8/16/98

MGT 722: Managerial Economics for EMBA

Owen Graduate School of Management

Vanderbilt University

Fall Semester 2014

Professor:Luke M. Froeb

E-mail:luke.froeb@owen.vanderbilt.edu

Office: (615) 322-9057

Website:http://www.cengagebrain.com

Blog: http://www.managerialecon.com

TAs: Sarah Berhalter: sarah.berhalter@owen.vanderbilt.edu

Lee J Webb: lee.webb@owen.vanderbilt.edu

Course Goals

If you do the work for this class, you will be able to use economics to solve business problems. In particular, you will be able to:

Use the rational-actor paradigm to predict firm and individual behavior.

Compute the relevant costs of any decision.

Use marginal analysis to make extent (how much) decisions.

Make investment decisions that increase firm value.

Set optimal prices and price discriminate.

Predict industry-level changes using demand/supply analysis.

Understand the long-run forces that erode profit

Develop long-run strategies to increase firm value.

Use game theory to predict how your actions influence those of others.

Bargain effectively

Make decisions in uncertain environments.

Solve the problems caused by moral hazard and adverse selection.

Align individual and division incentives with the goals of the company.

Manage relationships between upstream suppliers or downstream retailers.

Find unconsummated wealth-creating transactions and devise ways to profitably consummate them.

You learn economics only by solving problems

Learning economics is similar to learning math or physicsthe only way to learn is by doing problems. Reading material is helpful, but the only way to learn this is by doing problems. WARNING: for you creative types, do not fool yourself that you learning by following lectures and the readings. Instead, work on problems: HW, quizzes, practice quizzes, and end of chapter questions. You will pass if you put in the work on the problems.

Class Material

Froeb, L. M., Managerial Economics: A Problem-Solving Approach, 3rd Edition (Cincinnati: Southwestern, 2013). (IBSN13: 978-1-133-28488-8), bundled with Coursemate Printed Access Card)

REQUIRED. This is the text for the class, and corresponds closely to the lectures.

Cengage Coursemate for Managerial Economics: A Problem-Solving Approach, 3rd Edition. https://login.cengagebrain.com/cb/login.htm

REQUIRED: [BUNDLED WITH TEXTBOOK] This book comes bundled with Coursemate, an interactive tool with access to a digital version of the text and additional resources. For every chapter you will find flashcards, homework solutions, interactive quizzes, video lectures from Professor Froeb and more. Please become familiar with and utilize this tool as it willassist withboth your understanding and performance in the course. Though no deliverables come from coursemate, much of the material found in the interactive and sample quizzes for each chapter are similar to the class quizzes, and completion of them is a great way to prepare.

Note: Use the access code found on the card in the textbook to set up and create your account. Do not lose or dispose of this card! Once your account has been created, use the link above to access the log-in page. After logging in, you may be prompted to enter a Course Key- ignore it, as that is not required to access the chapter resources on the left. For any issues setting up the account please contact Sarah (sarah.berhalter@owen.vanderbilt.edu)

Managerial Econ Blog, http://www.managerialecon.com/

REQUIRED. Please keep up with the blog. You may see homework, quiz, and exam questions that come directly from the blog. Please feel free to post comments. Good comments count towards class participation grade; bad comments hurt. When you read a blog post, try to make up a problem based on the post, and post it in the comments to the blog. A link to the blog and the content that applies to specific chapters can also be found in Coursemate.

Economics Interactive Tutorials by Samuel L. Baker, Ph.D., Associate Professor University of South Carolina, Norman J. Arnold School of Public Health, Dept. of Health Administration (http://hspm.sph.sc.edu/courses/econ/Tutorials.html)

RECOMMENDED. While these interactive tutorials have a health care focus, they do an excellent job of introducing basic concepts of economics, especially for students with little background in economics. They are freely available at the above URL. I strongly urge those of you without a strong economics background to go through these. No deliverables are required from these Interactive Tutorials; however, these interactive tutorials are great practice for testing yourself on the concepts and the quizzes or for those who require additional assistance.

Deliverables & Grading

Class Participation +/- 5%

Best 5 of 6 Blackboard quizzes25%

Best 5 of 6 Individual HWs25%Best 4 of 5 Group Presentations (slides and memo) 25%Take home Final Exam covering readings, lectures, MBA Primer25%

Quizzes: (Best 5 of 6 scores taken)

There are six scheduled Blackboard quizzes. You may drop one. The quizzes will be based on material covered in class, end of chapter questions, homework problems and coursemate material. Class attendance, understanding of assignments and completion of the sample and interactive quizzes at the end of each related chapter in coursemate are the best ways to prepare for these quizzes.

Online quizzes are closed book and closed note, and must be completed individually. You may not use any other resources during the quiz. This includes additional online resources, copies of quizzes from earlier years and your classmates.

Your score will be posted on Blackboard. Quizzes and solutions will be posted on blackboard once the time window has closed. If you have a question about a problem you missed, please make an appointment to meet with Sarah or Lee J.

Group Homework: (Best 4 of 5 scores taken)Write a