Online Course: Microeconomics for Managers (Jan 2013)

Workload: 6-8 hours/week

About the Course

This course is designed to introduce students to basic microeconomic theory at a relatively rapid pace. The focus will be on fundamental economic principles that can be used by managers to think about business problems, including those inside the firm (relating to the problem of administering the firm’s resources in the most cost-effective way) and those outside the firm (relating to broader market and government forces that can affect the behavior of firms). The course will not deal directly with standard “managerial economics,” which tends to emphasize the mathematics and statistical techniques used in optimizing firm decisions. However, every effort will be made to apply basic principles to management problems, mainly
those relating to getting incentives right for customers, suppliers, workers, managers, and owners. Accordingly, this course will focus on an emerging subdiscipline within economics, organizational economics. It will stress methods of thinking, and students will be evaluated on their ability to recall, use, and extend the methods of thinking that are covered during the quarter.

About the Instructor(s)

Richard McKenzie is the Walter B. Gerken Professor Emeritus of Enterprise and Society in the Paul Merage School of Business at the University of California, Irvine. He retired from the University of California, Irvine at the end of June 2011, but only to pursue an array of academic and non-academic (business and services) ventures, including the development of this online video lecture course.

Course Syllabus

Week One: Economic Thinking. Topics include rational behavior and the law of demand and Maslow’s Hierarchy.

Week Two
: Property Rights and Trade. Topics include property right, markets, the prisoner’s dilemma, and comparative advantage.

Week Three
: Competitive Markets and Policies. Topics include supply and demand, market efficiency, labor markets, adding features to products, adding fringes to pay packages, and more.

Week Four
:  Competitive Markets – Prospects and Problems. Topics include incenttves, trust and welfare, external costs and pollution rights, external benefits, the logic of queues and others.

Week Five
: International Trade and Finance. Topics include international trade and protection and exchange rates.

Week Six
: The Theory of Demand and Applications. Topics include the elasticity of demand, rational addiction and network effects.Week Seven: The Theory of the Firm. Topics include principal-agent problems, firms and coordinating costs, opportunistic behavior, and make-or-buy decisions, franchising, and leverage and moral hazard.Week Eight: Cost Structures. Topics include short- and long-run cost structures.Week Nine: Market Structures. Topics include production under perfect competition, production and pricing under pure monopoly, taxation and regulation of monopoly, perfect and imperfect price discrimination, market segmentation, monopolistic competition, oligopoly and cartels, contestable markets, and natural monopoly.
Week Ten: Special Topics in Market Theory. Topics include problems with monopoly theory, the lemon problem, first-mover advantage, the innovator’s dilemma, competitive labor markets, monopsony labor markets, and executive pay.

Recommended Background

Some microeconomic courses are math-heavy. They require calculus as a prerequisite. In this course, the goal is to instill the economic way of thinking about business. Little math is used in the lectures (and Professor McKenzie’s textbook to which the lectures are tied), but that does not mean the analysis will not be sophisticated, challenging, and rewarding.  Indeed, on finishing this course, students will be impressed with how challenging and sophisticated business decisions can be and how useful the economic way of thinking can be in understanding business problems and in guiding business decisions.

Suggested Readings

The video lectures can be used with several microeconomics textbooks.  However, they work best with Professor McKenzie’s own textbook (written with Dwight Lee), Microeconomics for MBAs: The Economic Way of Thinking for Managers, which can be ordered by clicking on the title.  Although “MBAs” is in the title, the book is accessible to undergraduate students who are serious about learning how the economic way of thinking can be applied to business problems.

Students should also consider ordering the sixth edition of Richard McKenzie and Gordon Tullock’s The New World of Economics (Springer, 2012). Professor McKenzie will occasionally draw lecture topics from this book. This book also applies the economic way of thinking to an array of social and business problems, from the economics of marriage and obesity to why popcorn costs so much at the movies.  Because of the range of conventional and unconventional topics covered in every edition of The New World (with the first edition released in the mid-1970s), it might rightfully be considered a predecessor to Freakonomics, a widely read economics book (which is recommended for students who want to expand their coverage of applied topics beyond the content of this course).

Course Format

This is a complete college and MBA-level course in microeconomic theory, covering fifty-eight lectures, which range in length from twenty to thirty-five minutes. These lectures contain as much content as any college-length course in microeconomics.  Although the video lectures can work with several microeconomics textbooks, they work best with Professor McKenzie’s own textbook, Microeconomics for MBAs: The Economic Way of Thinking for Managers, 2nd ed. (Cambridge University Press, 2010).  While “MBAs” is in the title, the content is accessible to all students (undergraduate and graduate) who are serious about learning how economic principles can be applied to business.  Professor McKenzie has provided a longer video introduction to the course — which gives details on the course, shows how the lectures will appear, and provides a sample of his online approach to lecturing – on YouTube.

For those students who want to have the video lectures on their computers’ hard drives, a complete set of the video lectures can be ordered via email after January 1, 2013 from the DVD distributor (to be identified).