ECONOMICS FOR MANAGERIAL DECISION MAKING - II

COURSE DURATION: 2 HRS PER WEEK FOR 12 WEEKSCOURSE CREDITS: 02

1. INTRODUCTION (2 HRS) Economics And Managerial Decision Making

- Managerial decision making under perfect information, risky and uncertain situations.

- Economics: Scope of economics; economics as a tool for decision making.- Managerial Economics: Definition and scope; distinction between economics

and managerial eco.

2. CONSUMER DECISION MAKING (4 HRS) Demand Side Of The Market

- Factors influencing demand; managerial implications.- Demand elasticities and lessons for a manager.- Demand estimation and fore casting: Basic methods.

Logic of Buying And Consumption- Conventional explanation for consumer behavior: Review- Attributes approach for explaining consumer choices

3. ECONOMICS OF SUPPLY AND PRODUCTION (3 HRS) Supply Side of The Market

- Factors determining after of a supplier.- Supply elasticities and lessons for a manager.

Production: Conceptual Framework- Production concepts: review- Cost concepts; their role in decision making; incrementation; engineering cost

curves.- Economies and diseconomies in production and supply.

4. PRICING DECISIONS AND IMPLEMENTATION (12 HRS) Alternative Paradigms Of Decision Making By A Firm

- The neoclassical model of firm: revenue, equilibrium, and profit positions.- Boumols’s sales revenue maximization model.- Behavioral approach of Cyert and March.- Marris’ model of managerial enterprise.

Various Market Models And Market Power- Market classification based on number of players and extent of competition;

contestable markets.- Power of the marketer regarding price setting in each of the situations.

Pricing Decisions And Implementations-1: Price Determination- Pricing decisions when competitors would not react.- Pricing under mutual dependence conditions- Pricing for attaining long term objectives.

Pricing Decisions And Implementation-2: Specific Models Of Pricing- Situation of multiplant operations- Cartelization- Price discrimination

- Transfer pricing Pricing Decisions And Implementation-3: Decisions In Practice

- Pricing under uncertainty.- Rule of thumb pricing.- Mark up pricing.- Product line pricing.- Price as quality indicator.- Pricing of product bundles- Promotional pricing.

Pricing Decisions And Implementation-4: New Product Pricing- Setting the initial price.- Adjusting price overtime

5. PRICING IN A REGULATORY FRAMEWORK (3 HRS) Market Failures And Price Regulations

- Market failures and need for regulation.- Regulations and market structure, firm behavior etc.- Price regulation

Important Note: Treatment shall be nonmathematical and applications oriented. Teaching shall be

case/real life situations based. End term examination will have application based questions.

Topics already covered under EMDM -1 may be skipped and discussion should be carried forward from where it was concluded in EMDM – I course.

BASIC TEXTS IVON PING: Managerial Economics (Blackwell Publishers) All chapters except

Ch.6 and 10 D N SENGUPTA AND ANINDYA SEN: Economics of Business Policy (OUP)

Chs.4,5,6,7,14 & 15