characteristics, Perfect competition features, Price determination and
equilibrium in the short run and the long run, Monopoly - features, equilibrium condition,
Price discrimination. Monopolistic competition- features, Oligopoly - Cartels as one of the
feature of Oligopoly, Game theory-types, static and dynamic games-Pricing Strategy (Case
study), Sustainability business model- Circles of Sustainability.
[Total 30 Hours]
Essential and Recommended Reading:

Prescribed Textbooks:
1. Mankiw, N. Gregory. (2016). Principles of Micro Economics(8th ed.). New Delhi: Cengage
Learning
Recommended Reading

1. Salvatore, D. (2013). Managerial economics Principles and worldwide applications, New

York: Oxford University Press New Delhi.
2. Geetika., Ghosh., Piyali., & Choudhari, P. R. (2012). Managerial Economics.(2nd ed.). New
Delhi,India:McGraw Hill Higher Education.
3. Trivedi M.L. (2010). Managerial economics - Theory and applications . New Delhi: TATA
MC graw Hill.
4. Managerial Economics A problem -solving approach, Nick Wilkinsin,(2005)
Cambridge University press e-copy.

4
 SECTION II COURSE PACK

Unit Unit details Week Hours Pedagogy Resource/

number (starting per (teaching Reference details
and end week learning
dates) methods
used)/
activities and
or class trips/
dates for
assessment

Unit 1 Introduction to 1 3 Interactive Chapter 1 & 2

Managerial Economics Lecture Mankiw, N.
Gregory. (2015).
Principles of Micro
Economics

Introduction to 1 1.5 Interactive Chapter 1 & 2

Managerial Economics- Lecture Mankiw, N.
Economic Systems- Gregory. (2015).
Principles of managerial Principles of Micro
economics, Integration Economics
with other managerial
decision making process.

Tools and analysis of 1 1.5 Interactive Chapter 1 &2

optimization-role of Lecture, Mankiw, N.
Government, private**, Gregory. (2015).
Competition Vs Principles of Micro
Cooperation. Economics.
Relationship with other
management subjects*.

Unit 2 Demand and Supply 2 3 Interactive Chapter 4

Analysis (Application) Lecture Mankiw, N.
Gregory. (2015).
Principles of Micro
Economics

Definition of demand, 1.5 Interactive Chapter 4 & 5

Law of demand and its Lecture and Mankiw, N.
determinants and caselet Gregory. (2015).
exceptions, movement analysis Principles of Micro
along the demand curve Economics
and shift in demand

5
 curve. Demand and
supply relationship

Definition of supply, 1.5 Interactive Chapter 4 & 5

Law of supply, Lecture and Mankiw, N.
Movement along the caselet Gregory. (2015).
supply curve and shift in analysis Principles of Micro
supply curve, Factors Economics
affecting supply,

Market equilibrium and 3 1.5 Interactive Chapter 5 & 6

pricing, floor price and Lecture Mankiw, N.
ceiling price. Application Gregory. (2015).
of demand and supply Principles of Micro
analyses: Economics

Concepts of elasticity, 1.5 Field based Chapter 5 & 6

degree, determinants & experiment. : Mankiw, N.
types, practical Estimation of Gregory. (2015).
implication,Relationship Elasticity of Principles of Micro
of Revenue and elasticity Demand on Economics Field
of demand, Demand Goods and Visit and Survey
forecasting and its use in Services and
demand. Caselet on M
-Pesa

Unit 3 Consumer Behaviour 4&5 3 Interactive Chapter 7

Lecture and Mankiw, N.
Caselets Gregory. (2015).
Principles of Micro
Economics

Introduction to 1.5 Interactive Chapter 7

Consumer behavior, Lecture and Mankiw, N.
Utility, Cardinal Caselets Gregory. (2015).
approach, Ordinal Principles of Micro
approach Economics

Consumer’s equilibrium 1.5 Interactive Chapter 7

using Indifference curve Lecture and Mankiw, N.
analysis and Consumer Caselets Gregory. (2015).
surplus Principles of Micro
Economics

Application of 1.5 Interactive Chapter 7

Indifference curve Lecture and Mankiw, N.
analyses. Caselets Gregory. (2015).

