Managerial Economics

Southern University
Baton Rouge, Louisiana

Instructor: Choudhury, Khashruzzaman
Subject area: Economics
Department: Public Administration
Course number: PA 563
Year taught: 1997

Please note that the copyright for this syllabus is retained by the instructor.

Course Name and Title: PA 563: Managerial Economics
3 Hours
Time and Venue: Tuesdays: 6:30 p.m. - 9:30 p.m.
110 Higgins Hall
Instructor: K. Choudhury
Phone Number: (504) 771-3103 or 3104

This course surveys important economic theories and deals with the application of basic economic analysis to public policy problems. Students in this course should get acquainted with basic economy-wide problems and learn economic reasoning so that they can use economics to help untangle the complex policy problems that will confront them as policy makers, policy analysts, and administrators. This course differs from more traditional micro and macroeconomics courses in its emphasis on applications.

In recent years, increasing importance is being attached to environmental concerns and justice, as these relate to our everyday living. Economic principles and arguments underlie most of these concerns. A special focus of this course is therefore on environmental issues and problems, seen from an economic perspective. An attempt has been made to integrate environmental concerns into almost all topics included in this course.

Additionally, because of increasing emphasis being placed on a global perspective in examining any economic topic, wherever possible, efforts have been made to provide "international" examples in illustrating the relevant points.

This course is designed for students with little or no background in economics. It is taught with a minimum of mathematics, namely graphs and simple algebra. The basic principles of economics take a lot of practice to learn and to know how to use them. Consequently, you must prepare the problem sets at the end of the texts or handed out in class. In order to comprehend better, always study economics with colored pens or pencils, and draw graphs whenever you are asked to or you can. Drawing a graph or diagram with your own hand will help plant it for a long time in your brain. Some advanced materials heavily rely on the introductory material. Therefore, you can not afford to fall behind. Please do not miss any class!

Upon successful completion of the course, you should be able to:

1. Define and explain the key concepts, principles and procedures relating to micro and macro economics.
2. To be aware of, understand and appreciate environmental concerns of all economic issues or problems, and environmental justice.
3. Identify and analyze important economy-wide issues and problems in isolation, and in a global international perspective.
4. Apply important tools of economic analysis to analyze and solve various problems, especially complex public policy problems involving questions of economic efficiency, equity and environmental impact.
5. Read with clear understanding papers and articles dealing with economics or environment related subjects, issues or problems for the United States or for other countries.
6. Learn how to apply economic reasoning in approaching a complex economic or environmental problem, and suggest one or more economic solutions to each such problem.
7. Develop an understanding of market failures and the need for public policies, especially pertaining to environmental upgrading and justice and global economic growth.
8. Prepare memoranda dealing with economic or environmental issues or problems.
9. Read into and understand clearly graphs and other statistical presentations.

The two required texts for the course are:

1. Choudhury, K., Primack, Martin L., and Willis, James F., Economics for Managers, First Edition, 1997, ISBN 1-56226-316-1, C.T. Publishing Company.

2. Callan, Scott J., and Thomas, Janet M., Environmental Economics and Management. 1996, ISBN 0-256-13254-2, IRWIN.

In order for class sessions and presentations to proceed speedily and smoothly, you must bring both books to each class session. I will make frequent references to these books in class, in order to avoid unnecessary copying and Xeroxing.

In addition to the specified text materials, you may be referred to some supplementary readings. Please note that all readings are required, unless they are specifically designated as "optional". Students are responsible for all assigned readings cases, applications and problems. I'll work as a facilitator and guide in order to encourage you to complete all readings and other assignments in time.

Class sessions are designed to achieve four important objectives:

(i) explain and clarify any confusing materials in the texts and readings;
(ii) present additional supplementary materials;
(iii) present and work out problems; help/draw graphs and diagrams; and,
(iv) initiate and encourage group discussion on various important economic and environmental issues, problems and policies, whenever relevant in a global perspective.

