ECO201 MANAGERIAL ECONOMICS

Unit Guide

Trimester 3 2022
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About ECO201 Managerial Economics

CONTACTS
Below is a list of contacts for this unit. Please liaise directly with your unit instructor regarding
appropriate consultation times. It is usually best to make contact with the staff via email.

Unit Instructor Dr. Pham Dinh Long

Email: long.pham@isb.edu.vn
Student Advisor Vu Ngoc Dan Khanh
41-43 Vo Van Tan, Vo Thi Sau Ward, District 3, HCMC
Phone: 028 3535 8888 - Ext: 231 Email: dan.vu@isb.edu.vn

UNIT OVERVIEW
A primary emphasis of managerial economics is the application of economic theory and
methodology to the practice of business management and decision making. Students will
learn how economic tools can be applied to achieve business goals and to address
managerial challenges. Completion of this problem requires an understanding of three topic
areas: consumer analysis and demand forecasting, production and cost decisions, and
market structure and strategy.

PRE-REQUISITES
ECO101 Principles of Economics

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Assessment Information
UNIT LEARNING OUTCOMES
The table below outlines the unit learning outcomes (ULOs) for this unit. Upon completion of
this unit, students will be able to:

1. Develop greater knowledge of the types of problems faced by firm managers.

2. Improve the economic intuition concerning these problems and solutions.
3. Use economic analysis to identify profitable decisions.
Possess an understanding of economics, especially as it relates to decision making by
4.
the firm.
Be able to apply economics in decision making as it relates to production decisions,
5.
production plans, pricing and hiring.

ASSESSMENT SUMMARY

VALUE LEARNING
ASSESSMENT ITEM DUE DATE
(%) OUTCOMES
At the beginning of each
1. Quiz (Individual) 15% ULO1-5
class from session 2
2. Mid-term exam (Individual) Session 7 20% ULO1-5
Simulation’s weekly reflective Prior to each class from
3. 30% ULO1-5
reports (Group) session 8
4. Final exam TBC 35% ULO1-5

Final marks and grades are subject to confirmation by the School Assessment Committees
which may scale, modify or otherwise amend the marks and grades for the unit, as may be
required by the University’s policies.
🛈 Note: To successfully complete this unit, students must:

▪ Achieve a minimum of 5/10 marks;

▪ Complete all assessment items; and

▪ Attend 80 percent of class time.

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Assessment 1: Quiz (Individual) (15%)

Overview
Due: At the beginning of each class from session 2
Length: 20 multiple-choice questions due in 15 minutes
Details
The quiz questions are designed to check whether you’ve read the materials before coming
to each class. Quiz will be uploaded on the KFO E-learning.
Marking criteria and standards
For multiple-choice questions, the criterion is that students must be able to select the best
available answer from the options given.
If you are absent from the class, your result for the according quiz will be ignored.

Assessment 2: Mid-term exam (Individual) (20%)

Overview
Due: Session 7
Length: Format: TBA, 90 minutes
Details
You are assessed on concepts and application of demand theory and estimation, production
and cost theory to solve business economic problems. Your analytical reasoning and solving
skills are examined.
Note: The mid-term examination is held in the regular classroom. There is no make-up
midterm examination.
Note: The mid-term examination is a closed-book exam. No materials are to be brought into
the examination venue.
Marking criteria and standards
For multiple-choice questions, the criterion is that students must be able to select the best
available answer from the options given. For short answer/essay questions, the criterion is
that students have to give out the right solutions.

