Post Graduate Programme in Management

2018-19 TERM: I

TITLE OF THE COURSE: MICROECONOMICS FOR MANAGERS

CREDITS: 4

Name of Faculty Office e-mail Telephone Consultation

Time for
students
Ajay Sharma J – 206 ajays@iimidr.ac.in +91-731- With
2439622 Appointment
Joysankar A – 105 joysankar@iimidr.ac.in +91-731- Only
Bhattacharya 2439517
N. Karthikeya K – 101 karthikeyan@iimidr.ac.in +91-731-
2439596
Sneha Thapliyal M – 101 snehat@iimidr.ac.in +91-731-
2439665

Course Description:
This course serves as the first course in Microeconomics. The focus of the course is on building
understanding of economic concepts and tools to facilitate decision-making in business
management as well as public policy contexts. A special emphasis is given on conceptual
application in Indian contexts.

Course Objectives:
The course aims to equip participants with intermediate level economic concepts and tools of
analysis to develop critical thinking and analytical skills to apply under different business
situations. Concepts of this course can further be applied in Industrial Regulation, Strategic
Competition, International Business, Marketing, Managerial Accounting, Public Policy, etc.

Pedagogy/Teaching Method:
All sessions are lecture based. Applications and case studies are used for illustrative purposes to
reinforce the understanding of concepts and tools.

Textbook:
The basic reference book used is: Besanko, D. and Braeutigam, R. (2015) Microeconomics, 5th
Edition, Wiley India. (Hereafter B-B)

Make-up Exam policy:

There is no makeup provision for the quizzes; whereas makeup for mid-term and end-term exams
will be given only if the participant was on medical leave with approval from PGP Chair.
The nature of such make up will be on the discretion of the instructors.

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 Evaluation:
Individual Component Group Component Weightage
Class Participation 10%
Surprise Quizzes 20%
Mid-term Exam 35%
End-term Exam 35%
Total 100%

Expected Learning Outcomes and Associated Measures:

Course Learning Outcome Program Level Goals/ Outcome Assessment

Tool(s)

1. Will be able to appreciate PLG 3. Develop critical thinking skills Classroom

behavior of and linkages discussion and
between different economic 3.2 Use available information and evaluation of class
agents suggested sources participation

2. Will be able to apply tools PLG 3. Develop critical thinking skills Embedded
of microeconomic analysis to Question(s) in
understand behavior of economic 3.3 Identifies and presents appropriate Quizzes and
agents evidence supporting the analysis of Exams
alternatives

ACADEMIC DISHONESTY:

IIM Indore believes in Academic honesty. Academic dishonesty or misconduct is cheating that
relates to an academic activity. It is a violation of trust between the Institute and its stakeholders.
Plagiarism, fabrication, deception, cheating and sabotage are examples of unacceptable academic
conduct. Please consult the Programme manual for the section on academic dishonesty.

SCHEDULE OF SESSIONS

Module I. Basic Economic Concepts

Module Objective: To introduce the participants to the economic way of thinking

SESSIONS AND OBJECTIVE

Session 1: Basic Economic Concepts

Objective: How economists think to make sense of the world
Readings: B-B, Chap-1: Analyzing economic problems
Cases: - The Toughest Ticket in Sports, links: http://goo.gl/aZ7bnz;
http://goo.gl/riXmVk
- Positive and Normative analysis of the minimum wage, pg. 15-16 (B-B)

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Module II Consumer Behaviour
Module Objective: To understand the behaviour patterns of consumers under different
conditions

SESSIONS AND OBJECTIVE

Session 2: Consumer Behaviour

Objective: How consumers match scarce resources with unlimited wants
Reading: B-B, Chap-3: Consumer preferences and the concept of utility, pg 59-77 and
Chap-4: Consumer choice, pg 83-95
Cases: - Blind taste tests, pg. 76 (B-B)
- The effect of rising petrol prices on driving habits, pg.88 (B-B)

Sessions 3-4: Demand and Supply Analysis

Objective: What and how affects demand and supply of various classes of goods. How an
equilibrium is reached under different conditions
Reading: B-B, Chap-2: Demand and Supply Analysis, pg 21-33 and Chap 5: The Theory
of Demand, pg 121-132 pg. 139-141; pg. 147-151
Cases: - A Computer on Every Desk and in Every Home, B-B, pg 31-33. (B-B)
- Externalities in social networking websites, pg.150 (B-B)

