MGT 322: Managerial Economics
Owen Graduate School of Management
Vanderbilt University
Fall 2012 Mod II Syllabus
Professor: Luke M. Froeb
Class Blog: http://managerialecon.com
E-mail:
Office: (615) 322-9057
Office Hours: T/Th 3:30-4:30, or by appointment
Head TA: Brock Hardisty
Additional TAs: Keri Rich, Sarah Weng, Mitch Evans, Emma Gardner, Stephanie Dozier, Elizabeth Jensen, Cole Luby, Ajuma Imaji, Hoang Lan HuyenTonNu, Kelsey Duggan
Course Goals
After completing this class you should be able to:
· Use the rational-actor paradigm to predict firm and individual behavior
· Compute the relevant costs of any decision
· Use marginal analysis to make extent (how much) decisions
· Make investment decisions that increase firm value
· Set optimal prices and price discriminate
· Predict industry-level changes using demand/supply analysis
· Understand the long-run forces that erode profit
· Develop long-run strategies to increase firm value
· Use game theory to predict how your actions influence those of others
· Bargain effectively
· Make decisions in uncertain environments
· Solve the problems caused by moral hazard and adverse selection
· Align individual and division incentives with the goals of the company
· Manage relationships between upstream suppliers and downstream retailers
· Find unconsummated wealth-creating transactions and devise ways to profitably consummate them
Class Materials
· Froeb, L. M., Managerial Economics: A Problem-Solving Approach, 2nd Edition (Cincinnati: Southwestern, 2010). (ISBN 0538771240, bundled with the economics module of MBAPrimer.com)
REQUIRED. This is the text for the class, and corresponds closely to the homework and lectures.
· Managerial Economics module of MBA Primer
REQUIRED (BUNDLED WITH TEXTBOOK). This is a hands-on “how to” primer that teaches the mechanics of costs, demand, marginal analysis, and benefit-cost analysis. There are primers for Financial Accounting, Managerial Economics, Finance, Accounting, and Statistics. Be sure to select MBA Primer Online: Managerial Economics Module 3.0, 3rd Edition and NOT any of the other primers. Read the material, do the exercises, and take the quiz at the end of each chapter. Repeat the quizzes and review the material until you are comfortable with the concepts and techniques. No deliverables are required from the MBA Primer, but there are 5 quizzes on Blackboard that are almost identical to those in the primer. The primer can also be purchased separately from the textbook at: www.cengagebrain.com
· Student Dashboard, http://www.studentdashboard.net
REQUIRED. Puts all the chapter material: outlines, summaries, blog posts, practice quizzes, video lectures (only for ch1-12), slides, and links for each chapter of textbook in one place. You are responsible for all of this material for the assigned chapters. For the blog, you are responsible for the five most recent blog posts in each chapter, and all posts that are made during mod II.
USER: 2012VanderbiltMBA
PASS: Owen
· Managerial Econ Blog, http://www.managerialecon.com/
REQUIRED. This can be accessed through studentdashboard.net. Please feel free to post comments. Good comments may help class participation grade.
· Economics Interactive Tutorials by Samuel L. Baker, Ph.D., Associate Professor University of South Carolina, Norman J. Arnold School of Public Health, Dept. of Health Administration (http://hadm.sph.sc.edu/courses/econ/tutorials.html)
RECOMMENDED. While these interactive tutorials have a health care focus, they do an excellent job of introducing basic concepts of economics, especially for students with little background in economics. They are freely available at the above URL. I strongly urge those of you without a strong economics background to go through these. No deliverables are required from these Interactive Tutorials; however, these interactive tutorials are great practice for learning the concepts and the quizzes.
Deliverables & Grading
Class participation 10%
Best 5 of 7 Blackboard quizzes 25%
Best 5 of 7 Individual HWs 25%
Cumulative Final Exam 40%
If you have any questions about the grades you receive, submit your questions in writing to Professor Froeb.
Class Participation - To help reinforce the concepts from the assigned readings and homework, students will be required to participate in class discussions and should expect to be called upon at random. Your participation grade will be based on the your contribution to the class, including:
· Preparedness for class, as evidenced by the quality of your answers
· Classroom behavior/attentiveness (i.e. no laptops or cell phones in class)
· Commenting on the blog
Meaningful class participation requires the reading and review of the assigned class material. Do not come to class unless you have read these materials.
Blackboard Quizzes
Weekly quizzes will be posted on Blackboard and must be completed by Sunday night at midnight. Quizzes are timed and will shut off at midnight, so do not wait until late Sunday night to begin the quiz. Quizzes 1-4 are similar to quizzes 1-4 in the MBA Primer. The MBA Primer quizzes do not count towards your grade and you may take them as many times as you wish. The Blackboard quizzes count toward your grade and once you log on, you do not get a second chance.
All quizzes are individual assignments and any communication relevant to the quiz before, during, or after taking it is a violation of the Owen Honor Code. Quizzes are closed book and closed notes and you may not use any other resources (e.g. Internet) during the quiz. Copying or printing any portion of the quiz is a violation of the Owen Honor Code.
You will be able to see your score at the end of each quiz, but you will not be able to see which questions you missed or the correct answers to any of the questions. The answers to each week’s quiz will be reviewed at the following Wednesday’s lunchtime TA session. Please attend this session if you have any questions about the previous week’s quiz.
