SVKM’s

NARSEE MONJEE INSTITUTE OF MANAGEMENT STUDIES

POST GRADUATE DIPLOMA IN MANAGEMENT
Program: PGDM Trimester: I
Course: Micro Economics Code:
Teaching Scheme Evaluation Scheme
Classroom Practical/ Continuous Term End Examination
Tutorials
Credit
Session group work Evaluation (TEE)
20 0 0 50% 50%
Course Rationale:
The focus of the course is to make students understand the economic behavior of the firm in terms of its
objectives in general and profit maximization in particular with the help of demand side and supply side
economics. In addition, it will also familiarize the students to understand various market structures and
price and output determination in those markets. The course is essentially theoretical in nature which
throws some insights to the students to form architecture of managerial decisions.

Course Objectives:
1. To understand the scope and subject matter of managerial economics and its relationships with various
quantitative and behavioral sciences.
2. To understand various concepts of economics with a view to use them while examining decision-
making process of a firm in terms of identifying the demand and supply determinants, their
significance in the overall demand and supply determination, cost and output dynamics and price and
output determination under different market conditions.
3. To enabling students to relate implications of various economic decisions taken up by business / Govt
on their business.

Prerequisite:
NONE

Pedagogy:
 Participative, lectures, PPTs, case/article/news discussions, assignments, class activities and
presentations.

Textbook:
 Managerial Economics 7e, Dominick Salvatore and Ravikesh Srivastava, Oxford University Press,
2012.

Reference Books
 Managerial Economics 7e, Paul G. Keat, Philip K Y. Young, Pearson, 2013
[
 Managerial Economics 2e, GS Gupta, McGraw Hill, 2011
 Principles of Economics (E-book) 10e, Karl. E. Case, Ray. C. Fair and Sharon. M. Oster,
Prentice Hall, 2012

Links to websites:
 www.economicsdiscussion.net
 www.managementstudyguide.com
 www.intelligenteconomist.com
 whystudyeconomics.ac.uk

Evaluation Scheme:
 Group Project/Case 10 %
 Quiz/ class tests 10 %
 Class participation/ news analysis 05 %
 Mid Term Exam 25%
 Tem-End Exam 50%
Total 100%

Session Plan:
Session Topic/Sub Topic Learning Outcomes Pedagogical Textbook chapters &
Tool Readings
1 The Scope and Method Students will learn the Lecture and Case Textbook:
of Economics basics of economics Discussion Chapter 1:
 Why Study which will help them  Principles of
Economics: learn the economic Economics, Case,
Opportunity Cost, analysis of firm’s Fair and Oster
Marginalism, economic behaviour  The Scope and
Efficient Markets later during the course. Method of
 The Scope of Economics
Economics: pp.1-15
Macroeconomics,
Microeconomic
 The Diverse Fields of
Economics
 The Methods of
Economics:
Descriptive
Economics and
Economic Theory,
Theories and Models,
Ceteris Paribus
 Economic Policy:
Efficiency, Equity,
Growth and stability
2 The Economic Problem: Students will learn the Lecture and Case Textbook:
Scarcity and Choice fundamental concepts Discussion Chapter 2 :
 Scarcity, Choice and of Microeconomics  Principles of
Opportunity Cost which will lay Economics, Case,
 The Production foundation to help Fair and Oster,
Possibility Frontier them learn the  The Economic
 The Economic macroeconomic Problem: Scarcity
Problem theories and and Choice,
 Economic System application. pp.25- 43
and Role of
Government
3 The Nature and Scope Students will learn the Lecture and Case Textbook:
of Managerial basics of Managerial Discussion Chapter 1
Economics economics which will The Nature and Scope of
 Definition of help them learn the Case: Managerial Economics
Managerial economic analysis of Managerial pp. 4-19
Economics firm’s economic Decisions- A case of
 Relationship to behavior later during Marico manager
various Disciplines the course. (unpublished)
 Basic Process of Revised, July 2017
Decision Making
  The Theory of the
Firm
 The Objective and
Value of the Firm
 The Nature and
Function of Profit
 Theories of Profit
4 Optimisation Students will Lecture and Case Textbook:
Techniques and New appreciate as how Discussion Chapter 2
Management Tools application of Optimisation Techniques
 Methods of quantitative sciences and New Management
Expressing Economic can help a firm to Tools
Relationships optimally achieve its pp.39-49
 Total, Average and objectives
Marginal Appendix 2:
Relationships Differential calculus and
 Optimisation Optimisation Techniques
Analysis pp.67-81
 Constrained
Optimisation
 Differential Calculus
and Optimisation
Techniques
5-6 Demand Theory  Students will learn Lecture and Case Textbook:
 Demand for a about the basics of Discussion Chapter 3
Commodity demand and Demand Theory,
 Individual Demand supply and Case 3: pp.90-99
for a Commodity common The Demand for Big
 From Individual to determinants of Macs (Source: Textbook:
Market Demand demand and Dominick Salvatore) Chapter 3
 The Demand Faced supply. Managerial Economics,
by a Firm Keat, Young and S
 They will learn Banerjee, Chapter 3,
Supply and Demand how application of Supply and Demand,
 Market Supply Demand and pp. 41-62
Market Equilibrium supply that can be
used in decision
making process

