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Managerial Economics – Effective Business Decisionmaking

Learn How Businesses Apply Economic Principles to Formulate Effective Decisions
Robert Lee Reed
84 students enrolled
English [Auto-generated]
Evaluate business decisions from an economic perspective
Analyze the behavior of companies in the marketplace
Comprehend core concepts in managerial economics
Formulate and recommend business decisions


Managerial Economics is a field of Economics that analyzes business decisions. Managerial Economics allows business owners to answer the questions “How much should I produce?” and “What price should I charge?”.  However, there is much more to Managerial Economics than simply determining the optimum price and quantity that a firm should produce. Managerial Economics also allows us to determine how our business will be affected by changes in the production of other businesses. It allows us to predict the impact that certain government legislation will have on our business.  This course will examine business decisions from both the perspective of the supplier and the consumer.

Topics Covered

  • Market Equilibrium

  • Price Controls

  • Law of Supply and Demand

  • Indifference Curves and Budget Constraints

  • Elasticity of Demand

  • Isoquant and Isocost Curves

  • Minimizing Cost of Production

  • Market Structure

  • Pricing Strategies

  • Benefits of Mergers

  • Employee Incentives

  • Time Value of Money

About the Instructor

Robert Reed is a current Masters of Business Administration candidate and veteran with four years of service in the 82nd Airborne Division of the United States Army. He holds a B.A. in Economics and has served as a student tutor for three years.



Welcome to the course! This is a brief introduction to the course, the topics we will cover, and the course outcomes.

Fundamental Terms

Welcome to Managerial Economics. In this first lesson, we will discuss some fundamental concepts of Managerial Economics.

Time Value of Money

In this lesson, we discuss the time value of money. Learn why a dollar today is more valuable than a dollar tomorrow and how companies account for this difference between present value and future value.

Value of Perpetuity

In this lesson, we calculate the present value of a stream of infinite payments. This situation can arise when a company or business purchases an annuity, or when a business investment can be made in the present, but will yield dividends into the foreseeable future.

Demand Function

In this video, we will discuss the Law of Demand. The law of demand is a fundamental principle of Economics.

Quiz 1

Supply and Demand

Introduction to Supply and Demand
Consumer Surplus

In this video, we will discuss consumer surplus. Consumer surplus is a term used to describe value that consumers get from purchasing a product.

Law of Supply

In this lesson, we will discuss the Law of Supply. The Law of Supply is similar to the Law of Demand, but describes how producers are willing to produce more at higher prices.

Market Equilibrium

Market equilibrium is a term that describes the intersection of the demand and supply curves. In this lesson, we will examine the concept of market equilibrium. Additionally, we will use demand and supply curves to calculate market price and quantity sold.

Equilibrium Analysis Continued

In this lesson, we continue our analysis of equilibrium markets and learn how to calculate producer surplus from the supply function.

Price Ceiling

In this video we will learn about a price ceiling and how it affects market price and quantity.

Price Floor

In this lesson, we examine the effects of a price floor on market quantity and price.

Quiz 2

Analyzing Demand

Introduction to Demand
Elasticity of Demand

Elasticity of demand refers to how the change in one variable (price, price of competitors goods, etc. ) affects quantity.

Deriving Elasticity of Demand

In this lesson, we will take a more advanced look at elasticity. We will learn how to calculate elasticity from the demand function, and we will also learn how to derive elasticity using basic calculus.

Cross Price Elasticity

In this lesson, we will discuss additional types of elasticities. We will learn how the formula for elasticities can be expanded to encompass variables such as marketing expenditures or income. 

Deriving the Demand Function

The demand function is critical for understanding market price and quantity. In this video, we will learn how economists estimate the demand function with regression analysis.

Interpreting Regression Output

In this video, we will learn how to interpret a regression output. Is the model useful? How good of a model does the regression equation provide?

Indifference Curves

In this video, we will learn about indifference curves and the marginal rate of substitution.

Budget Constraints

This video discusses budget constraints and how consumers attempt to maximize utility given limited resources.

Consumer Satisfaction

This video discusses the concept of an indifference curve.


Introduction to Supply
Introduction to Production

In this lesson, we will discuss the basics of production. We will learn the differences between fixed, variable, and sunk costs.

Practical Example: Break Even Point

This example uses a craft fair to illustrate the concept of a break even point and contribution margin.

Introduction to Production Function

In this video, we will discuss the basics of a production function. We learn how different amounts of inputs can lead to different quantity of outputs. By the end of the lecture, you will understand the importance of Marginal Product of Labor.

Optimal Inputs

In this lesson, we will explore how firms choose the optimal amount of a certain input. We will continue to explore the production function by learning exploring the interaction between the Value of Marginal Product of Labor (VMPL) and the Wage Rate (W),


In this video, we will discuss the importance of Isoquant Curves. Isoquants allow us to see how a business can produce the same level of output while using different combinations of capital and labor.


In this lesson, we will discuss the Isocost Curve. This curve allows us to see how the cost of production is expressed in terms of different inputs.

Cost Minimizing Input

In this video we will put together the Isocost and Isoquant curves to see how managers can choose the proper mix of capital and labor to minimize costs.

Cobb-Dougals Production Function

This video discusses the application of the Cobb-Douglas production function.

Market Structure

Introduction to Market Structure
Perfect Competition

This lesson discusses the basics of perfect competition. Understanding the perfectly competitive market structure will give you a foundation for understanding other types of market structures.


In this lesson, we will learn about a monopoly and how it uses its market power to enhance profits.

Lerner and Rothschild Index

In this lesson, we will learn about two measures of relative market power.

Market Concentration

In this lesson, we will discus two ways of measuring the concentration of an industry.

Monopolistic Competition

In this lesson, we will learn how a monopolistic competition market structure operates.


In this lesson, we will discuss four types of oligopolies and the implications of each different type.

Price Discrimination

In this lesson, we will learn how firms with market power can use pricing strategies to increase profits and producer surplus.

Quiz 3

Firm Organization and Strategy

Introduction to Organization and Strategy

This lesson will discuss vertical and horizontal integration as well as conglomerate mergers.

Vertical Integration and the Cost of Inputs

In this lesson, we will learn about the costs of inputs and the concept of vertical integration.

Incentives for Performance

In this lesson, we will learn how managers can use performance incentives to maximize employee potential.

The Shutdown Rule

In this lesson, we will learn about perfect competition and the shutdown rule. In some circumstances, the firm should keep producing even when it is operating at a loss.


Closing Remarks
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