Professor Robert J. Lemke
Department of Economics and Business
Young Hall 315
Lake Forest College
Fall 2004
Syllabus: http://campus.lakeforest.edu/~lemke/econ370/syllabus.html
Contact Information:
Office: 315 Young Hall
Phone: 847-735-5143
E-mail: lemke@lakeforest.edu
Web: http://campus.lakeforest.edu/~lemke/
Course Description:
College Catalog Description
Econ 370: Managerial Economics. A study of the various ways in which microeconomic principles and quantitative tools can be used to aid managers in making sound decisions. Topics include forecasting consumer demand, production and cost analysis, optimal pricing and production decisions, sensitivity analysis, and capital budgeting. Prerequisites: Economics 130 or 180 and Economics 210.
The English Version
Managerial economics concerns the decisions made within a firm. Microeconomic theory (Econ 210) looked extensively at the production decisions of firms when maximizing profits, but managerial economics goes much beyond that.
Managers, the decision makers in firms, determine their pricing strategy, who to hire and fire, how to reward workers, and how to motivate workers. Managers must also solve logistical problems such as how to distribute their goods for sale, how to minimize the cost of producing a given production target, how much inventory to hold, where and how to spend advertising dollars, whether or not to expand the firm with more factory lines or more factories, and how to optimally search the market place for new ideas/technologies or competitors' prices. Firm owners must also decide how to reward their managers.
Objectives:
The intention of this course is to introduce to you a wide variety of problems faced by managers. Faced with these problems, you will be given the opportunity to develop strategies and tools for solving the problems, including computer solutions, used by managers every day. Our primary computer tool will be Excel. The intention is for you to become confident in your Excel skills to the point where Excel is an asset, not a liability, when you enter the job market.
As the business world requires people to work in groups, much of this class will also be focussed on group work. Over the course of the semester, you will engage in four group projects in which I assign the groups, groups present their results to the class, and everyone in the group will earn the same grade. Thus, your grade in this class will depend, in part, on your classmates. For some students, this is a terrifying thought. If this is your initial response, I would strongly encourage you to stay in the class anyway. Take this as an opportunity to build your small-group and inter-personal skills, which everyone needs.
My goals for this class are for you to
- develop greater knowledge of the types of problems faced by firm managers.
- improve your economic intution concerning these problems and their solutions.
- build your Excel skills to the point where you can use Excel to solve a wide variety of problems.
- improve your presentation skills, including developing an ability to convey information to others and to clearly explain and defend your decisions and results.
- improve your small-group and inter-personal skills.
Expectations
I expect you will welcome the challenges presented by the material and will push yourself to develop your analytical skills. I expect you will attend class everyday and be a serious participant in class discussions. And I expect everyone will be diligent group workers. If you find yourself struggling with any part of the class, including using Excel, I expect you will see me immediately. By the end of the semester, it is expected that you will be adept at thinking about managerial problems, applying economic analysis to these problems, and using Excel to determine optimal solutions to such problems.
Intended Audience
This class is intended for students who want to enter the business world or pursue an MBA after graduating from Lake Forest College. If you don't know if a job in business is for you, this class might help you decide. The benefit to someone knowing they are going to law school is unclear. Some of the skills will definitely carry over to law school. At the same time, we will be concentrating squarely on business topics. Finally, this is not an appropriate class for someone whose sights are set on graduate school in economics.
Class:
Class meets on Tuesday and Thursday mornings in Young Hall 314 from 9:30 to 10:50. Daily attendance and active participation in classroom discussions are expected. I reserve the right to lower the grade of any student who is cronically absent or tardy or exhibits disruptive behavior.
Office Hours:
Office hours are after class until 12:30 on Tuesdays and Thursdays and by appointment. I also have office hours for Micro Theory from 10:00 to 12:00 on Monday, Wednesday, and Friday mornings. With the understanding that I must help the Micro students first during that time, feel free to use those office hours as well. You are also welcome to stop by my office anytime or call me at home.Outside of stopping by my office, the best way to contact me is by e-mail at lemke@lakeforest.edu. You can also phone my office (847-735-5143) or my home (847-457-3219). E-mail and the telephone should be reserved for asking logistical questions. Questions concerning the lecture material, problem sets, etc. should be asked in person.
Texts:
The text for this class is a hybrid textbook from Thomson South-Western publishers. They have combined chapters from two books into one textbook for us. This hybrid book can be purchased in the bookstore for $128.25.Other readings will also be assigned during the semester. These will either be put on reserve at the library or we will place a class order for the books. If there are any topics that you wish we would discuss but that do not appear in the hybrid textbook, please suggest them and I will see if I can find a book to have the class read.
