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EC335: Managerial Economics

12/15 CATS - Department of Economics

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

By the end of the module the student should be able to understand key concepts in Managerial Economics, such as market structures, game theory, imperfect information, principal-agent problems; demonstrate knowledge of economic trends, institutions and policies, especially in the context of business and industry-related problems and issues; abstract and simplify basic economic problems through the application of simple theoretical models.


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.


Pre or Co-requisites
EC131 and EC229
This module cannot be taken by L100, L116, LM1D/LLD2 and PPE students. 15 CATS for BA German & Business Studies students; 12 CATS for all other WBS students. Students who take this module must not be taking or have previously taken EC208 Industrial Economics 1.
Part-year Availability for Visiting Students
Not available on a part-year basis


Assessment Method
12 CATS - 2 hour exam (100%)
15 CATS - Coursework (10%) + 2 hour exam (90%)
Coursework Details
One assignment (1500-word) (10%)
Exam Timing

Exam Rubric

Time Allowed: 2 hours.

Answer TWO questions from Section A (60 marks) and TWO questions from Section B (40 marks). Answer Section A questions in one booklet and Section B questions in a separate booklet.

Approved pocket calculators are allowed.

Read carefully the instructions on the answer book provided and make sure that the particulars required are entered on each answer book. If you answer more questions than are required and do not indicate which answers should be ignored, we will mark the requisite number of answers in the order in which they appear in the answer book(s): answers beyond that number will not be considered.

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.

Reading Lists