California State University, Bakersfield

Managerial Economics (ECON 451)

Abbas Grammy, Ph.D.
Department of Economics
Office: BDC Room 249 via 247
E-mail: agrammy@csub.edu
Telephone: 661-654-2466

Professor of Economics
School of Business and Public Administration
Office Hours: MW 8:30-9:30 a.m. & 2-3 p.m.
Website: www.csub.edu/~agrammy
Fax: 661-654-2438

Catalog Description:
Application of empirical methods to managerial decisions. Topics include estimation of demand, sales
forecasts, business conditions analysis, estimation of production and cost functions, pricing and
advertising, and capital budgeting. Case studies and software applications. Prerequisite: ECON 201,
MATH 101 and 140 or equivalents, or permission of instructor.
Required Text:
Brickley, Smith, Zimmerman, Managerial Economics and Organizational Architecture, McGraw-Hill/Irwin,
2009, ISBN: 978-0-07-337582-3
The textbooks Power Point slides are available on my website under Course Materials. Please download
and print as handout three to a page for note-taking and discussion purposes.
Course Objectives:
Upon completion of this course, the student will be able to:
Develop greater knowledge of the types of problems faced by business managers
Develop intuition concerning how economics helps solve managerial problems
Learn the strategic workings of modern firms (i.e., small, large, domestic, and multinational)
Understand how market organization, corporate culture, and public policy affect business performance
Improve presentation skills, including developing an ability to convey information to others
These objectives are achieved by classroom lectures and discussions, data analysis projects, historical and
current events, homework assignments and examinations.
Course Policy:
Attendance: You are required to attend all class sessions and actively participate in class discussions. You
are also required to come to the class on time and stay for the entire period. I will end the class on time and
give you a brief break. If you must leave the class to attend a prior engagement before the session is over,
you need to let me know in advance.
Grading System: Letter grades will be determined by total percentage points earned in the course. I do not
intend to grade on the curve. I will use the following distribution corresponding to each letter grade:
95-100 A
90-94 A87-89 B+

84-86 B
80-83 B77-79 C+

74-76 C
70-73 C65-69 D+

60-64 D
50-59 D0-50 F

Assignment Policy:
There will be no make-up exams, quizzes, or assignments. Only serious and compelling medical reasons
with supporting certifications from credible sources will be considered. Exams, quizzes, and assignments
cannot be made up for other reasons. Assignments must be hand-delivered to me in the classroom on their
respective due dates. Other forms of submission such as sliding under my office door or via e-mail are not
acceptable. Late assignments will not be graded. Late arrival to exam or quiz sessions will not receive extra
time. If you happen to miss any exams, quizzes, or assignments, your grade will be based on the
requirements you have completed. Incomplete grades will not be assigned.
Cheating & Plagiarism:
I follow the universitys policy on Academic Integrity enumerated below:
The principles of truth and integrity are recognized as fundamental to a community of teachers and scholars. The University
expects that both faculty and students will honor these principles and in so doing will protect the integrity of all academic
work and student grades. Students are expected to do all work assigned to them without unauthorized assistance and without
giving unauthorized assistance. Faculty have the responsibility of exercising care in the planning and supervision of academic
work so that honest effort will be encouraged and positively reinforced.
There are certain forms of conduct that violate the university's policy of academic integrity. ACADEMIC DISHONESTY
(CHEATING) is a broad category of actions that use fraud and deception to improve a grade or obtain course credit.
Academic dishonesty (cheating) is not limited to examination situations alone, but arises whenever students attempt to gain an
unearned academic advantage. PLAGIARISM is a specific form of academic dishonesty (cheating) which consists of the
misuse of published or unpublished works of another by claiming them as one's own. Plagiarism may consist of handing in
someone else's work, copying or purchasing a composition, using ideas, paragraphs, sentences, phrases or words written by
another, or using data and/or statistics compiled by another without giving appropriate citation. Another example of academic
dishonesty (cheating) is the SUBMISSION OF THE SAME, or essentially the same, PAPER or other assignment for credit in
two different courses without receiving prior approval.
In particular, seemingly identical examinations and assignments will be subject to the cheating and plagiarism policy. The
course of action is to assign Failure (F) grades to students caught cheating and for the instructor to report them to the university
administration for further disciplinary actions. You must work independently in the completion of all assignments and
examinations in this course. All course requirements are not group activities.

