MBA

Course Title: Managerial Economics and decision making
Code No: FO 513
Area of Study: Core
Credit: 2
Course Objective: The objective of the course is to develop analytical perspective of the students to
understand theories and methods of economics as they are applied to business and decision making.
Unit I: Introduction to Managerial Economics LH 4 hrs
Manager, Economics, Managerial Economics, Importance of Managerial Economics in decision
making, Objectives of the firm: Profit Maximization [Numerical problems]; Accounting profit vs
Economic profit
Unit II: The Theory of Consumers Behavior LH 3 hrs
Concept of Utility (Total Utility and Marginal Utility), Cardinal vs Ordinal, Indifference Curve,
Budget Line, Consumer’s Equilibrium
Unit III: Demand and Supply: Theory and Analysis LH 7 hrs
Demand: Concept, Individual Demand, Market Demand [Numerical problems]; Change in Quantity
Demand, Change in Demand, Demand Function, Elasticity of Demand (Price, Income, Cross)
[Numerical problems];
Supply: Concepts, Market Supply, Shift in Supply Curve, Price elasticity of Supply, Demand and
Supply together: Equilibrium
Unit IV: Costs and Revenue : Theory and Analysis LH 3 hrs
Cost: Cost Concepts, Short-run and Long-run cost curves, Economies and Diseconomies of Scale;
Revenue: Revenue Curves in the different markets (Perfect and Imperfect competition);
Unit V: Production Theory and Analysis LH 5 hrs
Production: Importance of Production, Concept of Short-run and Long-run, Concepts of Factors of
Production, Law of Variable Promotion: Short run production function, Iso-quants, Producer’s
equilibrium: Least cost combination, Expansion path, and Law of returns to scale: Long run
production function,
Unit VI: Working of firms and Industry: Markets LH 10 hrs
Perfect Competition: Equilibrium of Firm and Industry in short-run and long-run, Shut down position
Monopoly: Reason for Monopoly, Price and Output Determination in SR and LR; Price
Discrimination
Oligopoly: Concepts on Collusion, Cartel, Price leadership; Game Theory: Pure strategy and Mixed
strategy, Nash equilibrium
Monopolistic Competition: Competition with differentiated products- equilibrium of firms (SR and
LR), excess capacity
Pricing of Multiple products: Pricing of products with interrelated demands, Optimal pricing of joint
product (Fixed proportion and Variable proportion)

References:
Craig H Petersen, W. Cris Lewis and Sudhir K. Jain, Managerial Economics, 4/ed, Pearson
Education, New Delhi, 2003
N.G. Mankiw, Principles of Microeconomics, 4e, South- Western Cengage Learning India Ltd.,
2006
K K Seo, Managerial Economics, 6/ed, Surjeet Publications, 2003
Dominic Salvatore, Microeconomics Theory and Application, 4/ed, New York Oxford University
Press, 2003.
Dwevidi D.N., Microeconomics Theory and Applications, Pearson Education, New Delhi, 2003
Peterson and Lewis, Managerial Economics, 4/ed, Prentice-Hall of India, 2006
Nepal, Dahal and Uprety, Business Economics, Asmita Books (Kathmandu)