BUKD-G596 Economics for Managers
- 12 weeks
- 2.00 credits
Core1. Managers need to make decisions in complex settings that run the gamutfrom pricing to mergers and acquisitions to entering and leaving markets.These decisions are made given information that the manager hascollected. For example, decisions are often responses to changes inthe business environment or to decisions by competitors. In turn,internal decisions will be noticed by competitors and may provokeresponses. Managerial economics is the branch of economics that focuses ondecision-making in firms. Managers have found that the principles ofmanagerial economics are useful in analyzing problems facing firms and henceare powerful tools that aid decision-making. Our task will be to developfamiliarity with these tools and gain the ability to apply them to realand simulated situations. Economic principles lie behind most businessdisciplines. For example, price setting, a key decision for a firm and often amarketing function, is based on price theory developed by economists.We will spend considerable time learning techniques useful in settingprices. This is often a complicated problem because the optimal price willdepend on cost considerations, demand for the product or service, andthe nature of competition. Pricing decisions by competitors will often affectour best pricing strategy. The degrees of vertical and horizontal integrationin a firm are other important strategic choices for management and the basicideas flow from economics. We will study how to evaluate thesechoices and also investigate how mergers, acquisitions, anddivestitures should be valued, since M&A activity is the quickest wayto change the degree of horizontal or vertical integration in a firm.