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Managerial Economics 293.docx

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Management Core
MGCR 293
Tariq Nizami

Managerial Economics10292012 84200 AM Professor Tariq Nizami Grading2 assignments 10assignment 1 appendix A and chapters 2 3 4due October 29 and handwritten assignment 2 Chapter 5 6 7 8 9 and 10due last day of class Midterm 30Chapter 1 Appendix A 2 3 and 4 50 75 multiple choice questionsndNovember 2 from 9am11am50theory 50 mathematical problems Final Exam 603h closed book760755 multiple choice 50 and 8 problems 50Chapter 411Chap 1Intro to Managerial Economics10292012 84200 AMMaximize revenue minimize costsRevenue is not income Income is the residual Revenue shows the name of the account from which you received cash it is the amount of cash coming in from each sale Managers cannot expect to succeed unless they understand both opportunities and constraints EconomicMarket forces of supply and demand in the market place determine1 Demand for products 2 Prices of resources and cost of production3 Number of rival firms 4 Nature of pricing strategies5 Profitability of business investors What is managerial economics Managerial Economics extract from microeconomic theory Those concepts and techniques that enable managers to select strategic direction to allocate efficiently resources available and to respond effectively to tactical problems What does managerial economics provide Provides a systematic and logical way of analyzing business decisions which focuses on economic forces that shape day to day short run decision as well as long run planning decisions Managerial Economics focus on the application of microeconomic theory to business problems ME focuses on the application of microeconomic theory to business problems Microeconomics is the study and analysis of the behavior of individual segments of the economy such as individual consumers workers and owners of resources individual firms and markets for goods and services Studies show our subconscious and our rationality influence the way we buy Example when they played French music in the store more people bought French wine over German wine and vice versa Advertising agencies aim to attack you in these ways In the pharmaceutical industry if companies keep their products cheap not many people buy People begin to think they are not as effective if they do not cost as much This is evidence of our irrationality The focus in microeconomics is at the firm or market level whereas the focus in ME is on managerial behavior This managerial behavior provides powerful tools and frameworks to guide managers to better decisions It serves to strengthen all analytical skills The most important task of managers is to make good decisions The objective of ME is to help business students become architects of business strategy It develops critical thinking and provides students with a logical way of approaching business decisions In 2008 decisions exports had made failed The best economists could make good decisions Now they aim to look at what happened ME is powerful and essential All successful business have used the fundamentals of ME to maximize their profitability We always use ME to make decisions trade time money etc Most of this decision making is irrational because you are thinking with emotions ME draws on economic analysis for such concepts as demand supply cost project competition pricing entry strategy and market protection ME bridges the gap between theorists and managers The chapter provides basic concepts that will be seen in class We have to make two decisions to maximize the profit price to charge and output to produce The market you are in will determine how well you make this decision
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