Managerial Economics & Finance EC611

Transcription

1 Course Unit Title: Course Unit Code: Managerial Economics & Finance EC611 Type of Course Unit: Compulsory (Compulsory/Optional) Level of Course Unit: Master (2nd Cycle) (first, second or third cycle) Year of Study: 1 Semester when the unit is delivered: Number of ECTS credits allocated: Name of lecturer(s): 2 8 TBA Learning Outcomes of the course unit: Upon successful completion of this course students should be able to: Apply managerial decision making tools for problem- solving Use statistical techniques (e.g., regression analysis) to estimate demand Decide on optimal pricing strategies under different market structures. Price discrimination, price leadership, limit pricing, collusive pricing, cost-plus pricing, and others are among the pricing strategies that will be examined Select the appropriate cost minimization strategy to enhance cost competitiveness Link management strategy concepts to microeconomic and finance concepts. Mode of Delivery: Face- to- face Prerequisites and corequisites: None Recommended optional None program components: Course Contents: Objective: The objective of the course is to familiarize students with how economic and finance tools can be utilized to aid decision making in a business organization to enable students to appreciate the contribution of economics (primarily microeconomics, but also macroeconomics) and finance to the competitive behavior of business firms to enable

2 students to employ techniques and concepts from many functional areas of business administration (marketing, finance, human resource management, etc.) Description: Topics include basic concepts, pricing and promotion decisions; expenditures, costs and production decisions; estimation of demand, cost and probabilities; estimation of cost of capital and investment decision; public enterprise and the environment of business. Topics to be discussed: I. Nature and Scope of Managerial Economics and Finance A. Scope of Managerial Economics and Finance 1. Definitions 2. Interrelationships of economics, finance, and other management disciplines B. Theories of the firm C. Nature and function of profits D. Shareholder value and the Dividend Discount Model II. Techniques of Analysis A. Optimization techniques 1. Total, average and marginal relations 2. Differential calculus and the concept of the derivative 3. Constrained optimization B. Risk and uncertainty analysis 1. Probability distributions and measures of variance 2. Utility theory and risk aversion 3. Present value analysis 4. Decision trees and simulation III. Demand Theory and Demand Estimation A. Demand functions and demand curves 1. Consumer behaviour and the derivation of demand curves B. Concepts of demand elasticities 1. Prices, cross price, and income elasticities

3 C. Demand estimation and forecasting 1. Market research, surveys, and experiments 2. Regression analysis 3. Time series forecasting and ARMA techniques IV. Production and Cost Analysis and Estimation A. The concept of the production function 1. Optimal input combinations 2. Returns to scale B. Productions costs 1. Short run and input productivity 2. Long run and economies of scale 3. Empirical production and cost functions C. Linear programming techniques and applications V. Pricing and Output Decisions under different market structures A. Perfect competition and Monopoly 1. Derivation of short and long run supply curves 2. Price and output determination in short and long run B. Oligopoly and Monopolistic Competition 1. Price and output determination in short and long run 2. Monopolistic competition and oligopoly models 3. Social welfare implications of perfect versus imperfect market structures VI. Pricing Practises 1. Price Discrimination 2. Cost-plus pricing 3. Transfer Pricing 4. Break-even analysis VII. Financial Decision Making of Business Firms A. Plant and equipment investment decisions and capital budgeting 1. Present discounted value and internal rate of return analysis 2. Mutually exclusive and fixed capital budget applications

4 VIII. IX. B. The cost of capital to the firm 1. The concept of an optimal debt equity financing mix 2. Cost of debt, equity and the cost of capital as the relevant discount rate Multinational Finance and Globalization Arguments for and against globalization Exchange and Business Risks Multinational Capital Budgeting Multinational Transfer Pricing Public Sector Decision Making A. The nature of public goods 1. The relevancy of externality B. Benefit-cost analysis and the present discounted value approach. C. Concepts of public choice theory Recent developments and contemporary issues pertaining to the subject-matter of the course. Recommended or required reading: Paul Keat and Philip Young: MANAGERIAL ECONOMICS: Economic Tools for Today s decision makers Pearson Education. Dominick Salvatore: MANAGERIAL ECONOMICS, McGraw Hill Seo, K.K.: MANAGERIAL ECONOMICS, Irwin Publishers James Pappas, L. and Mark Hirschev: FUNDAMENTALS OF MANAGERIAL ECONOMICS, The Dryden Press International. Planned learning activities and teaching methods: Class Instruction Consultation 42 Hours 5-15 Hours

5 Assessment methods and criteria: Language of Instruction: Work Placement(s): Place of Teaching: Examinations 70% Research Paper/ Assignments 20% Class Participation/ 10% Attendance 100% English No Regular Classroom European University Cyprus, Nicosia