HW Assignments
Each week’s homework assignment will be posted to Blackboard at the beginning of the week. Completed HW assignments should be dropped off in the box on the 3rd floor by 5pm on Friday. Many of the questions are taken from the end of the chapters in the textbook, so as you read, if you cannot answer these questions on your own, ask questions in class or in the TA sessions. If you cannot answer the question in less than 150 words, then you don’t understand the question.
All homework assignments are open book and open notes, but are individual assignments. You may discuss the concepts of the homework problems with your classmates, but do not look at their written homework. Everything you turn in is to be your own work. Do not expect them to give you the answers or to verify that you have the right answer. Learning this material is hard work, and the only way you can learn it is by doing the questions yourself. If you cannot answer the question in less than 150 words, then you don’t understand the question.
To ensure anonymity in grading, each student will be assigned a unique identification number to be used on all homework assignments. Put only your number and not your name on your homework. Each question will be graded by the same TA to ensure consistency in grading.
Final Exam
Information on the final exam will be provided towards the end of the mod. A practice final exam will be posted and exam review sessions will be offered prior to the test. The final exam includes material from the whole course, as well as blog postings during the mod.
TA Office Hours
TAs will hold office hours each Friday from noon until 3pm to discuss the prior week’s quiz and homework, as well as to answer any questions about course material. Please see the complete schedule in the syllabus for locations.
TAs are also available for free, individual help by appointment. Appointments can be made by contacting a TA directly or by contacting the TA scheduler, Sarah Weng () who will assign the appropriate person based on your needs.
Course Honor Code Policy
Do not lie, cheat or steal.
If I or any of the TAs find evidence of cheating, like sharing of tests or quizzes, or suspiciously-similar individual homework, you will be handed over to your peers on the Honor Council. This will trigger a lengthy judicial process that may lead to failure of the course, suspension, or expulsion.
There is no group work assigned in this course. All work is to be your own.
· Plagiarism, which includes the unauthorized use of previous years’ materials (e.g., examinations, case analyses, homework assignments, quizzes, etc.), is a violation of the Honor Code.
· Quizzes are to be completed individually with no outside help. Quizzes are closed-book, closed-note, closed-browser assessments. Any deviation from these guidelines is a violation of the Honor Code.
By submitting required assignments, you are confirming that you have abided by the Honor Code.
Course Calendar
Complete all readings and Primer assignments prior to each class.
Week 1
October 15: Introduction
Assigned Reading: Textbook: Preface & Chapters 1-2
On Blackboard: “The Economics of Organizations”
MBA Primer: Introduction: What is Managerial Economics?
October 17: Benefits, Costs, and Decisions
Assigned Reading: Chapter 3
MBA Primer: Using Economics in Management Decisions
HW #1 due Friday, October 19 by 5pm
Week 2
October 22: Extent Decisions & Investment Decisions
Assigned Reading: Chapters 4-5
MBA Primer: Understanding the Seller’s Costs
October 24: Simple Pricing
Assigned Reading: Chapter 6
MBA Primer: Understanding the Buyer’s Demand
HW #2 due Friday, October 26 by 5pm
Quizzes 1 & 2 must be completed by Sunday, October 28 at midnight
Week 3
October 29: Economies of Scale and Scope & Understanding Markets and Industry Changes
Assigned Reading: Chapter 7-8
MBA Primer: Understanding Markets and Profit Maximizing
October 31: Strategy and Long-run Relationships Between Industries
Assigned Reading: Chapters 9-10
HW #3 due Friday, November 2 by 5pm
Quizzes 3 & 4 must be completed by Sunday, November 4 at midnight
Week 4
November 5: Foreign Exchange, Trade, and Bubbles
Assigned Reading: Chapters 11-12
November 7: Price Discrimination
Assigned Reading: Chapters 13-14
HW #4 due by Friday, November 9 at 5pm
Quiz 5 must be completed by Sunday, November 11 at midnight
Week 5
November 12: Strategic Games
Assigned Reading: Chapter 15
November 14: Bargaining
Assigned Reading: Chapter 16
HW #5 due by Friday, November 16 at 5pm
Quiz 6 must be completed by Sunday, November 18 at midnight
****FALL BREAK****
Week 6
November 26: Auctions & Making Decisions with Uncertainty
Assigned Reading: Chapters 17-18
November 28: Moral Hazard and Adverse Selection
Assigned Reading: Chapters 19-20
HW #6 due by Friday, November 30 at 5pm
Quiz 7 must be completed by Sunday, December 2 at midnight
Week 7
December 3: Aligning Incentives of Employees and Divisions with Goals of Firm
Assigned Reading: Chapters 21-23
December 5: Course Review
Assigned Reading: Chapter 24
HW #7 due by Friday, December 7 at 5pm
Final Exam Date & Time TBA
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Stephanie Dozier
Kelsey Duggan
Mitch Evans
Emma Gardner
Brock Hardisty
Nicholas Luby
Ajuma Imaji
Lizzi Jensen
Keri Rich
Hoang Lan Huyen TonNU
Sarah Weng
Managerial Economics TAs 2012
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