This document outlines the syllabus for a Business Economics course. It includes required texts, grading criteria, and an overview of key economic concepts to be covered throughout the semester. Specifically, it will cover microeconomics and macroeconomics topics, including scarcity, production possibility frontiers, demand and supply analysis, and the role of economics in managerial decision making. Students will be evaluated based on class participation, assignments, presentations, exams and a final exam.

1. Business Economics (ECO 341)
Fall Semester, 2012
Khurrum S. Mughal
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2.  Required Texts & Readings:
 Economics, 19th Edition by Paul A. Samuelson & William D.
Nordhaus
 Recommended Readings: Articles from
 Economics, 4th Edition by David H. Hyman
 Economist Weekly, Business Section.
Course Material
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3.  Class Participation 5
 Quizzes 10
 Assignments 10
 Presentation 10
 Two Mid Term Examinations 25
 Final Exam 40
100
Grading Criteria
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4. 4

5. Economics
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6.  Definition:
 How societies use scarce resources to produce valuable
goods and services and distribute them among different
individuals.
(Economics, 19th Edition by Paul A. Samuelson & William D. Nordhaus)
Economics
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7.  Scarcity
 Production is never high enough
to meet everyone’s demand
 Wants are unlimited
 Efficiency
 An economy is producing
efficiently unless no individual’s
economic welfare can be improved
unless someone else is made worse
off
Economics
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8.  Microeconomics
 Study of economics at smaller scale
 Adam Smith: Markets, Firms, & Households
 Wealth of Nations (1776): Determination of prices of land, labour, &
capital; and strength and weaknesses of market mechanism
 Macroeconomics
 Study of overall performance of the economy
 General Theory of Employment, Interest & Money, John M Keynes (1936)
 What causes business cycles, with alternating spells of high unemployment
and high inflation
 Fallacies Encountered in Economic Reasoning:
 The post hoc fallacy - causality
 Failure to hold other things constant
 The fallacy of composition
Basics of Economics
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9.  Positive Economics
 Based on facts of an economy
 Normative Economics
 Involves ethical precepts and norms of fairness
Basics of Economics
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10.  Types of Economies
 Market Economies: Individual and private firms make
the major decisions regarding production and
consumption (laissez-faire economy)
 Command Economies: Government makes all
important decisions about production and distribution
 Mixed Economies
Basics of Economics
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11.  Limited Resources:
 Land
 Labour
 Energy
 Factories and tools
 Technical knowledge etc.
 Allocation among innumerable possibilities
 Choice of input and output allocation
 Factors of Production: land, labour and capital
Basics of Economics
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12. Basics of Economics
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13.  Opportunity Cost: The cost of giving up any activity
when one makes a choice to choose the best possible
alternative
 Example: Choosing between production of computers
and printers by a firm on PPF
Basics of Economics
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14.  Marginal Analysis: How much you get from using one
more unit
 Marginal Utility
 Marginal Product
 Marginal Revenue
 Marginal Cost
Basics of Economics
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15.  Time Dimension:
 Short Run
 Operating period in which at least one factor of production is
in fixed supply
 Long Run
 Operating period in which all factors of production are in
variable supply
 Short Run Profits Vs Long Run Success of Business
Basics of Economics
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16.  Limited Resources:
 Land
 Labour
 Energy
 Factories and tools
 Technical knowledge etc.
 Allocation among innumerable possibilities
 Choice of input and output allocation
 Factors of Production: land, labour and capital
Basics of Economics
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17.  Inputs and Outputs
 The Production Possibility Frontier
 Application of PPFs
 Poor Vs High Income Nations
 Choice among Public and Private Goods
 Economic Growth
 Current Vs Future Consumption
 Unattainable Vs Inefficient Points on PPF
Society’s Technological Possibilities
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18. Application of theory and tools of analysis of decision
science to examine how an organization can achieve its
aims and objectives most efficiently
Business Economics
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19. Managerial Economics
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Management Decision Problems
Economic Theory:
Micro &
Macroeconomics
Managerial Economics:
Application of economic theory and
decision tools to solve managerial
decision problems
Decision Science:
Mathematical
Economics and
Econometrics

20.  Relationship to economic theory:
 Linked to individual firms investment decision,
production and preferences of consumers.
 Macroeconomic conditions in which a firm is
functioning.
 Economic theories aim to predict economic behaviour
 Theory of the firm is of utmost importance for
Managerial Economics
Relationship to Economic Theory
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21.  Mathematical Economics is used to formalize the
economic models of economic theory in the form of an
equation
 Econometric tools are used to statistically analysis the
models using real world data
 The tools are used for forecasting as well.
 For Example: Demand of Education
Relationship to Decision Sciences
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22.  Integration of Economic Theory, Decision Science
Tools, and Business Areas of Study
 Managerial Decision Process:
 Establishing the objective of the firm
 Problems and Obstacles towards achieving the objective
 Identifying the range of possible solutions
 Selecting the optimal solution
 Implementation of the solution
Relationship with Business Administration
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23.  Types of Business Decisions
 Price and Output Decisions
 Demand Estimation
 Choice of technique of production
 Advertising Decisions
 Long-run Production Decisions
 Investment Decisions
Relationship with Business Administration
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24.  y=f(x) or y=g(x,z) or y=h(x1, x2,…..xn)
 Total, Average and Marginal Products
 Example: Labor to be employed in Construction
 Economic Models: Experiments similar to Natural science
experiments by holding everything else constant
Functional Relationships in Economics
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25.  Example of Demand and Supply
 Demand Function
Qd=a-bP where b<0
 Supply Function
Qs=c+dP where d>0
 Equilibrium
Qd=Qs
Economic Models
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