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INDIANA UNIVERSITY-PURDUE UNIVERSITY FORT WAYNE DEPARTMENT OF ECONOMICS Microeconomic Analysis and Decision-Making Course Number : BUFW E540 Instructor : Myeong Hwan Kim, Ph.D. Credit Hours : 3 Office : Neff Hall, 340F Class Meeting : Friday (6:00 pm-10:00 pm) Telephone : 1.260.481.6466 Location : KT 227 E-Mail : kimm@ipfw.edu Office Hours : By Appointment 1. Course Objectives The objective of the course is to provide an 2. Required Readings understanding of how fundamental Textbook: economic theory can be applied to decision Christopher R. Thomas and S. Charles making within the firm. The main topics Maurice, Managerial Economics, 11th covered will be the analysis of market Edition (Publisher: McGraw-Hill Irwin, demand, optimal use of resources, and ISBN-13: 9780078021718) pricing decisions. An introductory course in microeconomics is a prerequisite. You should be comfortable with employing basic * These policies will be strictly enforced. algebra and elementary calculus. If you do not follow these guidelines, your instructor will penalize you for it. By the end of the course, students will develop skills to: Explain the role of economic theory in 3. Evaluation of Work/Grading Policy managerial economics. Grade will be based upon completion of the Describe the characteristics of various following: first examination, second market structures such as perfect examination, final examination and projects. competition and monopoly. The final course grade will be based on the Know the difference between economic following: and accounting profit. Understand and graphically illustrate Exam #1 : 20% the way market forces determine prices Exam #2 : 20% and production in competitive markets. Exam #3 : 20% Learn the fundamental principles of Final Exam : 20% optimization theory for finding the Projects : 20% optimal level of business activities. Predict how revenue will be affected by 90-100 : A a change in the price of a product by 80-89 : B using the concept of price elasticity. 70-79 : C Determine the optimal level of inputs 60-69 : D and the cost of production in two 59 and below : F different decision–making time frames: short run and long run. Tests (Quizzes and Exams) Analyze how managers make pricing The tests will not be easy, and will surely and output decisions in competitive require extensive study. Quizzes will be markets and monopoly. given during the semester (if there are) - Understand how techniques of price– their purpose is to keep you up to date in discrimination and multi–product your studying. If you are not present for a pricing can increase profit. quiz or a scheduled examination, you will not be excused unless you submit an approved third-party official document. The 1 date for the midterm exams will be given in of extreme circumstances (Not coming to class. It is impossible to make two class, or forgetting, doesn’t rate as an examinations which are comparable in extreme circumstance.). coverage and difficulty but essentially different. For this reason, requests to take No “Extra Credit” Work special examinations (early or late) will be Students sometimes ask for some extra granted only in exceptional circumstances credit work near the end (or middle) of the that are beyond the control of a student (e.g., semester in an attempt to bring up poor serious illness, university business, a death grades. No extra credit work will be given to in the family). I expect you to contact me the any student on an individual basis. Again, day of the examination or before the there is no extra credit offered at any time examination if you must miss an exam or during the semester (please don’t ask). quiz for any reason. The make-up exam is expected to be taken upon your return to Grades via E-mail class, no exceptions. If a student fails to take Because of the large number of students in an exam and no arrangements were made, a each class, instructor will not be able to score of zero will be recorded. Each student reply to individual e-mail requests for exam will be allowed to make-up only one test and/or class grades at the end (or middle) of (midterm, final exam or quiz) during the the semester. semester, regardless of the reason for absence. Contesting a Grade If you wish to contest your grade on any Third-Party Official Document Policy work you complete for this class, please do The following policy applies to all excused so within one week after the assignment is absent: returned. To contest your grade, contact me After the missed class period, to schedule an appointment within one week documentation is required for an of receipt of the grade. At the conference, excused absence. bring the assignment (if it was returned to The document should contain your you) and any other documentation that may name and date (or period) of absence. support your case. If you do not hang on to It is the student’s responsibility to old tests, then the grades I have recorded request excuse and document absence. will stand and you will have nothing to Student need to present third-party argue your case. Appeals will not be heard official documents which show that unless you have scheduled an appointment there was a compelling reason (e.g., a with me within the one-week time frame medical emergency, a doctor’s note, a following receipt of the grade. death in the family, jury duty, call up for military service, police report) for your absence. 4. Expectations I do not accept nor acknowledge e-mail The student has read the material before notification. coming to class. The class session should The official documents need to be not serve as the student’s first encounter provided within a reasonable period of with the material. The class session is a time time (NO documents will be accepted to clarify and analyze the material. The after one week) and/or before the final instructor will assume that the student has an examination if the date of absence is the adequate grasp of algebra which is crucial to last week of the semester. an understanding of the economic models to The submission of falsified documents be used. Many economics courses, will be grounds to expel the student familiarity with graphical analysis is a must. from the class. That the student will actively participate in class discussions in the form of questions, Late & E-mailed Assignments answers and comments is strongly Late and/or e-mailed assignments will not be encouraged, and will count towards the accepted unless prior arrangements have student’s final grade. I also hope that each