Ch 2 Economics for Managers Paul Farnham by uux61715


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Catalog Description

This course uses basic macroeconomic concepts to develop a basic model of the
macroeconomy emphasizing real world data and relationships. The goal is for
managers to understand the main forces and trends in the economy, how they are
interrelated, and how policymakers try to affect them. Because changes in the
macroeconomy affect industries and firms throughout the economy, it is important
for managers to understand how these changes can affect managerial decisions,
particularly in terms of the concepts discussed in the context of microeconomics.
The performance of the economy is presented in the context of industries and firms
studied in microeconomics.

Detailed Course Description

In this course we use the principles from microeconomics (demand, production, cost,
and market environment) and macroeconomics (GDP, inflation, spending, monetary
policy, and international) to analyze and develop implications for the competitive
strategies of various types of firms.

The main objective is to give you the basic framework of modern micro and
macroeconomics. In class, we discuss the theory and basic institutional structures.
Based on the readings, we also analyze current policy issues as they relate to the
economic environment, industries, and firms.

Once you understand the basic framework, an important outcome of the course is for
you to be able to read articles in The Wall Street Journal, The Economist, etc. from
the viewpoint of an economist (on a deeper level than if you hadn't had this class; to
understand the concepts and terminology).


Economics for Managers      - Paul G. Farnham

The Structure of American Industry      - Walter Adams & James Brock

(11th edition paperback)

Learning Objectives: At the end of the term, you should be able to:

      accurately define and explain key microeconomic terms (such as demand,
       supply, equilibrium, marginal revenue, marginal cost, average cost,
       economies of scale, etc.)
      describe how different variables influence product price and quantity using the
       framework of Demand and Supply.
      calculate own-price, cross-price, and income elasticity and interpret the
       results for market prices and quantities.
      describe and analyze factors that affect the production and cost structure of a
       firm and an industry.
      describe and analyze market structures using models of perfect and imperfect
      interpret and analyze current business articles using the main microeconomic
       models and frameworks.

      give accurate and complete economic definitions of key macroeconomic terms
       and data series (such as GDP, inflation, unemployment, etc.)
      describe the basic structure of the macroeconomy in terms of the circular flow
       and the relevant interrelationships in both graphic and algebraic terms.
      describe the key components and variables in a General Macroeconomic
       Model (GMM) which includes IS/LM, AD/AS, Balance of Payments, and the
       Foreign Exchange market.
      evaluate the effects of different types of fiscal and monetary policies on
       macroeconomic performance using a GMM.
      describe the process of money creation and evaluate the implementation of
       monetary policy by the Federal Reserve.
      interpret and analyze current business articles using components of a GMM.
      (working in a group) develop an report (as a business-oriented economic
       research report) of the macroeconomy, industry, and firm giving historical
       and current analyses along with a forecast and recommendations.

As an MBA student in my class, I expect you to:

      attend and be prepared for each class session (reading before class any
       chapters, articles, and assignments that are listed, and be prepared to discuss
       and comment on them during the class session);
      read all of the material since current articles will be an important part of the
       class (I will tell you what to emphasize);
      be able to work with and understand graphs and basic algebra;
      have access to a computer and the Web, and be familiar with downloading
       from the Web and email (it's your responsibility to be able to download from
       any computer you work with - home or work);
      turn off ALL sounds for cell phones, pagers, computers, etc. - disruptions to
       the class will have a negative effect on your participation grade;
      check your email on a regular basis; I won't respond to any email requesting
       materials that are on the web site or that you can get from a group member;
      interact with your fellow group members and classmates in a professional and
       businesslike manner to complete any assigned tasks;
      demonstrate the interest and motivation appropriate for Georgia State
       University MBA students.

In turn, you should expect that I will:
      do my best to make the class sessions relevant and worthwhile;
      conduct an orderly, professional class in a comfortable environment;
      try to answer all questions with accurate or honest responses;
      show an interest in you as individual students;
      help you learn economic concepts that are appropriate for people in business
       (not necessarily economists);
      work with you individually, in groups, and as a class to help you with the
       economic concepts.

I expect both attendance and participation from MBA students; in class, when I ask
you a question or for a comment, I expect a response that shows you are aware of
the issues (basically, that you've been paying attention); whether it's right or wrong
is not as important as whether you are contributing. I see the class as a collaborative
learning experience for us all.

Course Requirements

      Examinations (60% final grade) - There will be 2 exams: one based on the
       micro material and one based on the macro material. The exam material
       comes primarily from the class lectures and discussions, which provide the
       framework and integrate the readings. Any make-up exam will be offered
       one time, different than the regular exam, closed-book, and at the
       discretion and convenience of the professor (usually the class period
       after the regular exam).

      Research Project (30% of final grade) - You will be a member of the
       Economic Analysis Group in a consulting firm. Your group's objective is to
       prepare a comprehensive historical and current analysis to the Board of
       Directors and senior management of your chosen firm on the macroeconomy,
       industry, and firm. The Project is due on the last day of class. Attendance is
       required. Missing this session will decrease your final course grade by
       1/3 letter grade (an 'A-' drops to a 'B+').

