ECAN 647-02
Managerial Economics

Professor Eric B. Schorvitz
Fall 2001

Office Hours:

Labs:

Required Text:

Description:

This course covers the basic principles of microeconomics: Two types of economic agents are considered - consumers and firms. These agents interact through markets. Both consumers and firms are assumed to engage in optimizing behavior. Consumers maximize utility; the basic assumptions sufficient for this behavior are discussed, the process by which demand curves are derived is discussed and demand elasticities, price and income consumption curves are derived graphically and detailed analysis of observed demand curves is presented. In addition. The labor-leisure choice and inter-temporal choice problems are addressed as examples of the income and substitution effects. Firms are assumed to maximize profit, the major components of which are revenues and costs. Basic results including properties of cost functions, input-demand functions and supply functions are derived. For firms and consumers, the approach taken is that of rational decision makers choosing from feasible sets. For consumers, the feasible set is determined by a budget constraint. For firms, the feasible set is determined by the production technology.

The treatment of consumers is fairly standard. Assumptions about individual preferences are used to derive indifference curves, the indifference curves are used to build up utility functions and the utility functions are used to derive demand functions. These demand functions are the most commonly used method of representing consumers in this course. You will see these again in your marketing classes.

In this course you will learn that no one gets rich by being a "perfect competitor." In order to make "extra normal profits" you want to be an "imperfect competitor." This course intends to help you identify situations in which this is possible by presenting theory of firms and consumers.

The treatment of theory of the firm is standard only in presenting production and cost information first. Then we proceed to the simplest imperfect model - the monopolist - and then proceed through a couple forms of oligopoly to conclude with the perfectly competitive market model. The advantage of this presentation is that it introduces the most important models early so that we can spend the most time on them. Additionally, the tool used to study these different market structures is game theory, a tool increasingly used in finance, management, and strategy.

This course is constructed of three independent parts; lectures, experiments, and homework. To fully absorb this course, you will need to participate in all three activities.

The weekly lectures provide the overview and structure to integrate the readings and problem assignments. Lectures are a complement to, rather than a substitute for reading in the text and homework assignments. Homework problems are not covered in the lecture, if you have specific questions about homework, we can do those problems in office hours. Homework is collected and graded on a 0 (didn't do it), 1 (threw it together), or 2 (put in the effort) point scale. Do expect to see problems from the homework assignments on the exams. Economics is not a spectator sport.

In addition to the standard lectures, there will be experiments scheduled during some of the Lab times. These experiments are not only fun, but also they provide valuable insight into the theory we cover in class. Furthermore, you can earn course credit based on your performance in these experiments.

Examinations:

Exams will consist of True/False, Multiple Choice, Short Answer, and Problem Solving. Basic calculators are allowed. Programmable calculators are forbidden.
Midterm: Tuesday, 9/20 GWH140 @ 1:30PM - 3:20PM
Final: Sunday, 10/14 GWH131 @ 1:00PM - 5:00PM

Grades:

Grades are determined by a weighted index on the following:

Experiments:	20%
Assignments:	10%
Midterm:	30%
Final:	40%

Make-Up Policy:

Due to the short duration of this class, make-up exams will only be given in special circumstances. If you know you are going to miss an exam, please bring it to my attention immediately so that we may work out an arrangement. If you miss an exam and do not tell me prior to the exam, no make-up will be given.

Cheating:

The minimum penalty imposed on work tainted by academic dishonesty is an assigned grade of zero. In addition, the Department Chair will be informed in writing of the incident, the penalty imposed, and my recommendation for expulsion. Further action may be taken at the departmental level.