SYLLABUS ECO 467: Managerial Economics

Spring, 2005

Dr. Donald G. Freeman Office: SHB 210-A

Phone: 294-1264 email: Hours: MW: 9:30 -11:00 a.m.;

Homepage: 1:00 - 3:30 p.m.

TTh: 2:00-3:30 p.m.

All course materials (homework, handouts, etc.) will be posted to Blackboard

Course Description:

An integration of economic tools of analysis with optimization techniques such as calculus, LaGrangian multipliers and linear programming. Additionally, students are exposed to risk analysis and decision-making under uncertainty, inventory control, profitability analysis, and capital budgeting. Prerequisites: ECO 230 or 233, BAN 232, FIN 367.

Course Objectives:

1. To apply the techniques of optimization theory to problems in business and economics.

2. To derive rules for decision making under conditions of risk and uncertainty.

3. To demonstrate the importance of completely and accurately quantifying the benefits and costs of any set of economic alternatives.

Text: Samuelson & Marks, Managerial Economics, Fourth Edition

Other Resources:


There will be four mid-terms with equal weight of 25% toward your final grade. Each mid-term will consist of 15-20 multiple choice questions, with a weight of 60%, and 2-3 longer problems, with a weight of 40%. The final exam, which is comprehensive, will be used as a make-up for any missed exam or as a replacement for a low grade on a mid-term (I will use the higher of the two grades, so there is no penalty for taking the final). If you are satisfied with your grade from the four mid-terms, you do not have to take the final. Please note that you can replace a low grade with the final only if you have taken all four mid-terms, so plan your emergencies carefully. The final will be a compilation of "greatest hits" from the midterms and structured in the same ratio of multiple choice to problems.

The grading scale is the usual 90-100, "A"; 80-89, "B"; 70-79, "C"; 60-69, "D"; below 60, "F". There is no curve. There are no brownie points, style points or extra credit projects.


Economics 467: Spring, 2005

Student Absences on Religious Holy Days Policy

Section 51.911(b) of the Texas Education Code requires that an institution of higher education excuse a student from attending classes or other required activities, including examinations, for the observance of a religious holy day, including travel for that purpose. A student whose absence is excused under this subsection may not be penalized for that absence and shall be allowed to take an examination or complete an assignment from which the student is excused within a reasonable time after the absence.

University policy 861001 provides the procedures to be followed by the student and instructor. A student desiring to absent himself/herself from a scheduled class in order to observe (a) religious holy day(s) shall present to each instructor involved a written statement concerning the religious holy day(s). This request must be made in the first fifteen days of the semester or the first seven days of a summer session in which the absence(s) will occur. The instructor will complete a form notifying the student of a reasonable time during which the missed assignments and/or examinations are to be completed.


It is my intention to treat you with dignity and respect. I will do my best to be on time for class, to be prepared for class, and to be scrupulously fair in assessing your grades. In return, I also expect to be treated with respect and our classroom time to be conducted in a businesslike manner. Therefore, I remind you that eating, drinking or dipping in class are not permitted; remember to turn cellphones off. Also, as a personal request, unless there are religious reasons for doing so, there will be NO HEADGEAR worn in class at any time. If you must leave in the middle of class, please take your things and do not re-enter; you will only be disturbing the class for a second time. Finally, if you must be late, please enter quietly and sit in the row nearest the door.


Will be end of chapter problems and exercises posted on Blackboard. Homework will not be collected. Solutions will be posted to Blackboard approximately one week after the assignment is made. This puts the burden on you to do the homework. Because the test problems will closely resemble the homework problems, doing the homework will put you at a distinct advantage.

Americans with Disabilities Act

SHSU adheres to all applicable federal, state, and local laws, regulations, and guidelines with respect to providing reasonable accommodations for students with disabilities. If you have a disability that may affect adversely your work in this class, then I encourage you to register with the SHSU Counseling Center and to talk with me about how I can best help you. All disclosures of disabilities will be kept strictly confidential. NOTE: no accommodation can be made until you register with the Counseling Center.


Economics 467 Spring, 2005

TENTATIVE SCHEDULE (Test Dates are Firm) Week Beginning _____________________Topic Chapter

01/09 Optimization theory (see Blackboard) 2, appendix

01/16 Optimization continued 8, pp 321-334

01/23 Optimization continued 9, pp 360-371

01/30 Demand Analysis 3

02/06 Exam 1: Feb 8/9 Demand Analysis 3

02/13 Oligopoly 10

02/20 Strategic Behavior & Game Theory 11

Fri., Mar 4: Last day to drop with a "W"

02/27 Exam 2: Mar 9/10 Strategic Behavior & Game Theory 11

03/06 Strategic Behavior & Game Theory 11

03/13 Spring Break

03/20 Risk Analysis 13

03/27 Risk Analysis 13

04/03 Value of Information 14

04/10 Exam 3: Apr 11/12 Value of Information 14

04/17 Asymmetric Information 15

04/24 Bargaining and Negotiations 16

05/01 Exam 4: May 4/5 Final: Week of 5/8 (Check schedule)

To: ECO 467 Classes

From: Dr. Freeman

Re: What to expect

I am sorry that I cannot be with you on the first day of class, but this short message will have to do. Two things will help you get through this little experience we call Managerial Economics: 1) Coming to class; and 2) Doing the homework. I cannot say that you are guaranteed a success in this course if you do both of these; I cannot say that you are doomed to fail if you do neither. I can say that those who come to class and do the homework have a higher probability of success than those who don't.

I have posted the first assignment on Blackboard; it is due one week from today. I shall not work every homework problem in class, but I will (eventually) post the solutions on Blackboard. I urge you to struggle through these problem sets (the assignment on Blackboard and problems 4, 5, 7, 9 & 12 at the end of Chapter 2). The problems you see in the homework will be very much like the problems you see on the exams. If you can do the homework, you can do the exam; if you can't do the homework....well, you get the idea.

When we meet next week, I shall begin immediately the material on solving optimization (maxima and minima) problems like those in Chapter 2. These are partly a review of concepts from BAN 232, as applied to decision problems in economics.

A final word. Please read carefully the "Decorum" section of the syllabus on Page 2. I am quite old-fashioned in my approach to the classroom, and it may take some getting (re-)used to. I take what we do here very seriously (although I try not to take myself so seriously), and I have found structure to be an ingredient that is absolutely essential to the learning process. I am sure that we can work together to make this semester a success for all of us.