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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
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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
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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
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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
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