Gujarat University, Ahmedabad – MBA Programme

Details of the Courses Offered

Annexure E
Course Code: C101
Economics for Managers (EFM)

1. Course Objective

This course is designed to impart knowledge of the concepts and principles of

Economics, which govern the functioning of a firm / organisation under different
market conditions. It further aims at enhancing the understanding capabilities of
students about macro–economic principles and decision making by business and
government.

2. Course Duration
The course will have 45 sessions of 60 minutes duration.

3. Course Content
Assignment of sessions to the modules of course is as follows:

Module Session Marks

No. Modules/SubModules (Uni.
Exam)
I Ten principles of economics
09 20
How people make decisions; How people interact; How
the economy works as a whole.
Thinking like an economist
The scientific method; Role of assumptions; Economic
models; The circular-flow diagram; Production
possibilities frontier; Micro and macroeconomics; Positive
versus normative economics
The market forces of supply and demand
Markets and competition; Individual demand; Demand
schedule and demand curve; Market demand versus
individual demand; Shifts in the demand curve; Supply
schedule, Supply and demand– equilibrium, analyzing
changes in equilibrium.
Elasticity and its application
The elasticity of demand; The elasticity of supply,
application of elasticity.
Consumers, producers and the efficiency of markets
Consumer surplus; Producer surplus; Market efficiency–
the benevolent social planner; evaluating the market
equilibrium; Market efficiency and market failure
The costs of production

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Costs – total revenue, total cost and profit, costs as

opportunity costs, cost of capital as an opportunity cost,
economic profit versus accounting profit; Production and
costs – the production function, from production function
to the total cost curve; various measures of cost – FC,
VC, AC, MC, cost curves and their shapes and
relationship; Costs in the short run and long run –
relationship between SR and LR ATC, economies and
diseconomies of scale.

II Firms in competitive markets 09 20

What is a competitive market; Profit maximization and the
competitive firm’s supply curve; The supply curve in a
competitive market?
Monopoly
Why monopolies arise; How monopolies make production
and pricing decisions; The welfare cost of monopoly –
deadweight loss, social cost; Public policy towards
monopolies; Price discrimination – the analytics of price
discrimination, examples of price discrimination (movie
tickets, airline prices, discount coupons, financial aid,
quantity discounts).
Oligopoly
Markets with only a few sellers – duopoly, competition,
monopolies and cartels, the equilibrium for an oligopoly,
how the size of an oligopoly affects the market outcome;
Game theory and the economics of cooperation –
prisoners’ dilemma, oligopolies as a prisoners’ dilemma,
other examples of prisoners’ dilemma (arms race,
advertising, common resources), the prisoners’ dilemma
and the welfare of society, why people sometimes
cooperate.

III Oligopoly Public policy towards oligopolies – 09 20

restraint of trade and the antitrust laws, controversies
over antitrust policy, resale price maintenance, predatory
pricing, tying.
Monopolistic competition
Competition with differentiated products – firms in the
short run, the long-run equilibrium, monopolistic versus
perfect competition (excess capacity, mark up over
marginal cost), monopolistic competition and the welfare
of society; Advertising – the debate over advertising,

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advertising as a signal of quality, brand names.

The theory of consumer choice
The budget constraint; Preferences – representing
preferences with indifference curves, four properties of
indifference curves, two extreme examples of indifference
curves; Optimization – the consumer’s optimal choices,
change in income, change in prices, income and
substitution effects, deriving the demand curve; Four
applications – do all demand curves slope downward,
how do wages affect labor supply, how do interest rates
affect household saving, do the poor prefer to receive
cash or in-kind transfers
Measuring a nation’s income
The economy’s income and expenditure; The
measurement of GDP; The components of GDP; Real v/s
nominal GDP; GDP and economic wellbeing.
Measuring the cost of living
The consumer price index; Correcting economic variables
for the effects of inflation, Impact of Inflation on various
sections of society- producers and consumers.

IV Production and growth 09 20

Economic growth around the world; The role and
determinants of productivity; Economic growth and public
policy; The importance of long-run growth.
Saving, investment and the financial system
Financial institutions in the US economy; Saving and
investment in the National Income Accounts; The market
for Loanable funds, Supply and Demand for Loanable
Funds.
The monetary system, Money growth and inflation
The meaning of money; Functions and Kinds of Money,
The classical theory of inflation; The Cost of inflation.
Open-economy macroeconomics – Basic concepts
The international flow of goods and capital – the flow of
goods (exports, imports, net exports), the flow of capital
(net foreign investment), the equality of net exports and
net foreign investment; savings, investment and their
relationship to the international flows; The prices for
international transactions (real and nominal exchange
rates); A first theory of exchange-rate determination
(purchasing power parity)

