Managerial Economics

What you'll learn

• Apply opportunity cost, marginal analysis and the distinction between economic and accounting profit to managerial decisions, and ignore sunk costs.
• Analyze demand and its determinants, calculate and interpret price, income and cross elasticities, and estimate demand from data with log-log regression.
• Set profit-maximizing prices with the markup rule, and design price discrimination, two-part tariffs, bundling, versioning and dynamic pricing strategies.
• Distinguish short-run and long-run costs, estimate cost functions, and evaluate economies of scale, scope and learning in production and capacity decisions.
• Explain how perfectly competitive and monopoly markets determine price and output, and assess barriers to entry, deadweight loss and natural monopoly.
• Analyze oligopoly and monopolistic competition with the Cournot, Bertrand and differentiated-product models, and explain the conditions that support or undermine collusion.
• Represent strategic interactions as games, find dominant-strategy, pure and mixed Nash equilibria, and explain how repeated interaction and changes to the game affect cooperation.
• Solve sequential games by backward induction, distinguish credible from non-credible threats, and evaluate commitment, first-mover advantages and bargaining power.
• Diagnose adverse selection, moral hazard and hold-up, and design signaling, screening, incentive pay and contracts that balance incentives against risk.
• Explain the Sherman, Clayton and FTC Acts and their enforcement, screen mergers with the concentration index and the 2023 Merger Guidelines, and compare approaches to economic regulation.
• Interpret growth, inflation, Federal Reserve policy, interest rates, exchange rates and trade policy, and build macro scenarios into business plans.
• Prepare an integrated economic analysis of a pricing and capacity decision that combines demand estimation, costs, competitive response, macro risk and contract design, and present a staged recommendation.