ECONOMIC ANALYSIS FOR BUSINESS Syllabus - MBA (PU)

Course Description

This is an intensive course that stresses functioning of the market system. The purpose of the course is to investigate and analyze the theoretical and analytical tools of microeconomics, with emphasis upon their application to business decision-making. Topics include demand and supply analysis, decision theory, production and cost theory, market structure and competition, price determination, competitive strategy, economies of scale and scope, employment of factors of production, and profit strategies. What will be emphasized throughout this course are reasoning and problem-solving. Cases will examine how economic principles apply to the actual business world.

Course Contents

            Introduction to Business Economics                        

Business success and economic issues; Basic concepts of Business Economics; Allocation of resources, Opportunity cost, Marginal analysis, Fundamental principles of economics, Positive and normative analysis, Importance and use of Business Economics; Corporate decision making and public policy design.

            Supply and Demand, Market and Welfare 

The market force of supply and demand, Market mechanism, Elasticity of demand and supply and its application, Consumer, Producer, Government and Efficiency of market, Application; Cost of taxation, price controls and international trade, Demand forecasting – techniques and applications.

            The Theory of Consumer Choice                            

Consumer behavior; Consumer preference and choice, Indifference curves, Marginal rate of substitution, Budget constraint, Optimization; What consumer chooses?, Applications; Price effect, income effect and substitution effect, Income and substitution effect.

            The Theory of Production and Cost                        

Technology and production; Production function, Isoquants, Marginal rate of technical substitution, Production with one  and two variable input(s), Returns to scale, Analysis of cost; short and long run, Least cost combination of inputs.

            Objective of the Firm                                                                       

Introduction of firm and its goal, profit maximization, Agency Theory, Managerial Theories; Sales revenue maximization, managerial utility maximization, corporate growth maximization, Behavioral theory (Cyert and March).

            Pricing Theory                                                                                  

Classification of market - perfect and imperfect market, Pricing under different market conditions, Perfect competition, monopoly, monopolistic competition, oligopoly; price leadership model, cartel, kinked demand curve model, Pricing: Cost-plus pricing, incremental pricing, multiple product pricing, transfer pricing.

            The Economics of Public Sector                              

Externality; positive and negative externalities of production and consumption, Inefficiency, Market failure and ways of correcting market failure, Common property resources, Public goods; public goods and market failure, Private preference of public goods.

Basic Books

Mankiw, N. G., Principles of Microeconomics, New Delhi: Thomson South-Western.

Mark, H. and Pappas, J. L., Managerial Economics, New Delhi: Prentice-Hall India, New Delhi

References

Katz, M. L. and Rosen, H. S., Microeconomics, New York: Irwin/McGraw Hill.

Brigham, E. F. and Pappas, J. L., Managerial Economics, Dryden Press.

Damodaran, S., Managerial Economics, New Delhi: Oxford University Press.

Petersen, H. Craig, and Lewis, W. Cris, Managerial Economics, New Delhi: Prentice-Hall India.

Mansfield, E., Managerial Economics, New York: W W Norton and Company.

Perloff, J. M., Microeconomics, New Delhi: Pearson Education.