EC335: Managerial Economics
Isleide Zissimos
Module Leader
Andreas Markoulakis
Module Lecturer
Introduction
This module uses traditional economic tools, for example partial equilibrium analysis, to teach the students to identify profitable decisions. When a bad decision is made by a manager, we explore its possible sources, which can include: (1) The manager was the wrong person to take the decision. (2) The manager did not have enough information to make a good decision. (3) The manager had an incentive to take the wrong decision. The economic tools help the students to develop a view on the appropriate way to tackle these issues, which can be, for example, either to change the decision-maker, or to change the information flow, or to change the incentives in the business organisation.
Principal Aims
Aimed at business students of Economics (students who will, in general, not pursue careers as economists or graduate study in Economics) seeking to understand how the theory of markets, incentives and games work in practical managerial situations. The module illustrates the central decision problems managers face and provides the economic analysis needed to guide these decisions.
Principal Learning Outcomes
Subject knowledge and understanding:…understand key concepts in Managerial Economics, such as market structures, game theory, imperfect information, principal-agent problems.
Subject knowledge and understanding:…demonstrate knowledge of economic trends, institutions and policies, especially in the context of business and industry-related problems and issues.
Subject knowledge and understanding:…abstract and simplify basic economic problems through the application of simple theoretical models.
Key Skills:…communicate knowledge and understanding of economics in written, graphical and in appropriate mathematical forms.
Cognitive Skills:…analyse competing models and hypotheses in a critical way.
Cognitive Skills:…analyse and formulate models for understanding and solving problems.
Subject-Specific/Professional Skills:…select and apply appropriate economic models and techniques to particular problems especially relating to business and industry.
Syllabus
1. Competitive Markets: (a) Review of Supply, Demand and Market Equilibrium. (b) Welfare Properties of Competitive Markets.
2. Market Structures: (a) Monopoly and Monopoly Pricing. (b) Oligopoly, Quantity Setting and Pricing Models, First Mover Advantage.
3. Game Theory: (a) Introduction to Game Theory, Nash Equilibrium. (b) Simultaneous and Sequential Games. (c) Classical Games and Applications.
4. Internal Organisation: (a) The Theory of the Firm, Transaction Costs, Make vs. Buy, Incomplete Contracts. (b) The Principal-Agent Problem, Incentive Contracts, Uncertainty and Risk-Aversion.
5. Asymmetric Information: (a) Moral Hazard with Applications to Finance. (b) Adverse Selection, The Lemons Problem, Herding.
Context
- Optional Module
- NN35 - Year 3, N140 - Year 3, N1R2 - Year 4, N1RA - Year 4, NN36 - Year 4, N220 - Year 3, N1RB - Year 4, N1RC - Year 4, MN31 - Year 3, MN32 - Year 3, MN32 - Year 4, MN34 - Year 3, MN34 - Year 4, MN35 - Year 3, MN35 - Year 4, MN36 - Year 4, MN36 - Year 5, MN37 - Year 4, MN37 - Year 5, N140 - Year 4, N1R1 - Year 4, N1R3 - Year 4, N1R4 - Year 4, N201 - Year 3, N202 - Year 4, N203 - Year 4
- Pre or Co-requisites
This module is not available for Economics students.
Any student who is NOT registered for BSc Management, BSc Accounting and Finance, BSc International Business,
BSc International Management, BA Law and Business cannot take this module.
Summary:Modules: EC131-15
- Restrictions
- May not be combined with modules EC231-15 or EC208-15
Assessment
- Assessment Method
- Examination (100%)
- Coursework Details
- Examination (100%)
- Exam Timing
- Summer
Exam Rubric
Time Allowed: 2 Hours
Read all instructions carefully - and read through the entire paper at least once before you start entering your answers.
There are TWO sections in this paper. Answer TWO questions in Section A (30 marks each) and TWO questions in Section B (20 marks each).
Answer each whole question in a separate booklet.
Approved scientific (non-graphical) pocket calculators are allowed.
You should not submit answers to more than the required number of questions. If you do, we will mark the questions in the order that they appear, up to the required number of questions in each section.
Previous exam papers can be found in the University’s past papers archive. Please note that previous exam papers may not have operated under the same exam rubric or assessment weightings as those for the current academic year. The content of past papers may also be different.