BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE, Pilani

Pilani Campus
AUGS/ AGSR Division

FIRSR SEMESTER 2021-22

COURSE HANDOUT
Date: 20.08.2021

In addition to part I (General Handout for all courses appended to the Time table) this portion gives further specific details regarding the course.
Course No : MPBA G501
Course Title : Managerial Economics
Instructor-in-Charge : Leela Rani
Instructor(s) : None
Tutorial/Practical Instructors : Leela Rani
1. Course Description:
The course provides to the students:
1. An insight into the scientific & analytical methods, techniques and tools of economics
2. A precise and comprehensive coverage of fundamental concepts in economics
3. Suitable real world applications & examples to expose him/her to possibilities of implementing concepts in business and economic practices and polices
4. Approach to integrate different aspects of a firm’s economic decisions within the firm’s framework as well as find & understand connections with the macroeconomic
environment

2. Scope and Objective of the Course:

This course aims at providing an overview of comprehensive coverage of fundamental concepts, analytical tools understanding economics of business decision making for a
profitable and sustainable status in dynamic business environment. While the primary unit of analysis is firm, the coverage of this course would enable finding &
understanding connections of firms’ decisions with its industry and the macroeconomic environment at large.

3. Text Book:
Truett & Truett, "Managerial Economics", John Wiley & Sons, 8th edition, Singapore, 2004
Additional class notes will be provided for few modules.
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 BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE, Pilani
Pilani Campus
AUGS/ AGSR Division

5. Reference Books:

R1. Managerial Economics 6Ed. (English) 6th edition, Dominick Salvatore, Ravikesh Srivastava
R2. Hirschey, “Economics for Managers”, Thompson, New Delhi, 2006.

5. Course Plan:
Modul Lecture Session Ref. Learning outcomes
e
PART- I The firm and it’s environment
1 Introduction to basic Chap 1 + Introduction to the nature and scope of managerial economics, economic goals of firms. Know optimal decision-
principles & methodology notes making, principles of decisions, why firms operate and sustainability aspects for firms.
2 Chap 2 + Basics of demand and supply, market equilibrium, firm’s demand, circular flow of the economy, utility & consumer
Revenue of the firm
notes choice
3 Price elasticity of demand, it’s measurement & relation with revenue; Income elasticity of demand, factors affecting
Demand analysis & estimation
Chap 3 elasticity, cross price elasticity and elasticity use for decisions, economic relationships based on elasticities
4 Chap 4 Need for forecasting, qualitative forecasting & techniques of forecasting - time series analysis, smoothening
Economic forecasting
techniques, exponential smoothening techniques, Barometric methods, econometric models
Part two: Production, cost and profit maximization
Production function, it’s organization & estimation, production Function with single input & with two inputs; least
5 Production analysis Chap 5 cost combination of inputs and related concepts, effect of change in input prices, returns to scale, empirical
production functions, short run and long run production functions
6 Cost of production Chap 6 Nature & types of costs, short run & long run cost functions, plant size & economies of scale 7 scope, learning
effect, choosing optimal plant size, estimation of cost, understanding international cost considerations
7 Profit analysis of the firm Chap 7+
Profit maximization, shot down point, break even analysis, incremental profit analysis, sustainability & profits
notes
Part three: Markets and behavior of the firm
8 Perfect competition & Chap 8 Perfect Competition (PC): basics, assumptions & pricing, short run analysis of PC firm, long run analysis of PC
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 BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE, Pilani
Pilani Campus
AUGS/ AGSR Division

firm. Monopoly, its setting & sources, short run & long run price and output determination, comparing PC &
Monopoly
monopoly
9 Monopolistic competition & Chap 9 Monopolistic competition: basics and settings, short run & long run price and output determination, product
oligopoly variation & selling expenses. Oligopoly: meaning and sources, duopoly: Cournot’s Model, Bertrand’s model, kinked
demand curve & cartels, profitability & efficiency for oligopoly firms
10 Games, information and Chap 10 Games & their strategic importance, dominant strategy & Nash equilibrium, prisoner’s dilemma, price and non-
strategy price competition, repeated games & strategic moves
11 Topics in pricing and profit Chap 11 Pricing of multiple products, price discrimination, transfer pricing. Two part pricing, bundling, alternatives to profit
analysis maximization, pricing and international trade
12 Factor markets & profit Chap 12 Profit maximizing employment of one variable input, equilibrium prices for inputs in PC, monopsony, bilateral
maximizing employment of +notes monopoly markets. Employment economics of women in economy (qualitative).
variable inputs
Part four: Firm and the public sector
13 Chap 15 Micro- versus macroeconomics in public sector analysis , public sector's product, resource allocation and the
Economics of Public sector supply of public goods, cost-benefit analysis , its applications, project design, public investment and the discount
rate, cost-benefit analysis and divergent public objectives, pitfalls & future of cost-benefit analysis

14 Chap 16 Managers and the law, types of law affecting the firm, administrative agencies and the law, regulated industries,
Legal and Regulatory
price regulation, regulation of "unregulated industries", laws, regulations, and the firm's strategy, trends and
Environment of the firm
example in regulatory issues
Several articles, case studies and exercises will be incorporated from time to time with advance announcements on Nalanda for learning and evaluation.

6. Evaluation Scheme:
Component Duration Weightage Date & Nature of component
(%) Time (Close Book/ Open Book)

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 BIRLA INSTITUTE OF TECHNOLOGY AND SCIENCE, Pilani
Pilani Campus
AUGS/ AGSR Division

Mid semester test 2 hrs. 24% TBA Closed book

Quizzes (2/3) 20 min. 10% TBA Closed book
Case studies (2/3) 50 min. 16% TBA Open book
Excel based ex. (1) 50 min 5% Sep.- Oct Closed book
Project & viva Take home 10% Sep-Oct Open book
th
Comprehensive 3h 35% 17 Dec. Open book
Examination

7. Chamber Consultation Hour: Thursday 5.00 pm to 6.00 pm (with prior appointment)- same link used for class

8. Notices: All notices will be put on Nalanda

9. Make-up Policy: Only in case of medical conditions (with prior permission)

10. Note (if any): Students must keep themselves updated with current affairs

Instructor-in-charge