Term : I
Course Credit : 02
No. Of Sessions : 24
Course Instructor : Dr. Biresh Sahoo
OBJECTIVE
The objective of this course is to acquaint the students with basic concepts and techniques of microeconomic analysis and their applications to managerial decision-making. Microeconomic analysis explains the behaviors of individual decision-making units such as business firms and consumers. The emphasis is on elucidating how the tools of standard price theory can be employed to formulate a decision problem, establish a decision criterion, and generate some of the information required to evaluate the alternative courses of action, and, finally, choose among the alternatives.
METHOD OF EVALUATION
Quizzes (Known & Surprise) : 20%
Assignments : 10%
Classroom participation : 05%
Group Viva-Voce : 10%
Mid-term examination : 25%
End-term examination : 30%
TOPICS
Module I: Consumer Behavior and Demand Analysis
The purpose of this module is to acquaint with the basic concepts of economic theory of consumer behavior, the demand function and demand curve, demand elasticities and their applications and techniques of demand estimation
I.1 Utility; Indifference curve; Marginal rate of substitution; Budget line; Consumer's equilibrium.
I.2 Revealed preference.
I.3 The demand-supply framework and the concept of a market
I.4 Determinants of consumer demands
I.5 The demand curve; price elasticity; cross elasticity; income elasticity
I.6 Relationship among price elasticity, total revenue, average revenue and marginal revenue
Module II: Production Decisions and Cost-Output Relationship
The focus of this module is to clarify the nature of economic costs and their relationship to choice of output and technology.
II.1 Nonparametric analysis of production process; total, marginal, and average product
II.2 Input combinations choice; Returns to scale; Production function
II.3 Various concepts of firm performance: Technical efficiency, Cost efficiency, Revenue efficiency, Allocative efficiency; Productivity growth, Technical progress, and Capacity utilization
II.4 Various concepts of costs
II.5 Cost-output relation in the short run and long-run
II.6 Long-run costs and economies of scale
II.7 Minimum efficient scale, Firm size, and Plant size
II.8 Learning curves, Economies of scale and scope
II.9 Derived demand for inputs
II.10 Cost-volume-profit analysis
Module III: Pricing under Alternative Market Structure
This module discusses standard pricing rules under different assumptions about the structure of the market in which the firm operates. It also examines certain pricing practices such as mark-up pricing, product line pricing and their relationship with optimal pricing rules of economic theory.
III.1 The Organization of the firm and the Nature of industry
III.2 Pricing in a perfectly competitive market
III.3 Monopoly
III.4 Monopolistic competition
III.5 Oligopoly
III.6 Pricing strategy
Module IV [Course on Independent Study]
This module has a flexible structure with the instructor choosing a few topics from among a selection topics covered such as follows:
IV.1 Efficiency and Productivity
IV.2 Scale Economies
IV.3 Economics of advertising
IV.4 Product quality decisions
IV.5 Game theoretic approaches to oligopoly
IV.6 Public enterprise pricing
IV.7 Pricing and output under demand uncertainty
IV.8 Economics of Information
Students who wish to conduct empirical study under my supervision on the aforementioned areas in any industry are most welcome for their summers.
TEXT BOOK
Michael R. Baye, "Managerial Economics and Business Strategy", McGraw-Hill International Edition, 2006.
SUPPLEMENTARAY READINGS
1. Robert H. Frank, “Microeconomics and Behavior”, New York: McGraw-Hill Publishing Company, 2003.
2. Hall R. Varian, “Intermediate Microeconomics: A Modern Approach”, New York: W. W. Norton & Company, Fifth Edition, 1999.
3. Gregory N. Mankiw, “Microeconomics”, International Student Edition, 2004.
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