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Indian Institute of Management Bangalore

Introduction to Managerial Economics

Indian Institute of Management Bangalore via Swayam


A successful manager makes good decisions. To make good decisions, you need to understand the market forces that impact your business and personal life. This is true for managers in large multinationals or small businesses, in non-profit organizations or in the government. Individuals and households also make decisions. They decide on what to learn, where to work, how much to save, where to invest, and what goods to buy, among others. Most modern societies depend on markets to organize economic activity: they are market economies. Many decisions you make as individuals or as managers relate to markets. So, it is important for you to know how markets work and how to make good decisions as a manager or as an individual operating in a market environment. This is what this course will teach you.Most business schools have a course on Managerial Economics as part of the MBA curriculum. Exposure to Economics is essential for all students of management. This course will provide a simple introduction to Managerial Economics and use minimum mathematics.What you will learn:• How markets work; supply, demand, and market equilibrium• Elasticity of supply and demand, taxes, and subsidies• Production of goods and services, measures of productivity• Making decisions for hiring and spending on infrastructure• Opportunity costs, different cost concepts, planning for the future• Pricing and selling decisions with different types of competitive pressures• Problems with markets and what we can do about it


Week 1: How Markets Work?

• What is Economics• Microeconomics and Macroeconomics• Why should students of Business learn Microeconomics• Market Economies• Production Possibility Frontier• The Demand Curve• Factors that Affect Demand• The Supply Curve• Factors that affect Supply

Week 2: Demand, Supply and Equilibrium

• The Equilibrium• Divergence from the Equilibrium Price• Effects of changes in business environment on the equilibrium• Price Elasticity of Demand and Supply• Income Elasticity and Cross Price Elasticity

Week 3: Production and Cost

• The Production Function• Behaviour of Average and Marginal Products• Law of Diminishing Returns• Productivity in the Long Run• Scale and Scope of Production• Costs of Different types• Behaviour of average and marginal costs• Relationship between costs and productivity• Costs in the long run

Week 4: Markets - Part 1

• Markets of Different types• Perfectly Competitive Market• Profits in a perfectly competitive Market• Perfect competition in the long run• Monopoly• Profits in a monopolistic market• Sources of Monopoly Power• The Multi-product firms• Monopolistic Competition
Week 5: Markets - Part 2

• Oligopoly• Different Models of Oligopoly• Why do markets Fail• Game Theory: a strategic understanding

Taught by

Subhashish Gupta



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