UNIVERSITY OF SOUTHERN CALIFORNIA



UNIVERSITY OF SOUTHERN CALIFORNIA

MARSHALL SCHOOL OF BUSINESS

Fall 2015 Master of Science in Finance Program

GSBA 511: MANAGERIAL ECONOMICS 1.5 Units

GSBA 544: The Firm in the National and International Economy 1.5 Units

15594R 865 C LA Core A 6:00-9:40 PM Wednesday JKP 210

There will be separate letter grades for GSBA 511 and GSBA 544.

Instructor: James Cunningham

E-mail: jpcunnin@marshall.usc.edu

COURSE OBJECTIVES

In GSBA 511 and 544 we will be covering the two major areas of economics, Microeconomics in GSBA 511, and Macroeconomics in GSBA 544. You will receive separate letter grades for each.

The purpose of GSBA 511 Managerial Economics is to refine our understanding of how markets work and to explore the challenges and opportunities that markets pose for managers and firms. The course applies basic economic principles to address issues that arise in a firm’s relationships with customers, suppliers, competitors, employees, other organizations, and the regulatory environment. Managerial Economics also provides some fundamental building blocks for other courses in the core curriculum, including Marketing Management, Strategic Formulation for Competitive Advantage, and Corporate Finance.

COURSE MATERIALS

The required text for GSBA 511 is Bernheim and Whinston, Microeconomics, 2nd edition, 2014

(New York: McGraw Hill Irwin) and the Powerpoints to accompany this text.

For GSBA 544, Text: Miles, Scott and Breedon, Macroeconomics: Understanding the

Global Economy (MSB), John Wiley & Sons, 3rd edition, 2012.

EXPECTATIONS

An active and productive classroom is essential for the success of this course. Cultivating and maintaining such an environment is the responsibility of the instructor and the students. This responsibility imposes several obligations on all of you. First, it is very important that you prepare yourself for each and every session. It is not necessary that you know the material “cold” before each class, but it is important that you expend sufficient effort to gain some grasp of the ideas we will be discussing. To be more specific, prior to every session, 1) you should read all of the assigned materials, 2) attempt to address and answer some of the discussion questions found at the end of each chapter, and 3) give some thought to the broader managerial implications of the materials and your discussions.

Second, microeconomics is logical and seems quite apparent when material is being presented in class. However, the arguments can be subtle and intellectually as well as analytically challenging when the student attempts to reproduce the details of an economic argument outside of class. Further microeconomic theory is cumulative, so that a misunderstanding of some earlier argument can create an even deeper misunderstanding at some later stage. It is important that you review your notes after each class and attempt to recreate the same economic arguments on your own. Keep current with your understanding of the material by reviewing your lecture notes soon after each class.

Third, microeconomics uses algebra, geometry and some notions from calculus as tools used to summarize complex arguments that cannot be efficiently expressed in words. Most of this mathematics is at the high school level, but it can be challenging if a lot of time has passed since you last used it. I will briefly review these concepts as I use them to present economic arguments, but I can only use a small amount of class time for this discussion.

And fourth, it is very important that you appreciate the interactive nature of the classroom environment. Although I will typically lecture, that does not mean I discourage classroom interaction. On the contrary, I encourage your active participation in the discussion through observations and questions. And I encourage relevant questions from the class, as well. However, please be respectful of your classmates’ time. We are on a very constrained timetable that does not allow for long, drawn-out conversations about material that is not relevant to the class material.

EVALUATIONS

Your grade for this course depends on your individual performance on mid-term and final examinations and the grading standards and policies of the Marshall School of Business. In addition, we are all bound by the standards of academic integrity of the University.

You will take comprehensive mid-term and final examinations covering the concepts and materials introduced in this course. The use of books, notes or aid from colleagues is not permitted in either exam. The Midterm will be 2 hours long, and the final will last two hours. The Midterm exam for GSBA 511 will be held on Wednesday, September 16th. The final exam for GSBA 511 is scheduled for Wednesday, October 7th. The Midterm exam for GSBA 544 will be Wednesday October 21st. The Final Exam for GSBA 544 will be Wednesday November 4th. Make-up exams will not be administered.