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Assessment 3: Simulation’s reflective reports (Group) (30%)

Overview
Due: 23h59, the day immediately prior to each session, starting from session 8
Length: 500 words (+/- 10%)
Details
In this simulation, your group of four to five will manage a simulated firm in which the main
decisions are related to pricing, production and advertising. This simulation, besides giving
you the opportunity to observe the interrelationship between marketing and production, will
allow you to experience competition in different markets and with different sets of elasticities.
Throughout the simulation, market conditions may change. For instance, a supply shock may
cause input prices to dramatically rise or conditions that cause a price war may appear. Make
sure to pay close attention to the market as well as your competitors. The simulation will last
eight weeks with each week simulating three months of operations.
Each week you will have to write a 500-word reflective report describing:
1. The decisions that were made
2. Why those decisions were made
3. The outcome of the decisions to the firm.
4. What accounts for your success and problems
5. Whether or not a different decision could have been beneficial and why
Marking criteria and standards
TBA

Assessment 4: Final exam (Individual) (35%)

Overview
The final exam will cover all the chapters in the Unit Guide.
This is a 120-minute examination and consists of multiple-choice and/or short answer/essay
questions.
Due: TBA
Length: 120 minutes
Details
The final examination is held on-campus. Check the examination timetable for the location
(campus, room number) and time (date, hour) of the exam.
The final examination is a closed-book exam. No materials are to be brought into the
examination venue.
Marking criteria and standards
For multiple-choice questions, the criterion is that students must be able to select the best
available answer from the options given. Each question in the final exam has the same value
– namely, one point. For short answer/essay questions, the criterion is that students have to
give out the right solutions.

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Teaching Activities

SCHEDULE OF ACTIVITIES

Required Assignment
Session Topic
Readings Due
Part I: Introduction
The Fundamentals of Managerial Economics
• Summarize how goals, constraints, incentives,
and market rivalry affects economic decisions.
• Distinguish economic versus accounting profits
and costs.
• Explain the role of profits in a market economy.
• Apply the five forces framework to analyze the Case study
1 Chapter 1
sustainability of an industry’s profits. discussion
• Apply present value analysis to make decisions
and value assets.
• Apply marginal analysis to determine the
optimal level of a managerial control variable.
• Identify and apply six principles of effective
managerial decision making.
Market Forces: Demand and Supply
• Explain the laws of demand and supply, and
identify factors that cause demand and supply to
shift.
• Calculate consumer surplus and producer
surplus, and describe what they mean.
• Explain price determination in a competitive Quiz 1
2 market, and show how equilibrium changes in Chapter 2 Case sudy
response to changes in determinants of demand
and supply. discussion
• Explain and illustrate how excise taxes, ad
valorem taxes, price floors, and price ceilings
impact the functioning of a market.
• Apply supply and demand analysis as a
qualitative forecasting tool to see the “big picture”
in competitive markets.
Part II: Demand
Quantitative Demand Analysis
• Apply various elasticities of demand as a
quantitative tool to forecast changes in revenues, Quiz 2
prices, and/or units sold. Chapter 3
3 Case study
• Illustrate the relationship between the elasticity
discussion
of demand and total revenues.
• Discuss three factors that influence whether the
demand for a given product is relatively elastic or

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Required Assignment
Session Topic
Readings Due
inelastic.
• Explain the relationship between marginal
revenue and the own price elasticity of demand.
• Show how to determine elasticities from linear
and log-linear demand functions.
• Explain how regression analysis may be used
to estimate demand functions, and how to
interpret and use the output of a regression.
The Theory of Individual Behavior
• Explain four basic properties of a consumer’s
preference ordering and their ramifications for a
consumer’ indifference curves.
• Illustrate how changes in prices and income
impact an individual’s opportunities.
• Illustrate a consumer’s equilibrium choice and
how it changes in response to changes in prices
and income.
• Separate the impact of a price change into Quiz 3
4 substitution and income effects. Chapter 4 Case study
• Show how to derive an individual’s demand discussion
curve from indifference curve analysis and
market demand from a group of individuals’
demands.
• Illustrate how “buy one, get one free” deals and
gift certificates impact a consumer’s purchase
decisions.
• Apply the income–leisure choice framework to
illustrate the opportunities, incentives, and
choices of workers and managers.
Part III: Supply
The Production Process and Costs
• Explain alternative ways of measuring the
productivity of inputs and the role of the manager
in the production process.
• Calculate input demand and the cost
minimizing combination of inputs and use
isoquant analysis to illustrate optimal input
substitution. Quiz 4
5 • Calculate a cost function from a production Chapter 5 Case study
function and explain how economic costs differ discussion
from accounting costs.
• Explain the difference between and the
economic relevance of fixed costs, sunk costs,
variable costs, and marginal costs.
• Calculate average and marginal costs from
algebraic or tabular cost data and illustrate the
relationship between average and marginal