Test grades will be as follows:

A = 90-100
B = 80-89
C = 70-79
D = 60-69
F = 59 and below

A letter grade will be assigned, based upon your performance in the following areas. To achieve a grade of 'A' you must be truly brilliant and hardworking, and must fulfill all course requirements with an excellent performance.

Areas = % of Grade
1. First examination = 30%
2. Two Assignments including one on environment = 20%
3. Environmental and Economic Reading Case Logs = 20%
4. Second examination = 30%

Total 100%

1. First Examination
The main objectives of the first examination are to assess students' performance, to give students early feedback about progress in the course to date, and to provide suggestions for areas of additional efforts. The examination will be in class and closed book.

2. Two Assignments
You'll be given two assignments, including one on environment, and your answers will be graded.

3. Environmental and Economic Readings/Case Lows
You'll be required to prepare a log book containing all environmental and economic readings/cases included/presented in this course. Details of how to do such annotated logs will be discussed in class.

4. Second Examination
The second examination will be comprehensive. It will be in class and closed book.

As already mentioned, a lot of practice is required to learn the basic principles of economics and how to use them. Accordingly, problem sets or/and cases will be assigned after every class session, except the initial class. These problems will also come from the two texts. You must complete all such problem sets or/and case analyses, and participate in class discussions. Problem sets, case analyses, and class participation will not be graded, but they are considered requirements for the course. You must come to class prepared to discuss all assigned problem sets, readings, or cases.

You are encouraged to work in groups on the problem sets and cases. Collaboration should be treated as an aid to individual learning, not a substitute for it, and the preparation of the final version of each assignment should be an individual, not a group, exercise.

Tuesday Sessions

Session 1: Class Organization and Introduction
-- Course Syllabus and Overview of the Course
-- How to Read, Understand and Draw Graphs How to Read Statistical Tables/Charts; Microeconomics, Macroeconomics and Managerial Economics Nature and scope of Managerial Economics; Environmental Economics and Global Interdependence; Managerial Economics with Environmental and Global Orientation.

1. Choudhury, Primack and Willis (CPW), Text
2. Chapter 1
3. Callan and Thomas (CT), Chapter 1, pp. 3-33.

1. Review problems 1 and 2 from CT, p. 32.
2. Preview and skim CPW Text, Chapters 2 and 3.
3. Prepare a list of 10 (ten) examples which illustrate global economic interdependence. Write meaningful sentences to explain the examples.
4. Prepare a list of 10 (ten) examples which illustrate environmental problems with economic implications. Explain these implications.

Session 2
Scarcity and Choice, Demand, Supply and Market Equilibrium, A Global and Environmental Perspective; Scarcity and choice examples from the USA and other countries; armaments and bombs; wastage and recycling: scarcity with environmental concerns; Applications; Cases

1. CPW Test, Chapters 2 and 3.
2. CT, pp. 34-51.

1. Do assigned problems from CPW, test.
2. Do problems in Problem Set 1.
3. Preview CPW, Text, Chapters 14 and
4. Do problems in Problem set 1, 2, 3.

Session 3
Gross Domestic Product (GDP): Calculations and deficiencies of GDP; underestimation of real GDP and reasons; concept of Genuine progress indicator (GPI); GDP vs. GPI; GDP and Environment; materials "balance" models; Applications; International Perspective and Comparison; Economic Welfare and Quality of Life; concept of net economic welfare or product; adjusting GDP for resource depletion; ozone depletion and global warming; cases

1. CPW, Test, Chapters 14 and 15.
2. CT, p. 19, p. 229, p. 144, pp. 147, 148, p.167, p. l79; p. 403; pp. 379-389; pp. 396-402.

1. Preview CPW, Text, Chapters 21 and 22.
2. Do problems in Problem set No. 15.
3. Do assigned problems from CPW, text.

Session 4
Money, Banking and Monetary Policy: Federal Reserve system and its evaluation; instruments of monetary policy; monetarism; International Perspective and Comparison; Global interdependence; banking and monetary policy in other countries; Applications; Cases.

