Managerial Economics is a core course of BS Economics aimed at presenting and developing a microeconomic approach to business decisions.The concepts and problems are analyzed from the perpestive of the firm and the manager's decisions. Emphasis is thus placed on the study of the production process and the analysis of interactions in markets, both with the consumers and the rival firms.

Learning Outcomes

  • Students will be skilled in critical thinking and decision-making, supported by economic principles and best practices in business. 
  • Students will have the ability to use data to inform economic and business decision making. 
  • Students will be able to put together quantitative reports as well as to evaluate reports put together by others.
  • Students will be able to comprehend economics-related writing. 
  • Students will be able to work effectively in teams and to address strategic and organizational challenges.
  • Content


    1.Nature, Scope and Overview of Managerial Economics

  • The Nature and Scope of Managerial Economics. The Managerial decision
  • making process.

  • Theory of the firm. Profit maximization. Cost Minimization.
  • Economic optimization. Economic relations of variables.
  • The Incremental concept in Economic Analysis. Demand, Supply and Equilibrium
  • 2.Demand Analysis, Estimation and Forecasting
  • The Basis for Demand. The Market Demand function. Demand sensitivity
  • analysis: Elasticity, Price Elasticity of Demand with Managerial applications.
  • Income Elasticity of Demand with Managerial applications.
  • Application of Regression Analysis: Demand estimation. Demand forecasting.
  • 3.Production and Cost Analysis

  • Production function; Total, Marginal and Average Product. Revenue and Cost in
  • Production. Production function estimation.    Productivity Measurement.
  • Homogenous and Homothetic Production Function. Short run and long run cost
  • curves. Learning curves and application. Cost-value-profit analysis. Cost estimation
  • 4.Decision Making Under Risk and Uncertainty

  • Introduction. Risk Analysis of Decision Alternatives. Adjustment for Risk in
  • Decision Making. The Expected Value Criterion. The Standard Deviation
  • Criterion. The Coefficient of Variation Criterion. The Certainty Equivalent
  • Criterion. The Maxima and Maximax Criterion. The Decision Tree and Joint
  • Probabilities. Optimal decision Strategy. Limit Pricing and Preventing entry.
  • 5.Pricing Analysis and Decisions

  • A Review of Market Structures and Basic Pricing Models. Perfect Competition.
  • Monopoly. Monopolistic Competition. Oligopoly. Selected Pricing Models.
  • Marginalist Pricing. Mark up pricing. New Product Pricing. Oligopoly Model.
  • Contestable Markets.   Pricing Strategies for Firms and Market Power.
  • Monopolistic Competition. Price Discrimination, Monoposony and Price Product
  • 6.Managerial Theories and Models of the Firm

  • Baumol's Theory of Sales Revenue Maximization. Marris's Model of Managerial
  • Enterprise. Wiiliamson's Model of Managerial Discretion Topics, Behavioral
  • Model by Cyert and March.
  • Public Sector Production and Pricing of Goods.
  • Public and Private Goods and their pricing mechanism Decreasing cost Industry
  • and pricing. Externalities and Market Pricing issues. Rent seeking and control.
  • Government Policy and International Trade, tariff and pricing.   Import
  • Competitiveness and tax, International pricing Techniques / Strategies.
  • 8.Capital Budgeting ant Investment

  • Pre-requisites of Capital Budgeting. Investment Criteria and Decisions. Cash
  • flowesti illation. Internal Rate of Return, Profitability-Index Criterion and other
  • criterion. Optimal Capital Budget.

  • Recommended Books
  •  Salvatore, D. Managerial Economics in a Global Economy, 8th Ed. Oxford University Press  (McGraw Hill, 2015).

  •  Hirschey, M. Managerial Economics, 14th ed. ( U.S.A. Thomson South-Western, 2016).

Suggested Books

  • Koutsoyiannis, A., Modern Microeconomics, 2nd Ed. (MacMillan, 1979).
  • Evan J. Douglas  and, Scott Callan.,  Managerial Economics analysis and strategy ,4th  Ed. (Prentice Hall, 1992).

Description of the System of Evaluation (Exam, assignments etc.):

Mid Term: 30 marks

Sessional: 20 marks

  • Project: 25%
  • Presentation: 25%
  • Participation: 25%
  • Attendance 25 %
  • Final Exam: 50 marks          

    Class Timings:    

  • For Regular Class:              Monday (9:30 AM to 11.00 PM )
  •                                             Tuesday (9:30 AM to 11:00 AM)

  • For Self Support Class:       Tuesday (1:00 PM to 1:30 PM )
  •                                             Wednesday (2:00 PM to 3:30 PM) 

    Commencement of Classes                                                   Februray 22, 2021

    Mid Term Examination                                                            April 19, 2021

    Final Term Examination                                                          June 21, 2021

    Declaration of Result                                                              July 02, 2021

Course Material