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Required Assignment
Session Topic
Readings Due
costs.
• Distinguish between short-run and long run
production decisions and illustrate their impact
on costs and economies of scale.
• Conclude whether a multiple-output production
process exhibits economies of scope or cost
complementarities and explain their significance
for managerial decisions.
The Organization of the Firm
• Discuss the economic trade-off associated with
obtaining inputs through spot exchange,
contract, or vertical integration.
• Identify four types of specialized investments,
and explain how each can lead to costly
bargaining, underinvestment, and/or a “hold-up
problem.”
Quiz 5
• Explain the optimal manner of procuring
6 different types of inputs. Chapter 6 Case study
• Describe the principal–agent problem as it discussion
relates to owners and managers.
• Discuss three forces that owners can use to
discipline managers.
• Describe the principal–agent problem as it
relates to managers and workers.
• Discuss four tools the manager can use to
mitigate incentive problems in the workplace.

Mid-term exam Instructions

7 for the
Simulation in Managerial Economics simulation
Part IV: Market
The Nature of Industry
• Calculate alternative measures of industry
structure, conduct, and performance, and
discuss their limitations.
• Describe examples of vertical, horizontal, and
conglomerate mergers, and explain the Reflective
economic basis for each type of merger. report 1
8 • Explain the relevance of the Chapter 7 Quiz 6
HerfindahlHirschman index for antitrust policy
under the horizontal merger guidelines. Case study
discussion
• Describe the structure-conduct-performance
paradigm, the feedback critique, and their
relation to the five forces framework.
• Identify whether an industry is best described
as perfectly competitive, a monopoly,
monopolistically competitive, or an oligopoly.

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Required Assignment
Session Topic
Readings Due
Managing in Competitive, Monopolistic,
and Monopolistically Competitive Markets
• Identify the conditions under which a firm
operates as perfectly competitive,
monopolistically competitive, or a monopoly.
• Identify sources of (and strategies for obtaining)
monopoly power.
• Apply the marginal principle to determine the
profit-maximizing price and output.
• Show the relationship between the elasticity of
demand for a firm’s product and its marginal Reflective
revenue.
report 2
• Explain how long-run adjustments impact
Quiz 7
9 perfectly competitive, monopoly, and Chapter 8
monopolistically competitive firms; discuss the Case study
ramifications of each of these market structures discussion
on social welfare.
• Decide whether a firm making short-run losses
should continue to operate or shut down its
operations.
• Illustrate the relationship between marginal
cost, a competitive firm’s short-run supply curve,
and the competitive industry supply; explain why
supply curves do not exist for firms that have
market power.
• Calculate the optimal output of a firm that
operates two plants and the optimal level of
advertising for a firm that enjoys market power.
Managing in Oligopoly Market: Game Theory
• Explain how beliefs and strategic interaction
shape optimal decisions in oligopoly
environments.
• Identify the conditions under which a firm
operates in a Sweezy, Cournot, Stackelberg, or
Bertrand oligopoly, and the ramifications of each
type of oligopoly for optimal pricing decisions, Reflective
output decisions, and firm profits. report 3
• Apply reaction (or best-response) functions to Chapter 9,
10 Quiz 8
identify optimal decisions and likely competitor 10
responses in oligopoly settings. Case study
• Identify the conditions for a contestable market, discussion
and explain the ramifications for market power
and the sustainability of long-run profits.
• Apply normal form and extensive form
representations of games to formulate decisions
in strategic environments that include pricing,
advertising, coordination, bargaining, innovation,
product quality, monitoring employees, and entry.

