|Module Title||ECONOMICS FOR MANAGERS|
|Co-ordinator||Professor John R Cable|
|Course delivery||Lecture||Introduction plus 8 x 2 hour sessions|
|Other||Reading programme and group-based activities|
Resource allocation and markets; Decision making involving choice; Strategic interaction.
Demand, Supply and Market Equilibrium
Factors affecting demand. Elasticity. Anticipating revenue effects of price changes. Application: Cambrian Railways. Other elasticities. Example: Demand for cigarettes.
The firm and its objectives. Cost structure: fixed and variable costs; total, average and marginal costs; the cost of durable inputs; sunk costs; opportunity costs. Revenue structure: total, average and marginal revenue under competition and monopoly.
Equilibrating mechanisms; Disturbances and Shifts in Equilibrium; Dynamically Unstable Markets; Asymmetric information.
Bidding, Contracting and Auctions
Bidding strategy. Auctions. The winner'r curse. Example: the UK 3G Mobile Licence Auctions.
Equating at the margin:
(i) Output determination: profit maximization and break-even analysis.
(ii) Making the most of a budget. Spending alternatives. Preferences and returns. The budget constraint.
(iii) Producing at Minimum Cost. Balancing input proportions. Factor Utilisation. Technical efficiency.
Alternative market structures. Oligopoly: the rivals? dilemma. Dominant strategies and Nash Equilibrium. Co-operation in repeated plays. Cartels. Entry and entry deterrence.
Principals and Agents
Principal-agent relationships within the firm: owners and managers. Hidden information and hidden action. Moral hazard. Incentive contracts. Alternative contracts: wage contract; rent contract; profit related pay. Incentive contracts in practice.
This module is at CQFW Level 7