Managerial Economics - Core Concepts

JWI 515 Managerial Economics, Week11 Wrap Up, 12/21/12


Great class. Helped me with a foundation in economics literacy.

(1) Which managerial economics topics have you mastered ?
None. There is a saying in India that what one knows the size of the fist and what one does not know is the size of the world. This helps me to keep a humble perspective - that humanity is always operating within the field of ignorance. I do however feel much more aware and literate in economics with the training received in this class.

(2) Which managerial economics topics do you now understand but may want to learn more about?
(i) Mathematical underpinnings of Profitability
(ii) Control costs before they control you: fixed, variable, total, average
(iii) Economy of scale
(iv) Regulation
(v) Risk & uncertainty
(vi) Factors of production
(vii) Supply & Demand & Market Equilibrium
(viii) Market structure - Perfect competition, Monopoly, Oligopoly
(ix) Measuring consumer and producer surpluses
(x) Utility maximization
(xi) How to mitigate dis-economy of scale
(xii) Price-output decision models: Cournot, Sweezy, Stackelberg, Bertrand
Cournot: a firm will make independent decisions to maximize its profit
Stackelberg: firm acts according to Cournot + first mover advantage
Bertrand: Homogeneous oligopolists; consumer goes after lowest price; price wars ensue to capture market share
Sweezy: firms will follow rivals' price decrease but ignore price increase
(xiii) Global market conditions
(xiv) Porter's 5 forces - Barriers to entry
(xv) SWOT - new entrant to market
(xvi) Corporate Social Responsibility
(xvii) Role of government in free markets - Externalities, Deregulation
society needs government regulation and public policy to balance public and private interests and promote economic growth. Government must also fund things that are in society's best interest overall.
(xviii) Analyze 5 types of risks and mitigate with 14 options for risk take downs
(xix) Private goods vs Public goods
(xx) Market failure - when one or more perfect competition criteria are violated

(3) What questions do you still have about managerial economics?
(a) How does one arrive at the demand curve - price vs quantity function - in the first place ?
(b) Is it possible to scale firms to reach sizes never seen before ? eg. can JWMI be scaled to enroll a million students at once?
(c) How to estimate dollar values of Positive and Negative externalities? As true cost = economic cost + social cost + environmental cost, knowing how to estimate externalities will help attach real costs to products and services.

Dr DP