Course Requirements:
Mid-term Examination: 30%
Final Examination: 30%
Weekly Exercises: 15%
In-Class Oral Presentation: 5%
Writing Assignment: 20%
Explanation of Course Requirements:
Examinations: There are two exams in this course. Each examination will consist of a combination of
problem sets and questions. The mid-term exam will cover chapters 2-8 and the final exam will cover all
chapters covered after the mid-term exam.
Weekly Exercises: Your assignment is to solve any one of the Self-Evaluation Problems and to answer any
one of the Review Questions at the end of a chapter previously covered. You can submit your weekly
assignment on either day of the class session. I suggest you do not choose the easiest problem or question.
Oral Presentations: You assignment is to present to the class any two of chapters
Marginal Applications

Academic Applications
Analyzing Marginal Decisions

Your presentations must take 10-15 minutes. In addition to the reading materials you are provided, you
need to research additional sources of information to enrich your presentations.
Writing Assignment: Assume a corporation, whose market value has been falling, hires you as an
Economic/Financial Analyst. Your task is to develop a set of strategies (i.e., managerial and/or promotional)
to help this company gain competitive advantage and add market value. To begin, you conduct a market
analysis of the companys performance in the stock market. Based on the outcome of your market analysis,
you propose a set of strategies that would exert the best potential for profitability. In you proposal, detail
your strategies and propose a set of goals along with a time-table for achieving these goals.
You will collect financial data on a troubling corporation of your choice (e.g., Lowe's Companies Inc;
LOW). Analyze its financial data and explore financial viability of this corporation with respect to the future
value of its stocks. To do so, visit http://msn.com; click on Money; then Investing. Input the name or
symbol of the company in the Name or symbol(s) box and click Quote. To collect data and information of
the companys activities and finances, visit the following sites including their respective pages:

Snapshot
Historical
News & Info
Fundamentals
Research

By visiting the above sites, you explore the type of product the company sells and the competitiveness of its
market; read the company report, key developments, and recent news; tabulate and plot the data on its stock
price and volume over a three-year period; and use the research tools to investigate the stability and viability
of the companys stocks.
First, review and analyze the data you have collected. Next, compare the data trends with the market trends
(e.g., Dow, Nasdaq, or S&P 500) to see how the companys stocks performed relative to the entire market.
Upon the completion of your analysis, give a 10-15 minute oral presentation to the class at a scheduled date
and write a four-to-five page paper (typed double-spaced and edited for spelling and grammar) to present
your research results. Insert all necessary charts in appropriate locations within the text. Submit your paper
to me in the classroom on its due date. Organize your paper in the following format:
1. Introduction and Purpose
3. Historical Trends
5. Strategies for Financial Viability

2. Company Choice
4. Research Results
6. Goals and Time Table

Schedule of Class Activities

Week 1
Introductions
Course Review
Chapter 2: Economists View of Behavior
3

Week 2
Chapter 3: Markets, Organizations, and the Role of Knowledge
Chapter 4: Demand
Week 3
Chapter 5: Production and Cost
Chapter 6: Market Structure
Week 4
Chapter 7: Pricing and Market Power
Chapter 8: Economics of Strategy: Creating and Capturing Value
Week 5
Mid-term Exam
Chapter 9: Economics of Strategy: Game Theory
Week 6
Chapter 10: Incentive, Conflicts, and Contracts
Chapter 11: Organizational Architecture
Week 7
Chapter 12: Decision Right and The Level of Empowerment
Chapter 14: Attracting and Retaining Qualified Employees
Week 8
Chapter 15: Incentive Compensation
Chapter 19: Vertical Integration and Outsourcing
Week 9
Chapter 21: The Economics of Regulation
Chapter 22: Ethics and Organizational Architecture
Week 10
Chapter 21: Leadership (web Chapter)
Course Wrap-up
Important Dates
First day of class: Monday, September 13, 2010
Last day of class: Wednesday, November 17, 2010
Mid-term Exam: Wednesday, October 6, 2010
Writing Assignment Due: Wednesday November 10, 2010
Final Exam: 5:00 p.m. Monday, November 22, 2010