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 431. Office: Room 517G, Jenkins School of Business.

Office hours: In Person: 3-6 PM Tuesdays (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).

Web Site/Blackboard: At Blackboard, 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 4, 4:15-6:20. The final takes place in the same room (Aresty 431).

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 23, October 30, and November 20)
• First Quiz (November 6) 35%
• Final Quiz (December 4) 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. I prefer homeworks to be submitted via email, but in person is OK too. If submitting by email, please submit a Word Document or pdf, avoid huge jpeg/picture files. The homework email must be sent (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 6 and December 4. 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.
• 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 16).
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 23.
2. Production: What inputs to use. (Chapter 4:7th edition, chapter 5:8th edition, October 23-30).
1. The production function and it's properties.
2. Optimal input use.
3. HOMEWORK 2 DUE OCTOBER 30.
4. Marginal rate of technical substitution.
5. Optimal input use with multiple inputs.
6. FIRST QUIZ, NOVEMBER 6.
3. Cost Analysis (Chapter 5:7th edition, chapter 6:8th edition, November 6-13).
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 13).
1. Price elasticity.
2. Income elasticity.
2. HOMEWORK 3, DUE NOVEMBER 20.
3. Setting the price to maximize profits (Chapter 6, November 20).
4. Pricing Techniques (Chapters 7-9:7th edition, chapter 8-10:8th edition, November 20).
1. Perfect Competition.
2. Cost plus pricing.
3. Monopoly pricing.
4. Price discrimination.
5. Upcharging.

Up to Dave Kelly's homepage

Interesting web sites for Eco 693 students.

National Association for Business Economists.
The Economist.
The Economist.com argues that economics is valuable for MBAs since economics has more compelling and realistic theories business administration than other disciplines.
Cool Economics