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Required Assignment
Session Topic
Readings Due
• Distinguish among dominant, secure, Nash,
mixed, and subgame perfect equilibrium
strategies, and identify such strategies in various
games.
• Identify whether cooperative (collusive)
outcomes may be supported as a Nash
equilibrium in a repeated game, and
explain the roles of trigger strategies, the interest
rate, and the presence of an indefinite or
uncertain final period in achieving such
outcomes.
Part V: Strategy
Pricing Strategies for Firms with Market
Power
• Apply simple elasticity-based markup formulas
to determine profit-maximizing prices in
environments where a business enjoys market
power, including monopoly, monopolistic
competition, and Cournot oligopoly.
• Formulate pricing strategies that permit firms to
extract additional surplus from
consumers—including price discrimination, Reflective
two-part pricing, block pricing, and commodity report 4
bundling—and explain the conditions needed for
11 each of these strategies to yield higher profits Chapter 11 Quiz 9
than standard pricing. Case study
• Formulate pricing strategies that enhance discussion
profits for special cost and demand structures—
such as peak-load pricing, cross-subsidies, and
transfer pricing—and explain the conditions
needed for each strategy to work.
• Explain how price-matching guarantees, brand
loyalty programs,
and randomized pricing strategies can be used
to enhance profits inmarkets with intense price
competition.
The Economics of Information
• Identify strategies to manage risk and
uncertainty, including diversification and optimal
search strategies. Reflective
• Calculate the profit-maximizing output and price report 5
12 in an environment of uncertainty. Chapter 12 Quiz 10
• Explain why asymmetric information about Case study
“hidden actions” or “hidden characteristics” can discussion
lead to moral hazard and adverse selection, and
identify strategies for mitigating these potential
problems.
• Explain how differing auction rules and

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Required Assignment
Session Topic
Readings Due
information structures impact the incentives in
auctions, and determine the optimal bidding
strategies in a variety of auctions with
independent or correlated values.
Self-study
FINAL EXAM: TBA

TUTORIALS
Tutorials following the lecture in each session provide students the opportunity to apply and
share knowledge by doing a variety of in-class activities individually or in groups such as
exercises, discussion, and presentation. These activities focus on demonstrating your skills
and help you build your ability to achieve the learning outcomes for this unit.
Tutorial questions/exercises will be regularly set. You will be expected to have completed
specific reading and exercises from the textbook and other required materials prior to
attending each lecture and tutorial class. If you have not prepared adequately, you will not
get the full benefit from this learning opportunity.

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Learning Resources

ESSENTIAL READINGS

Prescribed Baye, M., et al. (2016). Managerial Economics and Business Strategy
textbook (9th ed.). McGraw-Hill
Recommended
None
readings

ONLINE RESOURCES

E-library https://smartlib.ueh.edu.vn/
Log-in with UEH-ISB account
E-learning https://learn.kfo.edu.vn/

REFERENCING REQUIREMENTS
Student assignments are to contain original content created by the students. Assignments
will be rejected if they include plagiarised content or contain excessive amounts of
quoted/cited material and minimal original content. Students will receive a grade of ZERO
(0%) for any assignments rejected for this reason. Written assignments WILL BE
RANDOMLY checked by the lecturer with Turnitin.com, an online plagiarism-checking tool.
Furthermore, your reference to support your statements must be from a reliable source, such
as textbooks, additional reading materials, and reference books. However, many websites
are not reliable sources. Examples are Wikipedia.org, about.com, and ask.com. If you are not
sure if a reference is acceptable or not, please contact the lecturer.
The Publication Manual of the American Psychological Association (APA) 7th ed., will
serve as the primary reference materials for all students. Therefore, all papers must be
submitted in APA format. The mechanics of student papers and work will be evaluated, as
well as the content. It is imperative that guidelines be reviewed before an assignment is
begun. It is also important that the required submission format be followed in compiling the
final paper or assignment.