1. CPW, Text, Chapters 21 and 22.
2. Do problems in assigned Problem Set.

Session 5
More about Demand and supply: Environmental Concerns; international perspective; consumer and producer surpluses; deadweight loss; import markets; markets for pollution rights; Elasticities of Demand and supply; uses in taxation; price ceilings and price floors; income and substitution effects, etc; applications; eases including those on OPEC oil, plantinium and LDC exports, international dumping; etc.

1. CPW test, Chapters 4 and 5.

1. Do problems in assigned Problem Set.
2. Do assigned problems from CPW, Test, Chapters 4 and 5.
3. Preview CPW, text, Chapter 6.

Session 6: General Review and Catching Up


Session 8
More about supply; cost of production; environmental cost; private and social costs and benefits; externalities; Market failures; exercises involving cost and benefit calculations; governmental interventions; intended and unintended consequences of public policies; public environmental control; applications; extended case of market for illegal drugs; etc.

1. (CPW), Text, Chapters 5 and 6.
2. CT, pp. 27-29; pp. 68-76; pp.77-78, pp. 80-81; pp. 83-104; pp. 109-112; pp. 235-237; pp. 251-262; pp. 278-279, pp. 409-410; pp. 407-408.

1. Do assigned problems from CPW and CT books.
2. Do problems in Problem Set No. 5.
3. Preview CPW, text, chapters 7 and 8.

Session 9
Competition And Monopoly; price discrimination; sources and regulations of monopoly; monopoly and deadweight loss; global perspective; transnational corporations; Environmental Concerns; Applications; monopoly in international trade and other economic sectors such as healthcare; cases.

CPW, Text, Chapters 7 and 8. CT, pp. 112-118; pp. 128-135.

1. Do problems in assigned Problem Set.
2. Do assigned problems from CPW, Text, and CT book.

Session 10
Imperfect Competition; Monopolistic Competition; Obligopoly; different oligopoly models; oligopolies in the U.S.A. and in other countries: regulations of oligopoles transnational Corporations; Environmental concerns and responses; Global perspective; Applications; Hotelling's paradox; Cases.

1. CPW, Text, Chapters 9 and 10.
2. CT, p. 667; pp. 665-666; pp. 648-659.

1. Do problems in assigned Problem Set.
2. Do assigned problems from CPW, Text, and CT book.

Session 11
Resource or factor Markets; Material balance models; Wastes; Environmental concerns; Exhaustible and non-exhaustible resources; technology and "doomsday" predictions; Hotelling rule; global perspective and international comparison; Determination of wages and other factor prices; national and international migrations and wages; comparative worth and minimum wage; empirical evidence on minimum wages; applications; cases; etc .

1. CPW, Text, Chapter 11 and 12.
2. CT, pp. 594-595; pp. 599-600; pp. 633 - 634; p. 624; p. 620; pp. 588-589; pp. 586-587; p. 584; pp. 581-582; pp. 560-572.

1. Work out problems in assigned Problem set
2. Do assigned problems from CPW, Text, and CT book.

Session 12
Inflation and Unemployment; Stabilization Policies; Fiscal, Monetary and Commercial Policies; Applications: Environmentally Responsible (public) policies; policies in other countries; global interdependence of policies; Applications; cases; etc.

1. CPW, Text, Chapters 16, 19, 20, 23.
2. CT, pp. 164-172; pp. 175-177; p.179; p.181; pp. 184-185; pp. 212-213.

1. Do problems from assigned problem set .
2. Do other assignments.

Session 13
Economic Fluctuations; previous and recent worldwide recessions and depressions; great depression of the thirties; global interdependence; international transmissions of depressions; Aggregate Demand and Aggregate supply; classical and Keynesian theories; Economic Policy; Controversies; Environmental and International concerns and implications; Applications; cases; etc.

1. CPW, text, chapters 16, 17, 18, 23.
2. CT, Chapter 19.

1. Do problems in assigned Problem Set.
2. Do assigned problems from CPW text.

Session 14: Review of the Course

Session 15: Second Examination summing Up