Post Graduate Programme in Management2015-16 TERM: I

TITLE OF THE COURSE: MICROECONOMICS FOR MANAGERSCREDITS: 4

Name of the Faculty member:Ajay Sharma Joysankar Bhattacharya N. Karthikeya Siddhartha K. Rastogi

Faculty Block and Room no.:J – 206 A – 105 B-Conf. Room B – 101

Email: <@iimidr.ac.in>ajays joysankar karthikeyan srastogi

Telephone Number:+91-731-2439622 +91-731-2439517 +91-731-2439596 +91-731-2439534

Course DescriptionThis course serves as the first course in Microeconomics. The focus of the course is on understanding ofeconomic concepts and tools to facilitate decision-making in business management as well as public policycontexts. A special emphasis is given on conceptual application in Indian contexts.

Course ObjectivesThe course aims to equip participants with intermediate level economic concepts and tools of analysis todevelop critical thinking and analytical skills to apply under different business situations. Concepts of thiscourse can further be applied in Industrial Regulation, Strategic Competition, International Business,Marketing, Managerial Accounting, Public Policy, etc.

Pedagogy/Teaching Method:All sessions are lecture based. Applications and case studies are used for illustrative purposes to reinforcethe understanding of concepts and tools.The basic reference book used is: Besanko, D. and Braeutigam, R. (2011) Microeconomics, 4th Edition, WileyIndia. (Hereafter B-B).

Make-up Exam policyThere is no makeup provision for the quizzes; whereas makeup for mid-term and end-term exams will begiven only if the participant was on medical leave with approval from PGP Chair.The nature of such make up will be on the discretion of the instructors.

Evaluation WeightageClass Participation 10Surprise Quizzes 20Mid-term Exam 35End-term Exam 35

Total 100%

SCHEDULE OF SESSIONS

Module I Basic Economic ConceptsModule Objective: To introduce the participants to the economic way of thinking

Session 1: Basic Economic ConceptsObjective: How economists think to make sense of the worldReading: B-B, Chap-1Case: The Toughest Ticket in Sports, B-B, pg 15.

Module II Consumer BehaviorModule Objective: To understand the behavior patterns of consumers under different conditions

Session 2: Consumer BehaviourObjective: How consumers match scarce resources with unlimited wantsReading: B-B, Chap -3, pg 75-89 and Chap-4, pg 105-112Case: How People Buy Cars: Importance of Attributes, B-B, pg 89

The Marginal Utility of ‘Home Cooking’ versus ‘Eating out’, B -B, pg 113.

Session 3 - 4: Demand and Supply AnalysisObjective: What and how affects demand and supply of various classes of goods

How an equilibrium is reached under different conditionsReading: B-B, Chap- 2, pg 26-41 and Chap 5, pg 150-159Case: A Computer on Every Desk and in Every Home, B-B, pg 41.

Session 5: ElasticityObjective: How to measure the changes in demand and supplyReading: B-B, Chap-2, pg 43-54Case: Coke versus Pepsi, B -B, pg 53.

Session 6 - 7: Impact of Taxes and SubsidiesObjective: How government's policy decisions enter the map of consumer behaviorReading: B-B, Chap-10Case: Gallons and Dollars: Gasoline Taxes, B-B, pg 396;

A Bailout of the King of Cheeses, B-B, pg 421.

Module III Production and Pricing DecisionsModule Objective: To study production decisions and product pricing under different conditions

Session 8: Theory of ProductionObjective: What are the basic concepts related to production choicesReading: B-B, Chap -6, pg 201-226 and 230-233Case: High-Tech Workers versus Low-Tech Workers, B-B, pg 220.

Session 9: Theory of CostObjective: What are the relevant costs and ensuing implicationsReading: B-B, Chap-7, pg 245-257 and Chap -8, pg 287-304Case: Self-Checkout or Cashier?, B-B, pg 257; The Costs of Higher Education, B-B, pg 295.

Session 10: Labor Supply DecisionObjective: How much to work and when to stop

Reading: B-B, Chap -5, pg 187-193Case: Substitution Bias in Price Indexes, B -B, pg 194.

Module IV Market StructuresModule Objective: To explore different market structures and implications for economic decisions

Session 11: Competitive SupplyObjective: How markets behave under perfectly competitive environmentReading: B-B, Chap-9, pg 330-341 and 366-377.Case: The ambiguous economics of Net neutrality; Available at:

http://www.livemint.com/Industry/hz8BtbDLFnLkV69HU2EWUP/The-ambiguous-economics-of-Net-neutrality.html

Session 12: Monopoly and Market PowerObjective: How markets behave when market power existsReading: B-B, Chap-11, pg 439-457 and 469-474Case: Market Power in the Breakfast Cereal Industry, B-B, pg 457.

Session 13 - 14: Pricing with Market PowerObjective: How to price the product when cost is not the only parameterReading: B-B, Chap-12, pg 485-517Case: Education in the First Degree, B-B, pg 494; Bundling Cable, B-B, pg 517.

Session 15: Monopolistic Competition and OligopolyObjective: What are the more common market structures and their process of decision-makingReading: B-B, Chap-13, pg 528-545 and 558-562Case: When a Good Doctor is Hard to Find, B-B, pg 562.

Session 16-17: Competitive StrategyObjective: How market structures make decision-making a strategic and competitive processReading: B-B, Chap -14, pg 571-589Case: Everyone Loses Except Lawyers, B-B, pg 576.

Module V Market FailuresModule Objective: To explore situations and remedies when markets fail

Session 18: ExternalitiesObjective: Are there situations where markets fail due to externalitiesReading: B-B, Chap-17, pg 697-718Case: London’s Congestion Charge, B -B, pg 712.

Session 19: Public GoodsObjective: What are the problems in provision of public goodsReading: B-B, Chap 17, pg 719-723.Case: Is Market Failure a Sufficient Condition for Government intervention?; Available at:

http://www.econlib.org/library/Columns/y2013/CardenHorwitzmarkets.html

Session 20: Economics of InformationObjective: What are the cost, benefits, and implications of informationReading: B-B, Chap -15, pg 623-627.

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