BUS 531: Managerial Economics (MBA) Course Syllabus Term 5 Summer 2011 Course Title: Course Number: Professor: Email Address: Virtual Office Hours: Managerial Economics (MBA) BUS 531 (MBA) Dr. Thomas Hardy hardyfinancialplanning@comcast.net Contact via e-mail Phone #: 734-678-0580 Fax #: 877-468-4432 Course Description This Managerial Economics course studies the role of economic theory in management analysis and decisions. The study of demand, cost, and supply theories from a business viewpoint are also covered. This course is about economic principles and their relevance to business decision-making. We will explore the interaction of information, economic incentives and market competition and how these interact to determine prices, products available, profits, and patterns of trade and organization. At the end of this course, students should be able to understand how basic economic reasoning can lead to improved managerial decisions. Student Outcomes Course Goals After completing this class you should be able to: Use the rational-actor paradigm to predict firm and individual behavior. Compute the relevant costs of any decision. Use marginal analysis to make extent (how much) decisions. Make investment decisions that increase firm value. Set optimal prices and price discriminate. Predict industry-level changes using demand/supply analysis. Develop long-run strategies to increase firm value. Use game theory to predict how your actions influence those of others. Bargain effectively Make decisions in uncertain environments. Solve the problems caused by moral hazard and adverse selection. Align individual incentives with the goals of the company. Identify unconsummated wealth-creating transactions and devise ways to profitably consummate them. 1
Information Literacy Students will determine the level and extent of information required to fulfill professional responsibilities. Students will learn where and how to access the information effectively and efficiently. Students will be able to critically evaluate the sources of information and know what information to use to accomplish their purpose. Students will understand the economic, legal and social issues surrounding the use of information in order to use the information ethically and legally. Creation of Value Students will be able to effectively communicate information and recommendations to those relying on their education, training and expertise. Students will synthesize information to support their conclusions and recommendations. Statistical Data Analysis Students will learn to organize, order attribute, weight, screen, evaluate and use information and data. They will be able to query required information to ultimately use raw data in the pursuit of creating recommendations and to add value to conclusions. Text Information: Managerial Economics: A Problem Solving Approach 2 rd Ed Author s name Froeb, Luke and McCann, Brian Year of publication 2008 Publisher Southwestern (Cengage) ISBN Number 978-0-5387-7124-5 (Bundled with MBA Primer) Managerial Economics module of MBA Primer (Bundled with textbook: http://v2.mbaprimer.com) Both the textbook and the MBA Primer are required for this course. The Bundled price is at significant discount to purchasing each individually. Where to Purchase Books Where to Purchase Books You can go to CLU s online bookstore efollet by using the following link: http://www.callutheran.bkstr.com Or you can use purchase or rent from the publisher: www.cengagebrain.com/shop/en/us/storefront/us?cmd=catproductdetail&isbn=978-0- 538-77124-5 (make sure there is no space between the 978-0- and the 538 in your browser url address window) Course Assignments/Assessments Class Chat A 60-90 minute chat session will be held each week on Tuesday starting at 6:00 PM Pacific Time. In the chat session the instructor will review issues from the previous week as well as discuss material from the current week and respond to student questions. During some chat sessions students will make group presentations. Student attendance and participation is required unless prior arrangements have been made with the instructor. The chat session will be archived for student review and PowerPoint slides used by the instructor will be distributed to the class. 2
View Lesson Each module contains a voice-over PowerPoint presentation reviewing the module topics. Discussion Forum Students will discuss topics relevant to the module material in the Discussion Forum. Group Homework Some weeks students will be assigned to groups and will answer a homework problem selected by the group. The solution will submitted as a Wiki and as a PowerPoint presentation and one or more groups will present their solution to the rest of the class. MBA Primer This is a hands-on how to primer that teaches the mechanics of costs, demand, marginal analysis, and benefit-cost analysis. There are primers for Financial Accounting, Managerial Economics, Finance, Accounting, and Statistics. Be sure to select MBA Primer Online: Managerial Economics Module Volume 2, 2nd Edition and NOT any of the other primers. Read the material, do the exercises, and take the quiz at the end of each section. Repeat the quizzes and review the material until you are comfortable with the concepts and techniques. Quiz yourself using variations of the MBA Primer questions. No deliverables are required from the MBA Primer itself. Feel free to start working on the MBA Primer as soon as you have purchased it. When you have completed studying the material from the MBA Primer during the first four weeks, you will take a quiz. The quizzes are timed and count toward the course grade. Mid-Term Exam: A Mid-term exam will be given at the end of the fourth week and will be comprehensive over the material of the first four weeks. The exam is timed, single access, and contains questions similar in difficulty and content to the timed quizzes. During the last half of the course students will complete sets of untimed homework problems that will assist in preparing them for the Final Exam. These homework sets will have a small (<5%) contribution to the final course grade. Final Case Study The final case study will be an in-depth analysis of one of the key topics covered in the course. The case study will be an individual effort and will be due at the beginning of the last week of class. Selected students will present their results during the final chat session. Final Exam: The final exam will be a one-time access, timed activity. The course material builds upon itself so the final exam will be comprehensive over the entire course however the exam will primarily emphasize material covered after the mid-term exam. Note that the final exam will not be a large portion of the total grade since student knowledge and performance will be assessed over the entire term through quizzes and homework, the final case study, the mid-term exam, forum discussions and participation. 3
