Managerial Economics

Course Outline:

1. Market Demand: Demand for a commodity, Price elasticity – Income elasticity – and cross-price elasticity of demand, using elasticities in managerial decision making
2. Production – Cost: Short-Run: Production with one variable input, Law of diminishing marginal physical returns, Three stages in production, Derivation of the average fixed cost, average total cost, average variable cost and marginal cost. Long-Run: Production with two variable inputs, Isoquant curves, Marginal rate of technical substitution, Isocost curves, Expansion curve, Optimal Combination of Resources – minimizing cost subject to a given output, input demand functions, Returns to scale and the function coefficient, Long-run total cost elasticity, Economies of scale.
3. Linear – Integer Programming: Problem formulation, Interpreting the solution – sensitivity analysis, Linear and Integer programming applications to Economics and Business problems, Solving problems using Solver of Microsoft Excel.
4. Pricing: Pricing of products with interrelated demands, Plant capacity utilization and optimal product pricing, Optimal pricing of joint products produced in fixed and variable proportions, Transfer pricing (a) with no external market for the intermediate product, and (b) with a perfectly and imperfectly competitive market for the intermediate product, Cost-plus pricing, Incremental analysis in pricing.
5. Discrete Event Computer Simulation in Queueing Systems: Structure of a waiting-line system, distribution of arrivals and service times, queue discipline, system entities, activities “B” and “C”, running a simulation model, generation of random numbers and the uniform distribution, fitting empirical to theoretical distributions.

Aim:

This course aims at familiarizing students with the application of Microeconomics and Management Science Tools to the process of determining optimal solutions in decision making problems in the field of Economics and developing the required analytical ability.

On completion of this module, students are expected to be able to:

(a) To calculate either from numerical data or if the mathematical form of the demand curve is known, the price elasticity of demand, income elasticity of demand and cross-price elasticity of demand, and use these elasticities in the conduct of business and economic policy.

(b) To extract (i) in the short run, the average and marginal productivity curves of the variable inflow, and to recognize the production stage of the enterprise, and (ii) the long-term input demand function and the average and marginal cost curves in order to recognize the form of scale and economies of scale.

(c) To create linear and integer programming in business and financial programming problems, solve these problems by using Microsoft Excel’s Solver, and perform the necessary sensitivity analysis.

(d) Apply multi-pricing practices, transfer pricing, price differentiation and pricing with cost increases.

(e) To construct distinctive simulation models for service systems, by defining system components, determining activities B and C, creating artificial observations for the duration of activities, and defining the logical or physical rules that determine the evolution of the system over time.

Suggested for further reading:

1. D. Salvatore, 2012, Επιχειρησιακή Οικονομική στο Διεθνές Περιβάλλον, Επιμέλεια Β. Πέκκα-Οικονόμου, Εκδόσεις ΔΑΡΔΑΝΟΣ ΚΑΙ ΣΙΑ Ε.Ε.

2. E. Mansfield, 1996, «Επιχειρησιακή Οικονομική», Τόμος Α, Επιμέλεια-Μετάφραση Γ.Κ. Μπήτρου, Εκδόσεις ΕΥΓΕΝΙΑ ΣΩΤ ΜΠΕΝΟΥ

3. Ε. Δρανδάκης, Γ. Μπήτρος, Ν.Μπαλτάς, 1994, «Μικροοικονομική Θεωρία», Τόμος Α, Εκδόσεις Μπένου

4. Γ. Πραστάκος, 2006, 2η Έκδοση. «Διοικητική Επιστήμη – Λήψη επιχειρηματικών αποφάσεων στην κοινωνία της πληροφορίας», Εκδόσεις Σταμούλη.

5. Γ. Πραστάκος, 2005, 2η Έκδοση. «Διοικητική Επιστήμη στην πράξη εφαρμογές στη σύγχρονη επιχείρηση», Εκδόσεις Σταμούλη.

6. D.R. Anderson, D.J. Sweeney, T.A. Williams, K. Martin, 2014. Επιστημονική Επιμέλεια: Γιάννης Κωνσταντάρας, Μετάφραση: Δημήτρης Χατζούδης, «Διοικητική Επιστήμη – Ποσοτικές μέθοδοι για τη λήψη επιχειρηματικών αποφάσεων», Εκδόσεις ΚΡΙΤΙΚΗ.