6
 Principles of Micro
Economics

Application of 1.5 Interactive Chapter 7

Indifference curve Lecture and Mankiw, N.
analyses. Caselets Gregory. (2015).
Principles of Micro
Economics

Unit 4 Analyses of 6&7 3 Interactive Chapter 13

Production, Costs and Lecture and Mankiw, N.
Revenues Caselets Gregory. (2015).
Principles of Micro
Economics

Production functions, 1.5 Interactive Chapter 13

Law of Variable Lecture Mankiw, N.
proportions Mathematical Gregory. (2015).
examples for Principles of Micro
practice and Economics
Case let on
Tata Steel

Returns to scale and 1.5 Interactive Chapter 13

economies of scale. Lecture Mankiw, N.
Producers surplus- Gregory. (2015).
Principles of Micro
Economics

Costs , Isoquants, Least 1.5 Interactive Chapter 13

cost combination types of Lecture Mankiw, N.
costs , Short run costs Mathematical Gregory. (2015).
and long run cost, examples for Principles of Micro
practice Economics

Revenue Analysis –TR, 1.5 Interactive Chapter 13

AR and MR, and break Lecture Mankiw, N.
even analysis Mathematical Gregory. (2015).
examples for Principles of Micro
practice and Economics
Case Study:
Fieldfresh
Foods

Market structures and 8 to 12 3 Interactive Chapter 14, 15, 16,

Unit 5 decision making Lecture 17 Mankiw, N.
Mathematical Gregory. (2015).
examples for Principles of Micro
practice Economics

7
 Market types, 1.5 Interactive Chapter 14, 15, 16,
characteristics, Perfect Lecture 17 Mankiw, N.
competition features Mathematical Gregory. (2015).
examples for Principles of Micro
practice Economics

Price determination and 1.5 Interactive Chapter 14, 15, 16,

equilibrium in the short Lecture 17 Mankiw, N.
run and the long run, Mathematical Gregory. (2015).
examples for Principles of Micro
practice Economics

Monopoly - features, 1.5 Interactive Chapter 14, 15, 16,

equilibrium condition, Lecture 17 Mankiw, N.
Price discrimination. Mathematical Gregory. (2015).
examples for Principles of Micro
practice Economics

Monopolistic 1.5 Interactive Chapter 14, 15, 16,

competition- features Lecture and 17 Mankiw, N.
Caselet on Gregory. (2015).
Uber Principles of Micro
Economics

Oligopoly - Cartels as 1.5 Interactive Chapter 14, 15, 16,

one of the feature of Lecture 17 Mankiw, N.
Oligopoly, Mathematical Gregory. (2015).
examples for Principles of Micro
practice Economics

Sustainability business 1.5 Interactive Chapter 14, 15, 16,

model- Circles of Lecture 17 Mankiw, N.
Sustainability Mathematical Gregory. (2015).
examples for Principles of Micro
practice Economics

Essential and Recommended Reading:

Prescribed Textbooks:
2. Mankiw, N. Gregory. (2016). Principles of Micro Economics(8th ed.). New Delhi: Cengage
Learning
Recommended Reading

5. Salvatore, D. (2013). Managerial economics Principles and worldwide applications, New

York: Oxford University Press New Delhi.
6. Geetika., Ghosh., Piyali., & Choudhari, P. R. (2012). Managerial Economics.(2nd ed.). New
Delhi,India:McGraw Hill Higher Education.

8
 7. Trivedi M.L. (2010). Managerial economics - Theory and applications . New Delhi: TATA
MC graw Hill.
8. Managerial Economics A problem -solving approach, Nick Wilkinsin,(2005)
Cambridge University press e-copy.

SECTION III
Mapping: A template to map the Learning Outcomes of the course against the components
of assessment is given below:
Course Outcomes Components of assessment

CIA I CIA II CIA III ESE

CO 1 CLO 1,CLO 2 1,2 2 1,2

CO 2 13 15 13,15

CO 3 21,2 3 21 , 23

Summary of CIA Assessments

CIA 1+2+3 = 65 marks (10+25+30)

Attendance: 5 marks
ESE: 30 marks

CIA 1 – Assignment (Individual) - 10 marks (conducted for 10 marks)

CIA 2 - Mid-term examination (2 hour exam) for 25 marks (conducted for 50 marks and
converted to 25)
CIA 3 - 1) MCQ - 15 marks; 2) Group Assignment Video Interview with Strart ups on Unit
Economics- 15 marks.