I strongly encourage everyone to start reading religiously at least one if not two of the following three sources: The Economist, Business Week, and the Wall Street Journal. Each of these has a scaled-down version available on-line as well as reduced rates for students.
For those interested, the chapters in the hybrid book come from the following two books.
Managerial Economics: Applications, Strategy, and Tactics, Tenth Edition Authors: James R. McGuigan, R. Charles Moyer, and Frederick H. deB. Harris
Publisher: Thomson South-Western Publishers, 2005
ISBN: 0-324-2592-39An Introduction to Management Science: Quantitative Approaches to Decision Making, Eleventh Edition Authors: David R. Anderson, Dennis J. Sweeney, and Thomas A. Williams
Publisher: Thomson South-Western Publishers, 2005
ISBN: 0-324-2023-18
Class and Group Participation:
Class and Group Participation will comprise 10 percent of your final grade. Half of this grade includes your participation in presenting the answers to homework questions, which will not be collected or graded. The other half will be determined by a survey administered in class that asks you to assign participation value to each of your classmates and groupmates.
Group Projects:
There will be four group projects during the semester. Each project will culminate with a 15 to 25 minute presentation of results to the class. Presentations will be evaluated on their informative value, clarity, ability to answer questions, and the overall style. Each project will determine 5 percent of your final grade, and twenty percent of each project's grade will be determined by your classmates' (not groupmates') ranking of the presentations.
Individual Projects:
Two individual projects will be assigned. As the name suggests, these projects are to be done individually, without discussing your progress with anyone else. Each project will require serious economic analysis and computer skills. You will be given a week or more to complete each project. Your best project will determine 10 percent of your final grade, while your worst project will determine 5 percent of your final grade.
Personal Appearance and Behavior:
This class is somewhat unique in that it relies heavily on group work and presentations while trying to provide you with a realistic view of the business world. Your appearance and behavior matter in the business world. I expect everyone will conduct themselves in a manner consistent with that environment. During presentations, interviews, etc., I expect everyone will dress and behave appropriately. Although the level of dress can be the typical college fashion during non-presentation and non-guest lecturer days, I still expect your behavior to be representative of how you would treat colleagues. For example, I expect that no one will ever interrupt the class by arriving late or having a cell phone ring during class. Your attire is particularly important when dealing with anyone outside of the class. You may have the opportunity to talk to people who someday might be in a position to help you develop contacts or even offer you a job. Their impression of you -- which will be determined in part by your attire, how you speak, how well prepared you are, and your manners -- may very well determine to what extent they will help you land that job or make that contact.
Exams:
There will be two exams during the semester plus a cumulative final. The final exam is on Saturday, December 11 from 1:30 to 4:30. The dates of the midterm exams have yet to be determined. Your best midterm exam will determine 20 percent of your final grade, while your worst midterm exam will determine 10 percent of your final grade. Your performance on the final will determine 25 percent of your grade.Make-up exams will be given only in unforeseeable and extraordinary situations. If you know you will be absent during an exam for a school-related reason, you should see me at least two weeks prior to set up a time to take the exam. If you unforeseeably miss the exam, you need to contact me within 24 hours to reschedule.
Grading Policy:
Your overall percentage for the class will depend on problem sets and class participation (10%), group projects (20%), individual projects (15%), mid-term exams (30%), and the final exam (25%). The conversion of your overall percentage into a letter grade will be no more stringent than:
Overall Percentage Letter Grade 90 - 100 A 80 - 90 B 70 - 80 C 60 - 70 D 0 - 60 F
Organization and Tentative Schedule:
The day-to-day operations of the class will change frequently as there are many parts to the learning process we are trying to develop. Classtime will include lectures of the material; class discussion of intuition, ideas, and solution possibilities; group presentations of results/solutions; and computer demonstrations of Excel.
Module Chapter Original Source Introduction Ch.1 Goals of the Firm MMH Ch.1 Ch.2 Fundamental Economic Concepts MMH Ch.2 Ch.3 Capital Budgeting MMH Ch.18 Decision Science Ch.4 Linear Programming ASW Ch.2 Ch.5 Sensitivity Analsyis ASW Ch.3 Ch.6 Networks ASW Ch.9 Ch.7 Project Scheduling ASW Ch.10 Probabilitstic Decisions Ch.8 Decision Analysis and Risk ASW Ch.14 Ch.9 Markov Processes ASW Ch.17 Strategic Behavior Ch.10 Oligopoly MMH Ch. 12 Ch.11 Game Theory MMH Ch.13 Information Ch.12 Contracting MMH Ch.15 Ch.13 Mechanism Design & Auctions MMH Ch.16 Forecating Demand Ch.14 Demand MMH Ch.3 Ch.15 Estimating Demand MMH Ch.4