V Aggregate demand and aggregate supply 09 20

Three key facts about economic fluctuations; Explaining
short-run economic fluctuations; The aggregate demand

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curve; The aggregate supply curve; Two causes of

economic fluctuations (the effects of shifts in aggregate
demand and supply).
The influence of monetary and fiscal policy
on aggregate demand
How monetary policy influences aggregate demand – the
theory of liquidity preference, the downward slope of the
aggregate demand curve, changes in the money supply,
the role of interest-rate targets in Fed policy; How fiscal
policy influences aggregate demand – changes in
government purchases, the multiplier effect, a formula for
the spending multiplier, other applications of the multiplier
effect, the crowding-out effect, changes in taxes; Using
policy to stabilize the economy – the cases for and
against active stabilization policy.
The short-run trade-off between inflation and
unemployment
The Phillips Curve – origins, aggregate demand,
aggregate supply and the Phillips Curve; Shifts in the
Phillips Curve – the role of expectations; Shifts in the
Phillips Curve – the role of supply shocks; The cost of
reducing inflation – the sacrifice ration, rational
expectations and the possibility of costless disinflation,
the Volcker disinflation, the Greenspan era.

Five debates about macroeconomic policy (pros

and cons)
Should monetary and fiscal policymakers try to stabilize
the economy; Should monetary policy be made by rule
rather than by discretion; Should the Central Bank aim for
zero inflation; Should fiscal policymakers reduce the
government debt; Should the tax laws be reformed to
encourage saving.

4. Teaching Methods:
The course will use the following pedagogical tools:
(a) Lectures and case discussion covering a cross section of
decision situations.
(b) Discussions on issues and techniques
(c) Projects/ Assignments/ Quizzes/ Class participation etc

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5. Evaluation:
The evaluation of participants will be on continuous basis comprising following
elements:

A Projects/ Assignments/ Quizzes/ Class participation etc Weight-age 30%

(Internal & Continuous
Evaluation)
B Mid-Semester examination Weight-age 20 %
(Internal Evaluation)
C End –Semester Examination Weight-age 50%
(External Evaluations)

6. Text Book:

Sr. Author/s Name of the Book Publisher Edition and Year

No. of Publication
T1 N Gregory Principles of Thomson 2nd edition, 2002
Mankiw Economics South- Indian reprint
Western
T2 Pindyck & Microeconomics Pearson 5th edition
Rubinfeld
T3 8/e Christopher R. Managerial Economics Tata Latest Edition
Thomes, S. – Concepts and McGraw Hill
Charles Maurice Applications

7. Reference Books:

Sr. Author/s Name of the Book Publisher Edition and

No. Year of
Publication
R1 DSalvatore Managerial Economics Thomson Latest Edition
in a Global Economy South
Western
R2 Ravindra H. Microeconomics for Oxford Latest Edition
Dholakia and Management Students University
Ajay N. Oza Press
R3 G. S. Gupta Managerial Economics Tata Mc Graw Latest Edition
Hill
R4 C. Rangaragan Principles of The McGraw- Latest Edition
and B. H. Macroeconomics, Hill
Dholakia companies
R5 G. S. Gupta, 3/e Macroeconomics – Tata McGraw Latest Edition
Theory and Hill
Applications
R6 Samuelson and Economics Tata McGraw Latest Edition
Nordhaus Hill

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R7 Atmanand Managerial Economics Excel Books Latest Edition

R8 I C Dhingra Essentials of Educational Latest Edition

(SCS) Managerial Economics

R9 D Salvatore Microeconomics: Oxford 4th Edition

Theory and University (Indian Edition)
Applications Press
R10 Lipsey and Economics Oxford 11th Edition
Chrystal University (Indian Edition)
Press
R11 D. Salvatore Managerial Economics- Oxford 6th Edition
Principles and University (Indian Edition)
Worldwide Applications Press

R12 H.L Ahuja Managerial economics S Chand 3rd edition

R13 Hirschey, Economics for Ceenge Latest Edition
Managers Learing
R14 Satya P. Das Microeconomics for Sage Text Latest Edition
Business Books
R15 Geetika, Piyali Managerial Economics Tata Latest Edition
Ghosh, Purba Mcgrawhill
Roy Choudhary
R16 Mankiw, Econimcs – Principles Ceenge Latest Edition
and Application Learning
R17 D. N. Dwivedi Managerial Economics Vikas 7th Edition

8. List of Journals/Periodicals/ Magazines/ Newspapers etc.:

Economist, Economical and Political Weekly, Economic Times, Business
Standard, etc.

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