N R Institute of Business Management

Course Design and Session Plan Micro-Economics

PGDM (Term-I)1 - (2011-12) Introduction
All people make economic decisions and participate in economic activities every day. Economics is the study of how people make decisions about producing, exchanging and consuming goods and services. This course explores the microeconomic theory and its relevance and applications to both managerial and public-policy decision- making. The course begins with a closer look at supply and demand curves, including the concepts of elasticity and indifference curves. It then moves to product markets, including how businesses organize themselves into industries. Several industrial strategies will be modelled, including Perfect Competition, Monopoly, Monopolistic Competition, and Oligopoly. The later part of the course focuses on developments in the field of game Theory and Information Economics. This course contributes to the students' understanding of how microeconomics can be used as a tool for decision- making. A key benefit is that the student will have a new perspective to use in analyzing personal economic situations, professional arenas, and as an individual voter and citizen

Course Objectives
By the end of the course, the student should be able to:

Describe the basic concepts in Managerial Economics Analyze and forecast demand for consumers goods Determine and estimate production and cost functions Evaluate pricing decisions

Evaluation This course relies on a variety of assignments in exploring Organizational Behaviour including various readings, online and in the textbook, exams, writing assignments,

Facilitator: Neha Patel

discussions, and group projects that entail collaborative learning, case studies, research projects, and written essays. Class Participation Quizzes Assignments Group Project Semester examination 10% 20% 20% 20% 30%

Textbook: 1. Mankiw, (2010) Principles of Microeconomics, 4th Edition, Cengage Learning

Reference Books: 1. Geetika, Ghosh Piyali & Choudhury Purba, (2010) Managerial Economics, 4th Edition, McGraw Hill 2. 3. Mankiw, (2011) Economics: Principles & Applications, 11th Edition, Cengage Learning Pindyck Robert, Rubinfeld Daniel, Mehta Prem (2009), 7th Edition, Pearson

Session Plan
Sessions 1,2&3: Introduction: Managerial Economics (Macro & Micro) nature& scope Learning Goals Nature & Scope of Micro & Macro Economics Circular Flow of Economic Activity. Objective of a Firm Constrained Decision Making Pre- session Activity Students to draw a circular flow model that correspond to the flow of goods & services & flow of dollar for the following: Martin earns Rs. 50/ hr working in factory Maria purchases new pair of earrings for Rs. 500 Madelines Bakery pays Rs, 2500 as rent Assignment to be announced during session Pre-Reads Why you should study economics (Pg- 35)

Module I: Introduction to Micro-Economics

4,5&6: Basic Concepts of Economics

Concept of: Economic Profit, Opportunity Cost & Accounting Profit Functional Relation: Total, Average & Marginal EquiMarginalism Time perspective in Decision Making Determinants of Market Demand Law of Demand Demand Function and its relationship with Total and Marginal Revenue Elasticity of Demand Price Elasticity, Income Elasticity, Cross Elasticity Using Elasticity in Decision Making Determinants of Market Supply Law of Supply Determination of Market Equilibrium Demand Forecasting

Evolution & Economics (Pg- 56)

Module II: Economic Concept of Demand & Supply

7, 8 , 9 , 10, 11, 12 & 13 : Demand, Supply & Market Equilibrium Students to make up an example of a demand schedule for Pizza & graph the implied demand curve Suggest an example of situation that would shift this demand curve Suggest if the price of pizza could shift the demand curve Political Unrest Shifts the Supply Curve (Pg-81) Case Study: Two ways to reduce the quality of smoking demanded Case Study: Rent Control in the short run & the long run Ticket Scalping: supply meets demand on sidewalk

Sessions 14 , 15 , 16 & 17 : Production Analysis

Learning Goals Production Function Production Function with one variable input short run analysis Production Function with two variable input long run analysis ISO COST ISO QUANT Economies of Scale

Pre- session Activity Assignment to be announced during session After the 14th session, students are required to submit their projects and make presentations on the same as per the schedule to be announced during sessions Students to give examples of 3 different trade offs that they have faced in life & to discuss the opportunity cost of each one of such tradeoffs

Pre-Reads The Luddite Revolt Case Study: Productivity & Wages

Module III: Production & Cost Analysis

18 , 19 , 20 & 21 : Cost Analysis

Economic concept of cost Opportunity Cost Explicit and Implicit Cost Marginal, Incremental and Sunk Cost Short run Cost function Long run Cost function Contribution Analysis, Break Even, Operating Leverage Estimation of Cost Function

Case Study: Near-empty restaurants & off-season miniature golf course

Module IV: Market Structures & Macro- Economy

22 , 23, 24 , 25 & 26 : Market Structure Price output under Perfect Competition Price output under Monopoly Price output under Monopolistic Competition Price output under Oligopoly Barrier to Entry and Strategic Behaviour leading to Imperfection National Income, Real National Income, Per Capita Income Human Development Index, Physical Quality of Life Index Gross Domestic Product, Gross National Product, Net National Product Assignment to be announced during session Case Study: The DeBeers Diamond Monopoly The global fight against cartels (Pg-351) Case Study: OPEC & the World Oil Market

27, 28 : Indicators of Economic Growth

Students to give a write up Indias Current GDP, National Income, GNP & HDI

Economic profiles of various nations SWOT analysis of Indian Economy

Sessions 29 , 30 : Monitory Policy

Learning Goals Bank Rate Open Market Operations Cash Reserve Ratio & Statutory Liquidity Ratio

Pre- session Activity Will undergo a discussion on RBIs current stand on Money Supply.

Pre-Reads Fed under Fire Case: Prof. Tom & Monitory Policy

Quizzes Quizzes aim at keeping the participants in-tune with the subject on a continuous basis. They will be used as the instrument to provide constant feedback to the participants on the basis of their performance to seek necessary improvements. The schedule for the same will be announced during the sessions. Project Students will be required to undertake a project which will be carried out in groups of 6. They will have to select a company of their interest & collect & analyze following information w.r.t. that company: 1) The supply & demand of the company 2) Point at which company is able to achieve Equilibrium 3) Economies of Scale applicable at the organization 4) Compare company information with industry Allocation of companies will be on first come first serve basis. Students will have to prepare comprehensive report for the same and present it in the class. Detailed guidelines on projects & project report writing will be given during sessions.