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ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
(Commonwealth MBA / MPA Programme)
MANAGERIAL ECONOMICS (5580)
CHECK LIST
SEMESTER: AUTUMN, 2010
This packet comprises the following material:-
1. Text Books
2. Assignment No. 1, 2
3. Assignment Forms (two sets)
In this packet, if you find anything missing out of the above mentioned material, please contact at the address given below:
Mailing Officer
Services Block– 28
Allama Iqbal Open University
H-8, Islamabad
Phone: 051-9057611-12
Wishing you all the best
Tahira Nisar
(Course Coordinator)
ALLAMA IQBAL OPEN UNIVERSITY, ISLAMABAD
(Commonwealth MBA / MPA Programme)
1. PLAGIARISM OR HIRING OF GHOST WRITER(S) FOR SOLVING THE ASSIGNMENT(S) WILL DEBAR THE STUDENT FROM AWARD OF DEGREE/CERTIFICATE, IF FOUND AT ANY STAGE.
2. SUBMITTING ASSIGNMENTS BORROWED OR STOLEN FROM OTHER(S) AS ONE’S OWN WILL BE PENALIZED AS DEFINED IN “AIOU PLAGIARISM POLICY”.
Instructions:
(a) All written assignment must be well organized, presented in an easy-to-read format and neat. Moreover, pay particularly close attention to grammar, spelling, punctuation and understandability. Communication is extremely important in this course.
(b) Documentation is likewise very important. Un-supported statements or opinions are worth less to the reader, who desires to verify your finding. Complete and specific documentation is mandatory. Also, your references should be to primary sources, except in rare unusual situation.
(c) Quoting should be kept to an absolute minimum.
Course: Managerial Economics (5580) Semester: Autumn, 2010
Level: Executive MBA/MPA Total Marks: 100
ASSIGNMENT No. 1
Q. 1 What are the roles of understated models in managerial economics?
(a) Profit-maximization model
(b) Revenue maximization model
(c) Agency model (20)
(20)
Q. 2 Define and explain risk premium and elaborate with the help of examples that how do decision makers adjust for risk in estimation of their projects’ rates of return? (20)
Q. 3 Explain and distinguish various forms of elasticity of demand? (20)
Q. 4 Explain the concept of “consumer equilibrium” and describe how do income and price changes affect consumer equilibrium? (20)
Q. 5 (a) Suppose that the price of a hamburger is $1 and the price of a pizza is $2. With an income of $10, a consumer chooses 4 hamburgers and 3 pizzas. Graph the consumer’s budget line and indicate his point of consumption. With his income rising to $15, the consumer chooses 6 pizzas and 3 hamburgers. Show this change in the graph. Is hamburger a normal good? Explain. What type of good is pizza? Explain.
(b) Suppose a consumer has a utility function of U = X0.5 Y0.5, where X and Y are the products that she consumes. If price of X is $5 and price of Y is $10, find the demand functions for X and Y if her income is $100. (20)
Guidelines for Doing Assignments
We expect you to answer each question as per instructions in the assignment. You will find it useful to keep the following points in mind:
1) Planning: Read the assignments carefully, go through the Units on which they are based. Make some points regarding each question and then rearrange them in a logical order.
2) Organization: Be a little selective and analytical before drawing up a rough outline of your answer. Give adequate attention to question’s introduction and conclusion.
Make sure that:
a) The answer is logical and coherent,
b) It has clear connections between sentences and paragraphs,
c) The presentation is correct in your own expression and style.
3) Presentation: Once you are satisfied with your answer, you can write down the final version for submission. It is mandatory to write all assignments neatly in your own handwriting. If you so desire, you may underlining the points you wish to emphasize. Make sure that the answer is within the stipulated word limit.
ASSIGNMENT No. 2
Total Marks: 100
Instructions:
1. This assignment is a research-oriented activity. You are required to develop a term paper and submit to the tutor for evaluation prior to the final examination. The last date of this assignment will be notified separately by our directorate of regional services and the same will be communicated to you directly as well as through approved study centers assigned to you.
2. You will have to participate in the activity fully, actively, and practically to be eligible to sit in the final examination of the course.
3. For the preparation of this assignment, you should first thoroughly review the conceptual framework of the topic and develop a scholarly material of the same giving references, quotations, and extracts of various scholars and experts. Then visit any business/commercial organization and study the relevant practical aspects there. Combining the theoretical and practical aspects, develop a comprehensive paper consisting of at least 20 to 25 typed pages to be submitted to your tutor.
a) Introduction to the topic
b) Important sub-topics
c) Practical study of the organization with respect to the topic
d) Review of theoretical and practical situations, merits, de-merits deficiencies or strengths of the organization with respect to the topic under study.
e) Conclusion and recommendation
f) Annex, if any
4. Prepare a copy of this assignment and submit to your tutor for your evaluation.
5. You should add any illustrative material/data/tables/analysis for effective submission.
6. If you fail to submit this assignment in the class, then you will not be able to sit in the final examination conducted by AIOU.