      Quizzes & Participation (10% of final grade) - There will be at most 10
       quizzes covering any aspect of the course (lectures, articles, text). The
       quizzes may be in-class or take-home. The objective is to help prepare you
       for the exams. There are no make-up quizzes.
General Policies

         This website is an integral part of the class; please check it on a regular
         For the Fall term term, 2 absences will result in automatic withdrawal
        (before the midpoint, you will receive a 'W'; after a 'WF'). There are no
        incompletes for the course.
         You should wait at least 15 minutes in class for me. A GSU official will
        announce any class cancellation.
         This syllabus provides a general plan for the course; deviations may be
         I can meet with you by appointment at a mutually convenient time. My
        office phone number is: 404.651.3569. My home number is: 404.892.2235.
        The easiest way to contact me is by email.

                             Topic                               Articles

                                                   Copper Limbo: just how low can it go?
                                                   Americans and their SUV's (08.25.00)
                                                   After decades of brand bodywork, GM parks
                       Introduction and            Oldsmobile - for good (12.13.00)
                       Demand & Supply             Federal Policies, Industry shifts produced
                                                   Natural-gas crunch (01.03.01)
                                                   Fast-food chains upgrade menus (02.05.02)
    1                                              Airlines must come to terms with Internet's real
                       Farnham Chs 1,2
                                                   impact (10.17.02)
                                                   Japanese auto giants accelerate shift to US
                        Micro Lecture 1            (01.06.03)
                                                   Detroit fears some consumers may be souring
                                                   on big SUVs (01.08.03)
                                                   On the farm, chickens come home to roost

                                                   Dell fine-tunes its PC pricing to gain an edge in
                                                   slow market (06.08.01)
                                                   How technology tailors price tags (06.21.01)
                            Elasticity             Airlines in America (04.18.02)
                                                   Ink-cartridge knock-off artists give full-price
                                                   competition fits (09.25.02)
    2                    Farnham Ch 3              Airlines try business-fare cuts, find they don't
                                                   lose revenue (11.22.02)
                                                   Amazon prospers on the web by following Wal-
                        Micro Lecture 2            Mart's lead (11.22.02)
                                                   Big airlines face pressure to simplify pricing

                       Production & Cost           Bag of high-tech tricks helps to keep airlines
                                                   financially afloat (01.20.00)
                                                   An Efficiency Drive: fast food lanes get even
                       Farnham Chs 5,6             faster (05.18.00)
    3                                              Big oil starts to tap reserves that are buried far
                       (omit appendix)             below the waves (07.03.00)
                                                   Caught unprepared, natural-gas industry is
                        Micro Lecture 3            stymied by shortages (10.11.00)
                          US ports are losing battle to keep up with
                          overseas trade (07.09.01)
                          Cargo idles off west coast as labor dispute hits
                          ports (10.01.02)
                          Dock labor troubles hinge on common
                          technologies (10.02.02)
                          Workers aren't included in lights-out factories
                          As Toyota closes in on GM, quality concerns
                          also grow (08.04.04)
                          Sea change: Exxon/Mobil bets on new
                          technology (08.17.04)
                          Once a footnote, flat screens grow into a huge
                          industry (08.30.04)
                          Amid price war, Chrysler to revamp
                          manufacturing (08.02.05)

                          Operators of fiber-optic networks face capacity
                          glut (10.19.00)
                          Postal services look for their online niche
                          Priority mail is prey for rivals (01.24.01)
                          Anxious Days in Potatoland (pdf)
                          US consumption of french fries is sliding
                          DVD gains on tape (02.05.02)
     Market Structure     Blockbuster's new pitch: why not buy that
                          movie? (11.01.02)
                          Battered by its Rivals (pdf)
4   Farnham Chs 7, 8, 9   Nimble giants: Titans swallow Wi-Fi, stifling
                          Silicon Valley (08.08.03)
                          Local-phone companies face seige in an
      Micro Lecture 4     industry in turmoil (08.13.03)
                          Bells mount two-way assault on local market
                          Cable trouble: Subscriber growth stalls as
                          satellite TV soars (08.04.03)
                          How discount airlines profited from their bigger
                          rivals' woes (08.12.04)
                          Equalizing Airfares (08.17.04)
                          Phone industry faces upheaval as ways of
                          calling change fast (08.25.04)

     Review & Project
5                                    Problem Set

6      Micro Exam                            .

    Review & Mid-term
7                                            .

    Macro Introduction
        and GDP           PowerPoint Presentation - GPMBA Intro.pps
                          The Macro Model
                          US economy marks solid growth, despite
8                         storms (10.29.05)
      Farnham Ch 11
                          Economy marks fastest growth since 04
      Macro Lecture 1
        Spending and
       Monetary Policy    Economics focus - a working model (08.13.05)
                          Don't worry about post-Greenspan era: central
                          banking itself has been elevated (09.19.05)
9    Farnham Chs 12, 13   Fed raises rates, signals additional increases to
                          come (11.02.05)
                          Housing market shows further signs of cooling
      Macro Lecture 2a    (11.15.05)
       and Lecture 2b

     Aggregate Model of    Why oil's surge hasn't damped global growth
     the Macroeconomy     Productivity rises at fastest pace in over a year
       Farnham Ch 14

      Macro Lecture 3

       Open economy

                             Brazil weathers scandal well (09.22.05)
11   Farnham Chs 15, 16    US trade deficit swells to a record (11.11.05)

      Macro Lecture 4

      Review & Project                       .

13      Macro Exam                           .

      Review & Project
14                                           .

15     Projects due

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