E/M 360 Managerial Economics, Spring 2005



E/M 360 Managerial Economics

Spring 2005

Larry Wohl, Social Science (SSC) 115

Phone: 7453 (office); 934-4041 (home); e-mail: law@gac.edu

Office Hours: 9:15-9:45, 2:30-3:30, M-R and by appointment

Text: Samuelson, William and Marks, Stephen, Managerial Economics, 4th edition, Wiley, 2003

Optional: Hussain, Sayed Ajaz, Study Guide to accompany Managerial Economics, 4th ed., Wiley, 2003

Required

Supplement: Mike’s Bikes business simulation (web purchase)

Course Description and Objectives:

Managerial Economics represents a hybrid between the classical training in microeconomic theory and the demand for practical application by students (and many professors) in business/management. The course is intended to provide students with critical thinking and problem solving skills. Compared to EM 380 Microeconomic Analysis, it treads somewhat lighter on some theoretical topics, and ignores a couple of them completely. It also has a stronger focus on the firm and the use of critical economic thinking for guiding managerial decisions.

Upon completion of this course, you should have a thorough grasp of the microeconomic theory of the firm at a level more rigorous and fully developed than you received in principles, in mathematical, verbal, and graphical terms. You should recognize and be able to set up and solve real-world problems that lend themselves to the use of the tools of micro theory and the decision sciences. Likewise, you should be able to use the concepts to analyze real-world problems that don’t lend themselves to “solutions,” but instead require development of potential scenarios. Very importantly, you should understand both the power and the limitations of those tools, and be able to interpret your solutions accordingly.

We will be working with a network-based business simulation called Mike’s Bikes. The simulation is available on the web, with a solo version for practice, and a team version we will use in competition. There will be graded assignments for both individual and team exercises. The simulation provides a useful virtual application of many of the principles of the course. Having to function in teams will be a real-world lesson in the environment most managers operate under. Both students and I have found it to be a very useful addition to the class. I’ll have much more to say on this as the semester develops.

Grading:

Three midterm exams (100 points each) 300 points

Principles take-home 30 points

Homework (usually 25 to 40 points each) 280 points

Mike’s Bikes exercises and performance 150 points

Class participation/discussion 40 points

Final exam (partially comprehensive) 200 points

1000 total points

I don't have an established curve for grading aside from requiring 50 percent as the bare minimum to pass the course. I announce an approximate curve after each exam so that you can keep track of where you stand, and you should feel free to check with me at any time. I will not accept late homework assignments unless you have made prior arrangements with me, if there is some reason you cannot turn in the work when it is due.  If you are unable to take an exam on the day it is scheduled, it is your responsibility to contact me beforehand (or afterwards with a verifiable medical excuse).  Please note the dates scheduled for exams and plan accordingly. Exams are given at night because they usually take two hours or more, but we will work around conflicts you may have. Homework points may include in-class quizzes, which cannot be made-up if you miss them unless it is an excused absence. Class participation grades are enough to potentially move you up or down half a letter grade, and are based on your responses to pre-assigned discussion questions from the text, as well as your attendance and contributions to overall class discussion.

Gustavus has adopted an Honor Code, which you all agreed to abide by when registering. The following statement is to appear on every graded paper: "On my honor, I pledge that I have not given, received, nor tolerated others' use of unauthorized aid in completing this work." Having noted that, please also note that I strongly encourage you to work together on homework assignments and in preparing for exams. You can learn a great deal from each other in the process. However, be sure that the work you turn in is your own. You should be careful about relying on others too much without making your own contributions to group efforts. I have found that those who have tried to get by copying others' assignments are usually lost on exams; the purpose of the homework is to help you master the problem-solving skills and prepare for the exams, so use it as such an opportunity. Although I have never needed to implement the second level, I inform you now that my policy is to give a zero on the first offense, and flunk anyone caught cheating or using someone else's work on exams or homework a second time.

Schedule

Class is scheduled to meet five days per week. We won’t always need all five days, and I will try to let you know at the beginning of each week if we will be taking a day off. Those days would probably be Thursday, but might be any day of a particular week, depending on circumstances. Do not schedule anything else during this class hour, as it will cause conflicts.

Each class tends to grasp different material at different rates, but we will stick fairly close to the schedule below to assure that we cover all of the required material. Specific reading, discussion, and homework assignments will be announced in class. A few topics in our book are somewhat scattered around compared to other books I’ve used in the past. Since I have my own preferences for how to organize the material, we will bounce around a bit at times; depending on time available, I may also add or change some material on the last segment, so you’ll need to pay attention for the reading assignments.

Week Topic Reading

2-7 Introduction; Economics Review; Chapters 1 & 2

2-14 Optimization Chapter 2 & appendices

2-21 Demand Analysis Chapter 3 & appendices

Exam #1 tentatively scheduled for 2-28

3-1 Production Chapter 6

3-7 Production and Cost Chapters 6 & 7

3-14 Cost Analysis, Linear Programming Chapters 7 & 18 & appendix

3-21 Linear Programming

Exam #2 tentatively scheduled for 3-23

3-25--4-3 Spring Break People, comics, TV Guide

4-4 Market Structure and Pricing

Decisions--Competitive extremes Chapters 8 & 9

4-11 Pricing and Output Decisions--

Reality and Interdependence Chapters 10 & 11 & appendix

4-18 Interdependence, Games & Strategy Chapter 11

4-25 Further Topics in Pricing reading to be assigned

Exam #3 tentatively scheduled for 4-28

5-2 Risk and Uncertainty Chapter 13

5-9 Capital Budgeting Chapter 19

5-16 Mike’s Bikes Wrap-up

Final Exam tentatively scheduled for Tuesday, 5-24 at 10:30 am

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