7. A number of topics given below are the general aspects of the course and you are required to select one of the topics according to the last digit of your roll number. For example, if the roll number is N-9337241, you will select topic number 1, and if the roll number is O-3427185 then you will select topic number 5 (the last digit).
0. Short run cost analysis;
1. Demand and supply analysis;
2. Economies and diseconomies of scale;
3. Price discrimination;
4. Market performance;
5. Market structure and degree of competition;
6. Diminishing return;
7. Pricing strategies;
8. Forms of monopoly;
9. Forecasting methods;
MANAGERIAL ECONOMICS (5580)
Course Outlines
BLOCK–1: INTRODUCTION TO MANAGERIAL ECONOMICS
§ The Nature of Managerial Economics
§ Economic Theory and Managerial Economics
§ Positive versus Normative Economics
§ The Use of Models in Managerial Economics
§ The Theory of the Firm
§ The Objective and Value of the Firm
§ Certainty, Risk, and Uncertainty
§ Limitations of the Profit-Maximization Model
§ Sales (Revenue) Maximization Model
§ The Agency Model
§ Marginal Analysis
BLOCK–2: DECISION MAKING UNDER RISK AND UNCERTAINTY
§ Risk and Uncertainty
§ Measuring Risk with Probability Distributions
§ Measures of Risk (Standard Deviation
§ Utility, Risk Aversion, and Risk Premium
§ Risk and Diminishing Marginal Utility
§ Risk Premium
§ Risk Adjustment in Decision Making
§ Asymmetric Information
BLOCK–3 QUANTITATIVE DEMAND ANALYSIS
§ Elasticity of Demand
§ The (Own) Price Elasticity of Demand
§ Point versus Arc Elasticity
§ Arc Price Elasticity
§ Elasticity, Marginal Revenue, and Total Revenue
§ Factors That Determine Price Elasticity
§ Elasticity of a Product versus Elasticity of a Brand
§ Other Types of Elasticity
§ Income Elasticity
§ Business Implications of Income Elasticity
§ Cross-Price Elasticity
§ Advertising Elasticity
§ Obtaining Elasticity from the Demand Function
§ Elasticity for Nonlinear Demand Functions
BLOCK–4: THE THEORY OF CONSUMER BEHAVIOUR
§ Indifference Curves a very detailed concept in Microeconomics in the description of consumer behavior with respect to different changes.
§ Application of Indifference Curves
§ Relationship between Indifference Curve Analysis and Demand Curves
§ The Attribute Approach to Consumer Choice
BLOCK–5: PRODUCTION ANALYSIS
§ Production Analysis
§ The Production Function
§ The Short-Run versus Long-Run
§ Production in the Short Run
§ Measures of Productivity
§ The Law of Diminishing Returns
§ Total Product, Average Product, and Marginal Product
§ The Optimal Level of Employment of a Variable Input
§ The Production Function of Multiple Variable Inputs (Isoquants and Isocosts)
§ Cost Minimization (Economic Efficiency)
§ Technological Changes
BLOCK–6: COST THEORY
§ Short Run Costs
§ Long Run Costs
§ The Nature of Costs
§ Normal and Pure Profits
§ Incremental Cost Analysis
§ Relevant Costs and Irrelevant Costs
BLOCK–7: NATURE OF INDUSTRY
§ Different Perspectives on Competition
§ Chamberlin’s Resource-Based View
§ Schumpeter’s Technology Based View
§ The Industrial Organization Model
§ Market Structure
§ Market Performance
§ Economic Profits or Rates of Return on Investment
§ The Lerner Index
BLOCK–8: MARKET STRUCTURE
§ Perfect Competition
§ Monopoly
§ Monopolistic Competition
§ Oligopoly
BLOCK–9: PRICING PRACTICES
§ Cost-Plus Pricing
§ Extracting Consumer Surplus
§ Price Discrimination
§ Two-Part Tariffs
§ Pricing Product Bundles
BLOCK–10: AN OVERVIEW OF STRATEGIC BUSINESS CONCEPTS FOR MANAGERS
§ Strategy Definitions
§ Strategy at Different Levels of a Business
§ How Strategy is Managed – Strategic Management
§ Strategic Analysis
§ SWOT Analysis
§ Ansoff Product/Market Matrix
§ Strategic Choice and Implementation
§ Game Theory – A Basic Definition, Prisoner’s Dilemma, and Key Concepts
§ The Game Matrix, Equilibrium, Dominant Strategies, and Nash Equilibrium
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