Course Description

Economics is the study of the allocation of scarce resources. Because all decisions are essentially about the allocation of scarce resources, economics is in fact the study of decision making and problem solving in general. Thus many of the techniques we will study will be used in other business classes and disciplines. For example, CAP-M and Black-Scholes from finance, executive compensation in organizational behavior, and price elasticities used in marketing are all derived from economic theory. Because economics is so useful across a wide variety of business problems, many investment banks, consulting firms, and tech firms such as Google and Microsoft now have in-house economics departments. Because in general these very fundamental decisions are made by higher level executives, economics becomes critically important for CEOs and other senior executives. This is one reason why economics is the most common major among Fortune 500 CEOs.

General Information

Course Meetings: Section 37b: Wednesdays 4:15-6:20 pm in Aresty 532. Office: Room 517G, Jenkins School of Business.

Office hours: tenatively scheduled for Tuesdays 3-5 pm. This may be revised depending on class availability. (Dave is almost always available to meet during business hours, but try to come during office hours if you can).

Contacts: Dave can be contacted via phone (8x3725) or email (dkelly@miami.edu).

Canvas: On Canvas, I will post notes, homeworks, quizzes, grades, solution sets, review sheets, and other materials, as well as a continuously updated syllabus.

Final Exam: Wednesday, October 2, 4:15-6:20 in Aresty 532 (same room as class).

Prerequisites

Textbooks

Allen, W. Bruce, Keith Weigelt, Neil A. Doherty, and Edwin Mansfield, Managerial Economics (8th Edition). W. W. Norton & Co., New York, 2012.

The 7th edition is also OK.

Allen, W. Bruce, Keith Weigelt, Neil A. Doherty, and Edwin Mansfield, Managerial Economics (7th Edition). W. W. Norton & Co., New York, 2009.

The textbook is not required. In class I will give some advice as to whether or not to purchase the book.

Grades

• 3 Homeworks 30% (due dates: October 21, October 28, and November 18)
• First Quiz (November 4) 35%
• Final Quiz (December 2) 35%

Additional Notes

• Attendence is required and very important for this class. All quiz material comes from class notes, and not all class notes are available in the book. Dave will provide detailed notes and record solutions to some example problems, which include some in-class examples not in the notes. Smart students will attend every class and take detailed notes on the in-class examples. Much of the learning takes place in the Q&A in class.
• There is a homework or quiz due every Wednesday, starting in week 2. Each homework is worth 10%, a letter grade. Dave prefers homeworks to be submitted via email or via Canvas, but in person is OK too. If submitting by Canvas/email, please submit a pdf, avoid huge jpeg/picture files. The homework must be submitted (or the homework placed on my desk in class) by the time class starts. Dave recognizes that sometimes emergencies occur, in which case a student can be excused from turning in a homework. In this case, the final will be weighted more. Students must let Dave know in advance if they are unable to turn in a homework on time. Finally, the homeworks sometimes demonstrate how the concepts used in class are applied in the "real world." Because the real world is complicated, the homeworks can be long. Do not wait until the last minute to start the homeworks.
• The two quizzes are November 4 and December 2. Now is the time to mark your calandars. As with the homeworks, if there is an emergency, the final will be weighted more. Students must let me know in advance if there is an emergency.
• The class requires active participation and discussion to learn. You cannot learn while you are on you phone.
• With six week courses, it is important to keep up. Missing one class is equivalent to missing a month's worth of undergraduate classes.
• AI Policy: you are free to use AI on homeworks. The quizzes are closed book/notes/AI and so those that cut and paste AI without understanding are likely to get low quiz grades. Using terms or concepts in the AI but not discussed in class is an easy way for Dave to see that are not understanding the answers. Finally, Dave has been known to word questions in a way that makes AI hullicinate. You are responsible for the answers.
• What they say about Dave on Rate My Professor:
  • "Can be an a-- if you procrastinate."
  • "God help you if you don't go to class."

Course Outline

1. Introduction (chapter 1, October 14).
1. What is Economics and what is managerial economics?
2. Thinking like an economist.
3. Managerial decisions studied in this course.
4. Principles of managerial economics.
5. An overview of theory of the firm.
1. Value of the firm.
2. Economic and accounting Profits.
3. Objective of the firm: profit maximization.
4. Profit maximization, ethics, sustainability, and welfare.
6. HOMEWORK 1 DUE OCTOBER 21.
2. Production: What inputs to use. (Chapter 4:7th edition, chapter 5:8th edition, October 21-28).
1. The production function and it's properties.
2. Optimal input use.
3. HOMEWORK 2 DUE OCTOBER 28.
4. Marginal rate of technical substitution.
5. Optimal input use with multiple inputs.
6. FIRST QUIZ, NOVEMBER 4.
3. Cost Analysis (Chapter 5:7th edition, chapter 6:8th edition, November 4-11).
1. Fixed, average, and marginal costs: short run.
2. Sunk costs.
3. Optimal production in competitive markets.
4. Pricing.
1. Demand curves (Chapter 2, November 11).
1. Price elasticity.
2. Income elasticity.
2. HOMEWORK 3, DUE NOVEMBER 18.
3. Setting the price to maximize profits (Chapter 6, November 18).
4. Pricing Techniques (Chapters 7-9:7th edition, chapter 8-10:8th edition, November 18).
1. Perfect Competition.
2. Cost plus pricing.
3. Monopoly pricing.
4. Price discrimination.
5. Upcharging.