Grading Assignment Type Points Discussion Forum 120 Group HW 100 zes 80 30 Mid-term Exam 100 Final Case Study 100 Final Exam 100 Total Points 630 MBA candidates are expected to meet all deadlines. All assignments must be submitted no later than the date due to receive credit. The only exception is when there are extenuating circumstances that are outside the student's control and PRIOR arrangements have been made with the instructor. As professionals, you are aware of the importance of strong writing skills. Letters, reports, and even short e-mail notes all indicate to others our ability to communicate. Since good writing follows clear thinking, others will form opinions about your ability and work ethic based upon written correspondence. Typographical errors, grammatical errors, misspelled words, or poor diction and an awkward writing style dramatically reduce the impact of your work no matter how good the content, as do errors that come from not paying attention to details such as leaving off dollar or percent signs. Grading Scale: Course grades will be awarded as follows: Percentage Grade 94% A 90% to 93% A- 87% to 89% B+ 84% to 86% B 80% to 83% B- 77% to 79% C+ 74% to 76% C 70% to 73% C- 67% to 69% D+ 64% to 66% D 60% to 63% D- <60% F 4
Course Outline Week Readings Assignment Description 1 Froeb Ch 1 Introduction Froeb Ch 2 The One Lesson of Business Froeb Ch 3 Benefits, Costs and Decisions MBA Primer Intro What is Managerial Economics? MBA Primer 1 Using Economics in Management Decisions 2 Froeb Ch 4 Extent (How Much) Decisions Froeb Ch 5 Investment Decisions MBA Primer 2 Understanding the Seller s Costs 3 Froeb Ch 6 Simple Pricing Froeb Ch 7 Economies of Scale and Scope MBA Primer 3 Understanding the Buyer s Demand Group Homework 4 Froeb Ch 8 Understanding Markets and Industry Changes Froeb Ch 9 Relationships Between Industries Froeb Ch 10 Strategy, the quest to slow profit erosion MBA Primer 4 Understanding Markets and Profit Maximization Mid-Term Exam 5 Froeb Ch 11 Using Supply and Demand Froeb Ch 12 More Realistic and Complex Pricing Froeb Ch 13 Direct Price Discrimination Froeb Ch 14 Indirect Price Discrimination 6 Froeb Ch 15 Strategic Games Froeb Ch 16 Bargaining Group Homework 7 Froeb Ch 17 Making Decisions with Uncertainty Froeb Ch 18 Auctions Froeb Ch 19 The Problem of Adverse Selection Froeb Ch 20 The Problem of Moral Hazard 8 Froeb Ch 21 Getting Employees to Work in the Best Interests of the Firm Final Case Study Timed Final Exam 5
Technical Requirements and Support Students are required to have a computer, e-mail and Internet access to enroll in this course. This course is delivered via online instruction. All materials with the exclusion of the textbook are delivered via the Internet. Technical support is available 24/7/365. Please see the section on Technical Help for more information. Students should also have access to Microsoft Excel and an additional statistical software package to be determined. Policy on Instructional Modification California Lutheran University is committed to providing reasonable accommodations in compliance with ADA of 1990 and Section 504 of the Rehabilitation Act of 1973 to students with documented disabilities. If you are a student requesting accommodations for this course, please contact your professor at the beginning of the semester and register with the Accessibility Resource Coordinator, Wendy Perkins, for the facilitation and verification of need. The Accessibility Resource Coordinator is located in the Center for Academic and Accessibility Resources (CAAR) Office in the Pederson Administration building, and can be contacted by calling 805.493.3878 or emailing wperkins@callutheran.edu Statement on Academic Honesty: Academic honesty the fair and straightforward representation of what one has actually learned, researched, and/or written is the foundation of a healthy environment for learning. Professors, administrators, and students are responsible for upholding high moral and ethical standards of academic honesty in all academic endeavors, and the academic community of the University must support the policy that any form of academic dishonesty is a serious breach of ethics and will be dealt with surely and appropriately. California Lutheran University defines scientific misconduct or research misconduct as fabrication, falsification, plagiarism, or other practices that seriously deviate from those that are commonly accepted within the scientific community for proposing, conducting, or reporting research. It does not include honest error or honest differences in interpretation or judgments on data. Intellectual property rights are to be respected at all times, with appropriate recognition/reference given to informational sources. Plagiarism occurs whenever a source of any kind has not been acknowledged. Every student must understand the correct procedures for acknowledging and identifying sources of borrowed material. The basic rule is this: Give credit where credit is due. In other words, if you include any material which is beyond your first hand experience, and which is not common knowledge of scholars in your field, you must cite your source in a way that your reader can [a] find the source from the information in your reference and [b] immediately determine which information of your source s contribution to scholarship and which is yours. 6