Unit 954: Managerial Economics

1. Introduction to Managerial Economics

• Definition and scope of managerial economics
• Importance in organizational decision-making
• Application of economic theory and methods to business problems
• Role of managerial economics in strategic planning

2. Demand Analysis

2.1 Principles of Demand

• Concept of demand and demand function
• Law of demand and exceptions
• Factors affecting demand (price, income, preferences, substitutes, complements)

2.2 Consumer Behavior

• Utility theory and consumer choice
• Budget constraints and optimization

2.3 Elasticity of Demand

• Price elasticity, income elasticity, cross elasticity
• Measuring elasticity and interpretation
• Importance of elasticity in managerial decisions

3. Production and Cost Analysis

3.1 Production Theory

• Production functions: short-run and long-run
• Law of variable proportions
• Returns to scale

3.2 Cost Concepts

• Fixed, variable, total, average, and marginal costs
• Explicit and implicit costs

3.3 Cost Functions and Economies of Scale

• Short-run and long-run cost functions
• Economies and diseconomies of scale

3.4 Cost Minimization Strategies

• Isoquants and isocost lines
• Optimal input combinations

3.5 Relationship Between Production and Costs

• How production decisions impact cost structures

4. Market Structures

4.1 Perfect Competition

• Characteristics
• Price-taking behavior
• Short-run and long-run equilibrium

4.2 Monopoly

• Characteristics
• Price setting and output decisions
• Welfare implications

4.3 Oligopoly

• Features and types (collusive and non-collusive)
• Strategic behavior
• Price rigidity and kinked demand

4.4 Monopolistic Competition

• Product differentiation
• Pricing and output decisions
• Long-run equilibrium

4.5 Implications for Managerial Decision-Making

5. Pricing Strategies

• Cost-based pricing
• Value-based pricing
• Price discrimination (first, second, and third degree)
• Price leadership and competitive pricing
• Strategies to maximize profits under different market conditions

6. Risk and Uncertainty

• Definition and types of risk
• Decision-making under uncertainty
• Expected utility theory
• Risk aversion and risk preferences
• Tools and techniques for risk assessment and mitigation

7. Capital Budgeting

• Importance of capital budgeting in managerial economics
• Net Present Value (NPV) method
• Internal Rate of Return (IRR)
• Payback Period
• Profitability Index
• Comparison of methods and decision rules

8. Game Theory

• Introduction to game theory concepts
• Types of games: simultaneous and sequential
• Nash equilibrium
• Applications in competitive strategy and cooperation
• Examples of strategic interactions in business

9. Government Intervention and Regulation

• Role of government in the economy
• Regulatory policies and objectives
• Antitrust laws and competition policy
• Environmental regulations
• Impact on business operations and managerial decision-making

10. Globalization and Managerial Economics

• Challenges and opportunities of globalization
• International trade theories and their implications
• Foreign exchange markets and exchange rate effects
• Multinational corporations and global strategies
• Managing economic risks in global markets
• Navigating global economic dynamics in decision-making