Module Identifier | MBM1010 | ||||||||||||||
Module Title | ECONOMICS FOR MANAGERS | ||||||||||||||
Academic Year | 2004/2005 | ||||||||||||||
Co-ordinator | Professor John R Cable | ||||||||||||||
Semester | Semester 1 | ||||||||||||||
Course delivery | Lecture | Introduction plus 8 x 2 hour sessions | |||||||||||||
Other | Reading programme and group-based activities | ||||||||||||||
Assessment |
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Resource allocation and markets; Decision making involving choice; Strategic interaction.
Demand, Supply and Market Equilibrium
Demand
Factors affecting demand. Elasticity. Anticipating revenue effects of price changes. Application: Cambrian Railways. Other elasticities. Example: Demand for cigarettes.
Supply
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.
Market Equilibrium
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.
Optimisation
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.
Optimising choice.
(iii) Producing at Minimum Cost. Balancing input proportions. Factor Utilisation. Technical efficiency.
Economic efficiency.
Strategic Behaviour
Market Rivalry
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.
Revision Session
This module is at CQFW Level 7