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    Deck1 - Introduction

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    jjwright3
    This document provides an overview and introduction to the MECN 430 Microeconomic Analysis course at Kellogg School of Management, Northwestern University. The summary includes: - MECN 430 focuses on fundamental economic drivers and mechanisms underlying forces shaping strategic industry interaction. - It relates to M&S 431 which describes industry forces at a high level, and MECN 441 which uses cases to analyze concentrated industries. - The course covers topics like commodity markets, cost analysis, government intervention, pricing decisions, and concentrated markets. - Students are expected to have prerequisites in microeconomics, probability, and mathematics. The course involves homework, exams, and class participation.

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    Deck1 - Introduction

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    jjwright3
    112 views15 pages
    This document provides an overview and introduction to the MECN 430 Microeconomic Analysis course at Kellogg School of Management, Northwestern University. The summary includes: - MECN 430 focuses on fundamental economic drivers and mechanisms underlying forces shaping strategic industry interaction. - It relates to M&S 431 which describes industry forces at a high level, and MECN 441 which uses cases to analyze concentrated industries. - The course covers topics like commodity markets, cost analysis, government intervention, pricing decisions, and concentrated markets. - Students are expected to have prerequisites in microeconomics, probability, and mathematics. The course involves homework, exams, and class participation.

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    This document provides an overview and introduction to the MECN 430 Microeconomic Analysis course at Kellogg School of Management, Northwestern University. The summary includes: - MECN 430 focuses on fundamental economic drivers and mechanisms underlying forces shaping strategic industry interaction. - It relates to M&S 431 which describes industry forces at a high level, and MECN 441 which uses cases to analyze concentrated industries. - The course covers topics like commodity markets, cost analysis, government intervention, pricing decisions, and concentrated markets. - Students are expected to have prerequisites in microeconomics, probability, and mathematics. The course involves homework, exams, and class participation.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    112 views15 pages

    Deck1 - Introduction

    Uploaded by

    jjwright3
    This document provides an overview and introduction to the MECN 430 Microeconomic Analysis course at Kellogg School of Management, Northwestern University. The summary includes: - MECN 430 focuses on fundamental economic drivers and mechanisms underlying forces shaping strategic industry interaction. - It relates to M&S 431 which describes industry forces at a high level, and MECN 441 which uses cases to analyze concentrated industries. - The course covers topics like commodity markets, cost analysis, government intervention, pricing decisions, and concentrated markets. - Students are expected to have prerequisites in microeconomics, probability, and mathematics. The course involves homework, exams, and class participation.

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as PDF, TXT or read online from Scribd
    Download as pdf or txt
    of 15

    Welcome to MECN 430!

    MECN 430 Microeconomic Analysis Jakub Steiner

    The material is for the exclusive use in MECN 430 classes at the Kellogg School of Management, Northwestern University. No other use is allowed without my permission.

    How Does Microeconomics Fit Within a Business School Education?


    Marketing: frameworks and insights to discover opportunities for creating satisfied customers Finance: tools to evaluate investment projects and manage access to financial capital Accounting: practices to generate information about firm performance to external audiences and to improve internal control Operations: approaches to configuring internal activities to achieve operational efficiency Management and Organizations: frameworks for getting the most out of the people within the organization Strategy: high-level logic to fit these functions together

    These functions enable businesses to fulfill their primary purpose: delivering and creating value. Is there anything left?
    2

    This course in relation to: -M&S 431: Core strategy course


    -MECN 441: Competitive strategy and Industrial Structures

    Management and Strategy MS 431


    M&S 431 was about describing and classifying competitive forces in an industry (e.g., Five Forces) M&S 431 relies on loose verbal applications of microeconomic ideas

    This course, MECN 430, is about


    understanding the fundamental economic drivers and mechanisms underlying these forces

    Competitive Strategy and Industrial Structures, MECN 441


    Uses richer cases to develop deeper, more detailed understanding of forces shaping strategic interaction between firms in concentrated industries