of been made with the Instructor and because you will contribute significantly to our class discussions and group work. Be prepared to 2 ask questions, raise concerns and considered to be inappropriate in this demonstrate your thinking skills. classroom include refusing to stay seated during class, sleeping, eating, coming in late, companions, interrupting others, talking, 5. Attendance Policy inappropriate behavior during group work, Students take responsibility for their verbal behavior that is disrespectful of other learning. It is expected that students attend students or the instructor, or others that may all scheduled classes during the time be disruptive. Students who exhibit such indicated in the Schedule of Classes for your behavior will be given a verbal warning by section. I also expect you to arrive on time the class instructor, then will be given a and stay for the entire class period. If you written warning in a meeting with the chair must leave class early, please let me know in of the Department/Division, and then will be advance, and then to sit as near the door as subject to disciplinary procedures. possible and leave quietly. Please remember that late arrivals and early departures distract Academic Dishonesty other students (not to mention your Any form of academic dishonesty is instructor), and hinder your progress in the prohibited. Students are expected to course. If you are not in class at the maintain the highest standards of honesty in scheduled time for your section of the class, their college work. Cheating, forgery and it is difficult for the instructor to provide you plagiarism are serious offenses, and students with timely feedback and other information found guilty of any form of academic about your work. If you miss a class, you are dishonesty are subject to disciplinary action. still responsible for all material covered and Incidences of violation of academic integrity any assignments given. Instructor will will result in a grade of F for the course, answer specific questions but instructor will dismissal of the student from the course and not re-teach any lesson. It is your may lead to additional actions. Students are responsibility to do the readings and come expected to be familiar with and adhere to prepared to listen to the lecture. the university policies with regard to academic dishonesty. These policies can be found on 6. Institutional Policies and Procedures http://www.ipfw.edu/academics/regulations/ In all respects, the policies of the honesty.shtml. Department, School, IPFW and the University shall be applied in this course. Cell Phone & Computer Cell phone is NOT allowed in the classroom. ADA Policy A cell phone violation will cause your cell Students with documented physical, learning, phone to be detained until you leave the psychological and other disabilities are classroom. Your cell phone needs to be out entitled to receive reasonable of sight and turned off. Other than note accommodations. If you need classroom or taking, no activities such as surfing the testing accommodations, please contact the Internet, playing computer games, typing a Office of Services for Students with paper, etc. is allowed in the classroom. You Disabilities (Walb Union, Room 113, 481- should disconnect the wireless network from 6657). The SSD will provide forms your computer. Any violation will cause verifying the need for accommodation. As your attendance credit to be 0 for that day soon as the instructor receives the form, you and you will be asked to leave the classroom. will be provided with the appropriate accommodations. Students are encouraged to request accommodations as close to the 7. Course Outlines (Tentative: The instructor beginning of the semester as possible. reserves the right to modify the syllabus during the course of the term.) Disruptive Behavior Students who exhibit behaviors which are Part I: Some Preliminaries considered to obstruct or disrupt the class or 1. Managers, Profits, and Markets its learning activities will be considered a. The Economic Way of Thinking Disruptive Behavior. Behaviors which are About Business Strategy 3 b. Measuring and Maximizing f. Other Demand Elasticities Economic Profit c. Separation of Ownership and 7. Demand Estimation and Forecasting Control a. Direct Methods of Demand d. Market Structure and Managerial Estimation Decision Making b. Specification of the Empirical Demand Function 2. Demand, Supply and Market c. Estimating Demand for a Price- Equilibrium Setting Firm a. Demand d. Time-Series Forecasts of Sales and b. Supply Price c. Market Equilibrium e. Seasonal (or Cyclical) Variation d. Measuring the Value of Market f. Some Final Warnings Exchange e. Changes in Market Equilibrium Midterm #2 f. Ceiling and Floor Prices Part III: Production and Cost Analysis 3. Marginal Analysis for Optimal Decisions 8. Production and Cost in the Short Run a. Concepts and Terminology a. Some General Concepts in b. Unconstrained Maximization Production and Cost c. Constrained Optimization b. Production in the Short Run c. Short-Run Costs of Production 4. Basic Estimation Techniques d. Relations Between Short-Run a. The Simple Linear Regression Costs and Production Model b. Fitting a Regression Line 9. Production and Cost in the Long Run c. Testing for Statistical Significance a. Production isoquants d. Evaluation of the Regression b. Isocost Curves Equation c. Finding the Optimal Combination e. Multiple Regression of Inputs f. Nonlinear Regression Analysis d. Optimization and Cost e. Long-Run Costs Midterm #1 f. Forces Affecting Long-Run Costs g. Relations Between Short-Run and Part II: Demand Analysis Long-Run Costs 5. Theory of Consumer Behavior 10. Production and Cost Estimation a. Basic Assumptions of Consumer a. Specification of the Short-Run Theory Production Function b. Indifference Curves b. Estimation of a Short-Run c. The Consumer’s Budget Constraint Production Function d. Utility Maximization c. Short-Run Cost Estimation: Some e. Individual Demand and Market Problems with Measuring Cost Demand Curves d. Estimation of a Short-Run Cost f. Corner Solutions Function 6. Elasticity and Demand Midterm #3 a. The Price Elasticity of Demand b. Price Elasticity and Total Revenue Part IV: Profit-Maximization in Various c. Factors Affecting Price Elasticity Market Structures of Demand d. Calculating Price Elasticity of 11. Managerial Decisions in Competitive Demand Markets e. Marginal Revenue, Demand, and a. Characteristics of Perfect Price Elasticity Competition 4
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