Managerial Economics is the application of economic theory and methodology to managerial decision making problems in both the public and private sectors. The focus of this course will be on demand analysis and estimation, production and cost analysis under various market conditions, as well as forecasting and decision-making under uncertain conditions. This course increases students’ understanding of economics as they learn to solve business problems pertaining to competitive strategies, profits, revenues, prices and costs. Thus, the course is divided into three parts: Part one focuses on production and cost theory and the basic decisions of a firm regarding quantity of production and what inputs to use. The second part concentrates on pricing and how consumers respond to price alterations. Part three will be on Game Theory which is a framework for decision made between a small group of managers or firms (also called business strategy).
- Given data pertaining to production and input usage, derive the combination of inputs (machines, skilled and unskilled labor, etc.) which maximizes profits.
- Given data on costs and prices, derive the optimal quantity of goods to produce.
- Given data on companies’ sales, sales price and costs, derive the price to charge in order to maximize profit under different circumstances.
- Use Game Theory to arrive at decisions in environments with a small group of firms, including negotiation and price wars between two firms.
- Learn how to take a scientific approach to making business decisions, where optimal decisions are computed mathematically according to formulas derived from firm level data.