    This course in relation to:


    -MECN 450: Macroeconomics

    MIcro-economics (this course) focuses on


    Individuals consumers: demand behavior of consumers in particular markets Individual firms: e.g. pricing by single firm Individual industries: how firms interact within an industry

    MAcro-economics (MECN 450) studies


    Economic aggregates: inflation, interest rate, unemployment, aggregate consumer spending.. Fiscal policy: deficit, national debt, taxation policy, social programs Monetary policy: money supply, interest rate, bank regulation International trade and exchange: trade deficit/surplus, capital movement, exchange rate fluctuations, currency attacks

    Principles
    Opportunity cost is what matters
    The Cost of Something is what you give up to get it!

    Rational individuals (should) think at the margin Individuals react to incentives


    And as a consequent changes in relative prices

    What you will learn by the end of this course


    1. Commodity markets: You will be able to evaluate major strategic bets using fact-based logically-grounded predictions about costs and prices 2. Cost: You will learn how to identify the categories of costs that are relevant for critical business decisions such as pricing, new market entry, and capacity abandonment 3. Government interventions: You will be able to construct models of how govt policies shape market interactions and the distribution of value 4. Profit-maximizing pricing decisions: You will learn how optimal pricing should balance cost and demand fundamentals 5. Concentrated markets: You will learn how to apply game theory to analyze strategic interactions

    Knowledge Prerequisites
    Microeconomics
    Knowledge of microeconomics at the level represented by On-Line Microeconomics Essentials

    Probability theory
    Probability theory at the level taught in DECS 433 Decision trees Basic familiarity with Excel tools

    Mathematics and algebra


    Mathematics at the level represented by On-Line Mathematics Essentials Calculus: derivatives of simple functions (linear and quadratic)

    Grade components
    Team and Individual homework exercises 10%
    More information on exams will be provided as the date of exams approaches

    Optional Midterm 40%

    Final examination 50%

    Kellogg Grading policy guidelines for core courses set by the Deans office: 35-40% As 5-10% Cs

    Class Participation Adjustment

    Class participation +/- 10%

    Final course score moves up or (but almost never) down by as much as 10% to reflect class participation and attendance.

    What matters for class participation is quality. I am looking for relevant, fact-based comments that move the class forward.. I will cold call on students at random

    Weekly Class Preparation


    Class participation:
    Attendance: Greatly appreciated Participation: Quality, not quantity Preparation: Readings and exercises

    Course readings:
    Case packet with cases and additional readings Optional: Besanko and Braeutigam, Intermediate Microeconomics: An Integrated Approach (3rd edition recommended)

    Types of assignments:
    Cases Group homework assignments (to be turned in) Exercises for class preparation (not to be turned in) Drill problems (not to be turned in but its important that you do them!)

    10

    Important dates and times


    Office hours: Mon, Thursday, 4-5pm
    Midterm: 90 min, in class at the usual class time and classroom, Mon Feb 6 Final: in class in week 11 Final (GIM trip or valid work-related reason) organized by student affairs office

    Classroom etiquette
    Please display your nameplate
    Do not leave then return except in an emergency Turn off your cell phone Please do not read ahead in the handouts Please do not use laptops in class

    Student Liaison Responsibilities


    The objective of having Student Liaisons is to facilitate greater two-way communication between the faculty and students Responsibilities include:
    Be a sounding board for the faculty member on student related issues Communicating any scheduling conflicts regarding assignments, classes, or exams to professors Organizing dates for lunches with professors and students Collecting TCEs and turning them in to Student Affairs during the last class Responsibilities will be very similar to Academic Rep responsibilities in 1st quarter core classes

    Time commitment for the student should be no more than an aggregate of 2-3 hours of the term

    Microeconomic analysis

    There is no new economy; just the old economy with a new technology
    Jack Welch

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