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Thompson Rivers University 50th Anniversary
Thompson Rivers University 50th Anniversary

ECON 3041: Managerial Economics

Students focus on the application of economic models and rationale choice to business decision making. Topics include an overview of managerial economics; demand and supply; costs of production and the organization of the firm; market structure and pricing and output decisions; game theory and pricing strategies; and the economics of information and the role of government in the marketplace.

Objectives

After completing this course, students will be able to:

  • List the different goals and constraints that firms face
  • Apply the economic way of thinking to individual decisions and business decisions
  • Use calculus (first and second order derivatives) to solve for an optimum solution
  • Understand how prices get determined in markets, how market participants benefit in the form of consumer surplus and producer surplus, and what are the consequences of government intervention
  • Measure the responsiveness of consumers' demand to changes in the price of a good or service, the price of other goods and services, and income
  • Understand the different costs of production and how they affect short and long run decisions
  • Derive the equilibrium conditions for cost minimization and profit maximization
  • Understand economies of scale, diseconomies of scale, economies of scope, and cost complementarities, and how each affects the cost of production
  • Explain the principal-agent problem and why different forms of compensation exist
  • Understand the four basic market models of perfect competition, monopoly, monopolistic competition, and oligopoly, and how price and quantity are determined in each model
  • Understand how game theory can be used to explain a number of business decisions
  • Explain four different pricing practices such as discrimination, two part pricing, block pricing, commodity bundling, transfer pricing, and peak load pricing
  • Understand why there is a role for the government to play in market economies

Course outline

ECON 3041: Managerial Economics includes the following six modules:

Module 1: The Fundamentals of Managerial Economics

Module 2: Demand and Supply

Module 3: Costs of Production and the Organization of the Firm

Module 4: Market Structures: Pricing and Output Decisions

Module 5: Game Theory and Pricing Strategies

Module 6: The Economics of Information and the Role of Government in the Marketplace

Required text and materials

  1. Baye, Michael. Managerial Economics and Business Strategy. 9th Edition. Boston: McGraw-Hill Irwin, (2017).
    Textbook. ISBN: 978-1-259-29061-9

Additional requirements

Computer with Internet is required for this course.

A math calculator is required, preferably with several memories, square root functionality, logarithms, correlation (regression) analysis, and financial analysis (e.g. present values and the internal rate of return).

Assessments

To successfully complete this course, students must achieve a passing of 50% or higher on the overall course, and 50% or higher on the final mandatory exam.

Assignment 1: Fundamentals of Managerial Economics 12%
Assignment 2: Demand and Supply 12%
Assignment 3: Costs of Production and the Organization of the Firm 12%
Assignment 4 : Market Structures 12%
Assignment 5: Game Theory and Pricing Strategies 12%
Final Exam * 40%
Total 100%

* Mandatory

Open Learning Faculty Member

An Open Learning Faculty Member is available to assist students. Primary communication is through the Learning Environment's "Mail" tool or by phone. Students will receive the necessary contact information when starting the course.

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