COURSE OUTLINE FOR BUSINESS ECONOMICS

I. Course description
Business Economics provides a broad overview of the economics of organization and
business decision-making. The course introduces the student to the fundamentals of
micro and macro-economic theory and practice as they are applied to business in a
managerial context. It provides the student with the basic analytical skills, insights and
managerial decision-making tools required for sound business decisions. The forces that
shape the external environment of the firm such as aggregate demand, economic cycles,
inflation, interest rates, exchange rates, and the role that demand management policies
play in the economy and their impact on the firm's operations are also explained. This
course has organized into two modules. Module one has three chapters general
definitions and business economics, capital budgeting and demand and supply concepts.
The second module of the course also includes the theory of production, cost functions
and market structures.

II. Course Objectives

The goal of this course is to develop the skills necessary to make optimal managerial
decisions given different situations, environments, and information sets by applying
microeconomic theory, which involves analytical work. By the end of this course it is
expected that the student will be able to:

 Interpret demand functions and elasticity and use this information to make
optimal pricing decisions.
 Determine the firm’s optimal input usage, given alternative production functions
and input prices.
 Recognize different market structures and make optimal decisions based on the
economic environment in which your firm operates.
 Apply Marginal analysis to the “firm” under different market conditions;
 Formulate alternative pricing strategies that will allow a firm with market power
to increase its profits.
 Calculate various measures of market power and explain how these measures are
used in evaluating horizontal mergers.