9
 CIA I
Individual Report on Estimation of Impact of Elasticity of Demand and its Types on Pricing
Decisions of Managers
Details of Assignment 1: Component 1

Goal This task will allow you to research and develop a deeper understanding of
the concept of elasticity and its variants and how it determine the pricing
decisions of the managers in real life.
It also helps to find an answer for pricing problem for the common goods
being utilized in day to day life.
Assignment The report will require students to apply your knowledge of the economic
concepts especially the market forces like demand and supply and elasticity
Description of demand its variants on the pricing decisions of the managers related with
the goods and services.

The student has to conduct a filed study or survey based on the elasticity of
demand and its variants like Price Elasticity of Demand, Income Elasticity
of Demand, Cross Elasticity of Demand and Advertising Elasticity of
Demand.

The student should take example of five products or services for each types
of elasticity of demand and measure the elasticity of demand for these
products and learn the implications for the pricing decisions for managers.

Skills Assessed  Analysis of Economic Information

 Interdependence between market forces like Demand and Supply
 Measurement and Estimation of Elasticity of Demand
 Application of Concept of Elasticity of Demand in the Pricing
Decisions.
Submission End of the Third Week. Exact date to be Announced
Date
Nature of Handwritten Copy. Soft Copy will not be considered for evaluation
Submission
Submission Late submission of assessment tasks will be penalized at the following
Penalties maximum rate:
 5% (of the assessment task’s identified value) per day for the
first two days from the date identified as the due date for the
assessment task.
 10% (of the assessment task’s identified value) for the third day
.
ASSIGNMENT CLO 01, COL 02
Linked with
CLO

10
Evaluation Criteria/ Rubrics for Assignment I : Total Ten Marks
Sl. No Evaluation Dimensions/
Rubrics (2 Marks for
each Rubrics) Excellent Very Good Satisfactory
(2) (1) (0.5)
1 Accuracy and Relevance of
Economic Analysis
2 Correct and Clear
Argument
3 Communication
4 Grammar , Spelling and
Presentation
5 Report Structure and
Referencing

11
 CIA -3

Video Interview on Unit Economics for Start Ups (Group Assignment for 15 Marks)

Goal: This assignment will help the students to understand the relevance and
significance of unit economics with a particular business model of a start-
up. As profitability of a business is an important measure of success, unit
economics facilitates in projecting whether a company is profitable or not,
and when it can expect to reach profitability.
Assignment Students will require to apply the knowledge of various cost and revenue
Description concepts to arrive at the calculation of the unit economics which finally
determines the profitability and success of the business model.
The students have to conduct a full-fledged video interview with the
founder/promoter of a start-up of their choice and find out how they are
arriving at the calculation of unit economics and how a particular start up
is managing its unit economics to remain sustainable and sustainable in the
long run. Before each group interviews the promoter or founder of the
start-up, they have to show the questionnaire for the interview and seek
written permission from the concerned faculty.

Skills 1. Analysis of the Relevance and Significance of Unit Economics.

Assessed:
2. Interdependence between cost and revenue concepts in determining the
profitability and success of the business model of a start-up.
3. Measurement and Estimation of Unit Economics in a start-up.
4. Application of unit economics in determining the profitability and
success of business model of a start up

Submission To be informed by the individual faculty in consultation with HOS and

Date Course Anchor
Nature of Group Video Presentation and Discussion in Class
Submission
Assignment CLO 01, COL 02
linked with
CLO

12
 CIA -3
Video Interview on Unit Economics for Start Ups (Group Assignment for 15 Marks)

Sl. No Parameters/Rubrics ( Marks for Each Rubric) Total Marks

1 Identification of Start Up 3
2 Promoter/Founder perspectives on Unit Economics 3
3 Calculation and Understanding of Unit Economics 3
4 Examples and Application of Unit Economics 3
5 Quality of Questions, Interaction, Learning and 3
Video Quality
Total 15

CIA -3
Video Interview on Unit Economics for Start Ups (Group Assignment for 15 Marks)
Sl. No Evaluation Dimensions/ Performance Rating
Rubrics (3 Marks for
each Rubrics) Excellent Very Good Satisfactory
(3) (2) (1)
1 Identification of Start Up
2 Promoter/Founder
perspectives on Unit
Economics
3 Calculation and
Understanding of Unit
Economics
4 Examples and Application
of Unit Economics
5 Quality of Questions,
Interaction, Learning and
Video Quality

13