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General Information & Policy

Submission
Assignment cover sheet

▪ All assignments are required to be submitted with an Assignment Cover Sheet.

▪ Group assignments are to be submitted with a Group Assignment Cover Sheet as well
as a Peer Evaluation Form depending on the request of the unit instructor.
Non-contributing team members can sometimes be an issue with group-work structured
assessment. Individual student group work scores may be adjusted as a result of peer
dissatisfaction with a particular student’s contribution to group work assignments, as reflected
in submissions of the evaluation form.

🛈 NOTE:
▪ Assignment cover sheets and the evaluation form can be located on KFO E-learning
system (https://learn.kfo.edu.vn/)
▪ Students are advised to keep a copy of all assignments submitted for marking.

Submission style
Assignments are expected to achieve a professional standard:

▪ Be typed, one and a half spaced, on A4 paper

▪ Use a simple clear format, suitable for a report to senior management in a commercial
organisation.
Submission method
Soft copy: submitted electronically via E-learning system (https://learn.kfo.edu.vn/) before
the deadline (Suggested title: Student name/Group name_Unitname_Name of Assignment).
Hard copy: submitted to your lecturer(s) on the due date if required.
Late assignment and make-up policy
All quizzes, the mid-term tests, group assignments, and final exams must be taken on the
assigned dates. No late assignments will be accepted unless prior authorization is granted by
the Unit Coordinator. In case such an authorization is not granted, grade deduction will be
applied. The Unit Coordinator may decide not to accept assignments that are not submitted
within 3 days after the assignment due date. However, if there are extenuating or unforeseen
circumstances, the Unit Coordinator must be contacted before the quiz, midterm, group
assignment or final exam dates to authorise a make-up if required.

Attendance
Class attendance is compulsory and students should provide reasons for the failure to attend
the class on a particular lecture/workshop session. Students are required to attend a
minimum of 80% of all classes in order to secure class participation marks. Please let your
lecturer(s) and/or ISB know AND submit a request for absence form to the Student Advisor
prior to the session if you are unable to attend any session.
Cases equating to an absence:

▪ Arriving to class late by 15 minutes at the beginning,

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▪ Arriving late by 5 minutes after the break

▪ Leaving prior to the scheduled end time without the permission of the lecturer

🛈 IMPORTANT: Students will not be allowed to sit in the final examination if violating the
above absence rule.

Electronic Device Use

▪ Cell phones will be turned off or switched to vibrate mode before class starts.

▪ No phone calls or text messaging are allowed inside the classroom during class
time.
▪ Portable listening and/or music devices may not be operated in the classroom.

▪ Headphones and/or ear buds of any type may not be worn while in the classroom
whether operating or not.
▪ Laptop and other electronic devices are not permitted unless specifically
authorised by the lecturer exclusively for note taking and doing class work.

🛈 IMPORTANT: If you are in violation of these policies, you will be excused from class and an
absence will be assessed.

Email Etiquette
Your lecturers receive many emails each day. In order to enable them to respond to your
emails appropriately and in a timely fashion, students are asked to follow basic requirements
of professional communication.
Your emails should:

▪ Have a concise and descriptive title, including the class and name of the unit you are
enquiring about
▪ Be clear about the intention of their emails

▪ Use appropriate tone and language, proof-read what is written in the email before
sending it.
Students should also allow 3-4 working days for a response before following up. If the matter
is legitimately urgent, you may indicate “URGENT” in the email subject header.
Make an appointment: If your email request is complex and requires a lengthy response it
may be probably best to make an appointment with your lecturer/instructor to meet in person.

Disability Support Services

Students with disabilities are advised that accommodations and services are available at
UEH-ISB. It is the student's responsibility to contact the UEH-ISB office and submit
appropriate documentation prior to receiving such services.

Additional Information
This unit guide may be revised at the discretion of the Unit Coordinator with approval from
Program Academic Director and School Academic Committee where appropriate.

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