BS2560: Managerial Economics

School Cardiff Business School
Department Code CARBS
Module Code BS2560
External Subject Code 100449
Number of Credits 20
Level L5
Language of Delivery English
Module Leader Professor Annette Roberts
Semester Double Semester
Academic Year 2013/4

Outline Description of Module

The Managerial Economics module examines a series of specific decision problems facing managers in modern firms and other institutions. These problems include the appropriate use of economic information to inform strategic and policy decisions, decision-making under conditions of uncertainty, the management of risk, and then the use of price and non-price decisions as strategic options.

The module aims to enhance some of the skills and materials obtained in the year 2 Microeconomic Theory module and will provide support for year 3 modules in Industrial Economics, Modern Business Enterprise, and Business Applications.

The module develops scientific decision frameworks and evaluation techniques to help solve a range of managerial problems, and explores the practical limitations of applying economic logic to business decision-making.

The module aims to develop, through teaching and learning, subject-specific and transferable skills, including technical, analytical and research skills.

On completion of the module a student should be able to

A. Knowledge and Understanding:

  • students will understand the key strategic economic problems facing modern business firms and institutions and be able to apply economic principles to a range of long term and short term decision problems.
  • recognise the potential and limits of economic principles as an aid to managerial decision-making and in analysis of strategic decisions.

B. Intellectual Skills: 

  • analytica lskills:  Students are expected to apply logical analysis to economic problems.
  • evaluative skills: Be able to accurately classify decision problems, and apply appropriate methods in seeking solutions to problems facing managers.

C. Discipline Specific Skills: 

  • appreciate the usefulness and limitations of economic theory to decision-making.
  • recognise the significance of limitations and constraints on decision-makers in the  firm, and to develop methods to deal with these problems in decision-making.
  • accurately report solutions to decision-making problems, highlighting key data, assumptions and environmental contexts.

D. Transferable Skills: 

  • work individually, setting goals and developing ideas.
  • problem solve using a range of quantitative methodologies.
  • develop logical and concise solutions to specific decision-type problems.
  • respond accurately to questioning on researched topic areas.
  • organise and analyse data on defined topics.
  • use a variety of information and technology resources, including electronic data sources and the internet.

 

How the module will be delivered

Teaching occurs in the Autumn and Spring semesters.  There are approximately 44 hours of contact comprising 34 hours of lectures and 10 hours of classes. Lectures provide students with an outline of the course material.  Students are encouraged to read around the module topics through a series of key reading from core texts, and with supporting information from satellite texts.  Classes concentrate on set numerical and essay style problems allied to the core lecture material. Students prepare answers to problems, deliver brief presentations of solutions, and participate in class discussions.

Classes explore particular decision situations in more detail. Class questions typically require a mix of qualitative and qualitative solutions.

Indicative study hours:   200

How the module will be assessed

The essay-style assignment will examine students understanding of key concepts and theories in Managerial Economics and will test their ability to relate these to a relevant example or case. The assignment will be submitted during the early part of the Spring Semester and should be no longer than 2,000 words.

The examination at the end of the Spring Semester is based on material covered in both Semesters. Students will have to answer four questions from a possible eight. There are a range of question types, including essay questions and multi-part quantitative/discussion mix questions. Students will demonstrate that they understand the theoretical foundations of the module, provide critiques of ideas and methodologies where necessary, and be able to apply logical, scientific approaches to decision-making in a range of decision situations.

 

Assessment Breakdown

Type % Title Duration(hrs)
Exam - Spring Semester 80 Managerial Economics 3
Written Assessment 20 Essay N/A

Syllabus content

  • How do businesses use economic information?This includes business forecasting, methods and analytical cases, use of economic models and input-output analysis.

  • Pricing techniques and analysis.Topics include pricing and the competitive environment, pricing in practice, strategies in pricing and entry and exit decisions.

  • How do firms make investment decisions in the presence of uncertainty?This includes cost of capital estimation, Modigliani and Miller ideas, financing of investments and capital structure optimisation.

  • Estimating and using cost information in a competitive environment.  Included are topics such as relevant costs for decision-making, cost estimation techniques, including statistical analysis, survivor analysis, engineering cost techniques and learning curves.

  •  Industry analysis.Using industry data to support business decisions; key sector analysis, strategic analysis of firms.

  • Location decisions as strategic economic choices. Topics include spatial competition, agglomeration economies, increasing returns, central place theory, industrial districts, and analysis of competition through geographical space.

  • Contracting, governance and organisational form. Included are introductory issues in determining the scope of firm operations, and decisions to outsource activity.

  • Government regulation. This includes an introduction to regulatory issues and examples and cases of firms’ responses to regulation.

  •  Bidding and auction design: This topic explores various types of auctions, optimal bidding strategies for buyers, the winner’s curse, and optimal auction design.

Essential Reading and Resource List

J. R. McGuigan, R. Moyer, and F. H. Harris, Economics for Managers, 12th Edition (South-Western, Cengage Learning 2012) 

H.C. Petersen and W.C. Lewis, Managerial Economics, 4th Edition (Prentice-Hall International 1999)

D. Besanko, D. Dranove, M. Shanley, S. Schaefer, Economics of Strategy, 5th Edition, (Wiley, 2009)

J. A. Brinkley, C. W. Smith and J. L. Zimmerman, Managerial Economics and Organizational Architecture, 5TH Edition, (McGraw-Hill, 2009).


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