GSBA 511 Midterm Exam.............50 percent  GSBA 544 Midterm …………..50 percent

GSBA 511 Final........................... 50 percent  GSBA 544 Final Exam………..50 percent

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GSBA 511 Total course…..….......100 percent GSBA 544 Total Course .……100 percent

There are no specific policy guidelines with respect to the number or percentage of any specific grade given (e.g., A, A-, etc.) or the number or percentage of passing or failing grades. Thus, considerable discretion is given each course instructor regarding the exact assignment and distribution of grades. Typically, these classes have averaged a grade of B+, or 3.3 GPA. That is a reasonable expectation of the grades in this class. I will also ensure that each student receiving a passing grade in this course has demonstrated sufficient mastery of the materials to facilitate their successful performance in subsequent courses.

The University, as an instrument of learning, is predicated on the existence of an environment of integrity. As members of the academic community, faculty, students, and administrative officials share the responsibility for maintaining this environment. Students are obliged to engage in behavior that maintains the standards of academic integrity so essential to a productive learning environment.

STATEMENT FROM DISABILITY SERVICES AND PROGRAMS

Any student requesting academic accommodations based on a disability is required to register with Disability Services and Programs (DSP) each semester. A letter of verification for approved accommodations can be obtained from DSP. Please be sure the letter is delivered to me as early in the semester as possible. DSP is located in STU 301 and is open 8:30 a.m. - 5:00 p.m., Monday through Friday. The phone number for DSP is (213) 740-0776.

COURSE OUTLINE AND ASSIGNMENTS

Session Date Topics Reading

1 8-26 Preliminaries BW 1

6:00-7:40 Supply and Demand BW 2

Wednesday Balancing Benefits and Costs BW 3

2 8-26 Consumer Preferences BW 4

8:00-9:40 Constraints: Choices and Demand BW 5

Wednesday

3 9-2 Cost BW 8

6:00-7:40 Profit Maximization BW 9

Wednesday

4 9-2 Behavioral Economics BW 13

8:00-9:40 Cognitive Limitations CL Ppt 8

Wednesday and Consumer Behavior

5 9-16 Midterm Exam (Chapters 1-5, 8-9, 13, Ppt 8)

6:00-7:40 GSBA 511

Wednesday

6 9-16 Market Interventions BW 15

8:00-9:40 Monopoly BW 17

Wednesday

7 9-23 Pricing Policies BW 18

6:00-7:40 Oligopoly BW 19

Wednesday

8 9-23 Externalities and Public Goods BW 20

8:00-9:40 Asymmetric Information BW 21

Wednesday

9 10-7 GSBA 544 National Income Accounts and

Other Economic Indicators

6:00-7:40 What Is Macroeconomics MSB 1

Wednesday The Language of Macroeconomics: MSB 2

The National Income Accounts

Productivity and the Supply of Output

Economic Growth I

Capital Accumulation and Economic Growth MSB 4

10 10-7 Final Exam (Chapters 15, 17-21)

8:00-9:40 GSBA 511

Wednesday

11 10-14 Capital Accumulation and Economic Growth MSB 4

6:00-7:40 (continued)

Wednesday Total Factor Productivity, Human Capital MSB 5

and Technology

Lucas, “The Industrial Revolution Past and Future,”

Federal Reserve Bank of Minneapolis, The Region, May 2004

12 10-14 Economic Growth and World Trade: Putting Theory into Practice

8:00-9:40 Endogenous Growth and Convergence MSB 6

Wednesday Unemployment and the Labor Market MSB 7

International Trade MSB 8

Globalization MSB 9

13 10-21 Business Cycles and Economic Policy

6:00-7:40 Money and Prices MSB 12

Wednesday Monetary Policy MSB 13

The Banking Sector MSB 17

14 10-21 Midterm Exam (50% of GSBA 544 Grade)

8:00-9:40 (Chapters 1-9, Lucas article)

Wednesday

15 10-28 Long Run Fiscal Policy and the Government Budget

6:00-7:40 Fiscal Policy and the Role of Government MSB 14

Wednesday Stabilization Policy MSB 15

Sovereign Debt and Default MSB 18

16 10-28 Exchange Rates and Global Capital Markets

8:00-9:40 Exchange Rate Determination: The Real Exchange Rate MSB 19

Wednesday Exchange Rate Determination: Nominal Exchange Rates MSB 20

and Asset Markets

Currency Crises and Exchange Rate Systems MSB 21

17 11-4 Final Exam (50% of GSBA 544 Grade)

6:00-8:00 (Material covered after the Midterm)

Wednesday

If you have a schedule conflict for either the Midterm or Final Exam in either 511 or 544,

please email Jeanette Christensen

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