SCHOOL OF BUSINESS

DEPARTMENT OF ECONOMICS

Managerial Economics: BEC381

Lecturer: Ms. Mwila Bowa (mwilabowa18@gmail.com)

Introduction
Students will gather, analyze and use macro and micro economic
data to evaluate business problems and to achieve optimum
decision making in the allocation of limited resources.
Rationale
Study of Managerial Economics helps in the enhancement of
analytical skills, assists in rational configuration as well as
solution of problems. It is of great help in price analysis,
production analysis, capital budgeting, risk analysis and
determination of demand.
Aim
The aim of this course is to demonstrate the application of
economic theory and the tools of analysis of decision sciences as
to how an organization can achieve its managerial aims and
objectives most efficiently.
Learning Outcomes
After completing this course you should be able to:
i. To understand the applications of economic theories in
business decision
ii. Develop long-run strategies to increase firm value.
iii. Use game theory to predict how your actions influence
those of others.
iv. Solve the problems caused by moral hazard and adverse
selection.

Course Content
UNIT 1 - Introduction
 Nature of Managerial Economics
 Scope of Managerial Economics
 The concept of Value Maximization
UNIT 2 – Review of Microeconomics Concepts and
Differential Calculus
 Demand, Supply, Market, Elasticity
 Total Cost, Average Cost, Marginal Cost
  Total Revenue, Average Revenue, Marginal Revenue
 Profit, Average profit, Marginal profit
 Market Structure and Competition
 Differential Calculus
UNIT 3 - Economic Optimization and Marginal Analysis
 Economic Optimization (Unconstrained Optimization)
 Profit Maximization
 Revenue Maximization
 Average Cost Minimization
 Constrained Optimization
UNIT 4 - Demand Estimation and Forecasting
 Elasticity and Total Revenue
 Elasticity and Marginal Revenue
 Cross Price Elasticity
 Elasticity and Demand Function; Elasticity for Linear
Demand Functions, Elasticity for Nonlinear Demand
Functions
 Demand Estimation and Forecasting with Regression
Analysis
UNIT 5 - Pricing and Business Strategy
 Mark-up Pricing
 Mark-up Pricing and Profit Maximization
 Price Discrimination
  Multiple Product Pricing
 Two part Pricing
 Bundle Pricing
 Peak Load Pricing
 Transfer Pricing
UNIT 6 – Strategic Behaviour and Game Theory
 Nature and Scope of Game Theory
 Elements and Types of Game
 Prisoner’s Dilemma
 Nash Equilibrium

Method of Teaching
 2 lectures hours per week (Physical class)
 1 Tutorial hours per week (online class)

Assessment
 Continuous Assessment 50%
o Assignments 20%
o Tests 30%
 Final Examination 50%

Prescribed Readings
i. Wilkinson, N. (2005). Managerial Economics: A Problem-
Solving Approach. New York: Cambridge University
Press.
Recommended Readings
i. Baye, .R.M. and Prince, T. J. (2014). Managerial
Economics and Business Strategy. New York: McGraw
Hill/Irwin, 8th Edition.
ii. Samuelson, F. W. and Marks, G. S. Managerial Economics.
John Wiley & Sons, Inc, 7th Edition.