Session 5: Elasticity
Objective: How to measure the changes in demand and supply
Reading: B-B, Chap-2: Demand and Supply Analysis, pg 34-44
Case: How people buy cars: The importance of price, pg. 44 (B-B)

Module III Production and Product Pricing Decisions

Module Objective: To study production decisions and product pricing under different
conditions

SESSIONS AND OBJECTIVE

Session 6: Theory of Production

Objective: What are the basic concepts related to production choices
Reading: B-B, Chap-6: Inputs and Production Functions, pg 163-186 and 188-190
Cases: How much is a qualification worth, pg. 194 (B-B)

Session 7: Theory of Cost

Objective: What are the relevant costs and ensuing implications
Reading: B-B, Chap-7: Costs and Cost Minimization, pg 201-212 and Chap -8: Cost
Curves, pg 235-249

Cases: - Who is more likely to avoid the sunk cost fallacy, B-B, pg 206
- Self-Checkout or Cashier?, pg 212. (B-B)

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Module IV Market Structures
Module Objective: To explore different market structures and implications for economic
decisions

SESSIONS AND OBJECTIVE

Session 8: Competitive Supply

Objective: How markets behave under perfectly competitive environment
Reading: B-B, Chap-9: Perfectly competitive markets, pg 267-280 and 303-312.
Case: Perfect Competition in Wood Products, pg 271. (B-B)

Sessions 9-10: Impact of Taxes and Subsidies

Objective: How government's policy decisions affect the consumers and suppliers
Reading: B-B, Chap-10: Competitive markets: Applications
Cases: - Petrol: The effect of a Frozen Fuel Duty, B-B, pg 327-329. (B-B)
- A Bailout of the King of Cheeses, B-B, pg 351. (B-B)

Session 11: Monopoly and Market Power

Objective: How markets behave when market power exists
Reading: B-B, Chap-11: Monopoly and Monopsony, pg 363-380 and 389-395
Case: Market Power in the Breakfast Cereal Industry, B-B, pg380. (B-B)

Sessions 12-13: Pricing with Market Power

Objective: How to price the product when cost is not the only parameter
Reading: B-B, Chap-12: Capturing Surplus, pg 405-433
Case: Education in the First Degree, pg 412-413; Bundling Television, pg 433. (B-
B)

Sessions 14-15: Monopolistic Competition and Oligopoly

Objective: What are the more common market structures and their process of decision-
making
Reading: B-B, Chap-13: Market Structure and Competition, pg 441-456 and 467-470
Cases: - Corn Syrup Capacity expansion confirms Cournot, pg. 449-450. (B-
B)
- Smartphone wars, pg. 462 (B-B)

Sessions 16-17: Competitive Strategy

Objective: How market structures make decision-making a strategic and competitive
process
Reading: B-B, Chap-14: Game Theory and Strategic Behaviour, pg 477-492. (B-B)
Case: Everyone Loses Except Lawyers, pg 481. (B-B)

Module V Market Failures

Module Objective: To explore situations and remedies when markets fail

SESSIONS AND OBJECTIVE

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Session 18: Economics of Information
Objective: What are the cost, benefits, and implications of information
Reading: B-B, Chap-15: Risk and Information, pg 522-527.
Case: Adverse selection in health insurance market, pg. 524-526. (B-B)

Session 19: Externalities

Objective: Are there situations where markets fail due to externalities
Reading: B-B, Chap-17: Externalities and Public Goods, pg 591-613
Cases: - Clearing the Air: The European Carbon Emission Trading Market as a
response to climate change pg. 605. (B-B)
- London’s Congestion Charge, pg 607-608. (B-B)

Session 20: Public Goods

Objective: What are the problems in provision of public goods
Reading: B-B, Chap 17: Externalities and Public Goods, pg 613-617.
Case: Free Riding on the Public Airwaves, pg. 617. (B-B)

Please give the details of the book if students need to buy the book:
Authors Title Publisher Edition Remarks, if
any
Besanko, D. and Microeconomics Wiley 5th Edition
Braeutigam, R. (B-B) India

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