7 Demand Theory-Price  Ability to identify Lecture and Case Textbook:

Elasticity of Demand the determinants Discussion Chapter 3 :
 Point Elasticity of of demand and Demand Theory
Demand their influence on Case: pp.99-119
 Arc Elasticity of the market Demand Elasticities
Demand demand by for Alcoholic
 Price Elasticity, Total understanding Beverages in the
Revenue, and elasticities. United States,
Marginal Reveune  Ability to Chapter 3, pp.119
 Factors Effecting understand which
Elasticity are strong
 Income Elasticity of elascitiies and
Demand which are not so
 Cross Price Elasticity strong elasiticities
of Demand in general and by
 Using Elasticities in products in
Managerial Decision particular
Making
8 Demand Estimation Ability to identify and Lecture and Case Textbook
 Marketing Research apply appropriate Discussion Chapter 4
Approaches to techniques and process Demand Estimation
Demand Estimation of demand forecasting pp.141-168
 Introduction to for a product.
Regression Analysis
 Demand Estimation
by Regression
Analysis
9-10 Demand Forecasting Understanding the Lecture and Case Textbook:
 Qualitative Forecasts process of demand Discussion Chapter 5
 Time –Series forecasting and Ability Case: Demand Estimation
Analysis to identify and apply Text book pp.192-212
 Smoothing appropriate techniques Chapter 5:
Techniques and process of demand Risks in Demand
 Barometric Methods forecasting for a Forecasting
product. pp. 219-220
Case:
Two-Minute Ready
To Eat Snacks
(unpublished, revised
in May 2014)
11-12 Production Theory and  Students will Lecture and Case Textbook:
Estimation Appreciate the discussion Chapter 6
 The organization of basic model of Case: Production Theory and
Production and the supply side Textbook: Estimation
Production Function economics Chapter 6 : pp. 243-268
 The Production through input- Labour Productivity
Function with one output relations in and Compensation in
Variable Input the short and long United States and
 The Production run abroad
Function with Two  Students will Pp. 253
Variable Inputs figure out as why Case:
 Returns to Scale large is beautiful Chapter 5:
in terms of Patel Brothers ,
lowering average Managerial
cost and how does Economics, G.S.
it happen through Gupta, , Production
economies of Analysis and Inputs’
scale? Demand
pp.141-142

Case:
Text book
Chapter 6 :
Returns
To Scale in US
Manufacturing
Industries
pp. 271
13-14 Cost Theory and  Students will Lecture and Case Text book
Estimation develop the ability discussion Chapter 7
 The Nature of Costs to identify pp. 292 -321
 Short Run Cost relevant and
Functions irrelevant cost Reading
 Long Run Cost while managing Text book,
Curves and controlling the Chapter 7:
 Plant Size and costs The shape of Long Run
 Economies of Scale  Students will also Average Cost Curves in
 Learning Curves learn about some Various Industries
 Minimizing Costs crucial ratios pp. 306-307
Internationally related to
 Cost- Volume-Profit production Text book:
Analysis and decisions Chapter 7 :
Operating Leverages Breakeven
analysis for Tata
Motors’ Nano Car
pp. 320-321
15 Market Structures Appreciation of Lecture and Case Textbook:
Perfect Competition, characteristics of Discussion Chapter 8
Monopoly and various markets from Market Structures Perfect
Monopolistic the point of view of Case: Competition, Monopoly
Competition competition. Text book: and Monopolistic
 Market Structures Competition in the Competition
and Degree of Indian Mutual Fund pp. 348-358
Competition Market
 Perfect Competition pp.351
 Meaning and
Importance of Perfect
Competition
 Price Determination
under Perfect
Competition
16 Market Structures Understanding the Lecture and Case Textbook:
Perfect Competition, sources of monopoly discussion Chapter 8
Monopoly and and also examine the Market Structures Perfect
Monopolistic fact that monopoly is Case: Competition, Monopoly
Competition not as fearsome as it is Barrier of Entry and and Monopolistic
 Monopoly made out to be. Monopoly by Alcoa Competition
 Sources of Monopoly pp. 365 pp. 364-372
 Short Run Price and
Output Determination
under Monopoly
 Long Run Price and
Output Determination
Under Monopoly
 Comparison of
Monopoly and
Perfect Competition
17 Market Structures  This chapter will Lecture and Case Textbook:
Perfect Competition, help students as discussion Chapter 8
Monopoly and what economic Market Structures Perfect
Monopolistic activities and Case: Competition, Monopoly
Competition businesses belong The Monopolistically and Monopolistic
 Monopolistic to monopolistic Competitive Medical Competition pp. 372-378
Competition competition and Private Practice
 Meaning and what makes them Market in India, pp.
Importance of distinctive from 373
Monopolistic each other.
Competition
 Short Run Price and  Students will also
Output Determination learn as how can
under Monopolistic we differentiate
Competition our product from
 Long Run Price and our competitors.
 Output Determination
Under Monopolistic
Competition
 Product Variation and
Selling Expenses
under Monopolistic
Competition
18-19 Oligopoly and Firm  Students will have Lecture and Case Textbook:
Architecture the appreciation of Discussion Chapter 9
 Oligopoly and how unpredictable Oligopoly and Firm
Market Concentration and difficult it is Case: Architecture pp.389-401
 Oligopoly: Meaning to determine price  Brands Thrive or
and Sources and output in Die,
 Concentration Raios oligopoly market Text book, p.391
and Hierfindahl and the extent of
Index, and competition Case:
Contestable Markets therein.  Textbook:
 Oligopoly Models  Students will also The Organisation
 The Kinked Demand learn about what is of Petroleum
Curve Model cut throat Exporting
 Cartel Arrangements completion and Countries Cartel,
 Price Leadership rivalry of firms as p.399
well how
decisions are
made in VUCA
world
20 Pricing Practices  Appreciation of Lecture and Case Textbook:
 Price Discrimination difference discussion Chapter 11 :
 Pricing in Practice between theory Pricing Practices
 Cost Plus Pricing and practice. pp. 469-498
 Peak Load Pricing
 Two Part Tariff  Understanding
 Tying and Bundling complementarities
 Other Pricing between theory
Practices and practice