This lecture provides an introduction to managerial economics. During the semester, we will cover a number of areas that are important to current and future business leaders. Managerial economics is going to be an exciting class for you because it's going to cover both theoretical ideas in economics And it's going to give you some practical applications about areas that are not only important for you as business leaders, but they're also areas that are in the news today, have been in the news for quite some time, and it will also make you both better citizens and voters. The key focus that I want to do, though, is to focus this lecture, this whole series of lectures on managerial economics.
to make you better, smarter business leaders in the future. So we're going to take a look at both theory and practice. We're going to cover eight areas. And the first two areas deal with some of the core concepts found in economics today. Limits and scarcity.
Why is that important? Because in terms of total resources, economists and business leaders make decisions under a limited amount of resources that are scarce. Not everybody gets to have everything that they want.
There are trade-offs. And the most important thing in understanding limits and scarcity is to be sure that those managerial decisions that are being made are in an area where the marginal benefits of those decisions outweigh the marginal costs. Once you drift into an area where the marginal costs outweigh the benefits, you're in a bad area. So we're going to take a look at limits and scarcity. The second and probably one of the most significant contributions in economics is the theories of demand and supply.
Okay, demand and supply in the main can explain almost anything in economics. Okay, give you some simple examples. A demand curve is a downward sloping curve. You're going to learn about that in this class.
What does that mean? It means that the lower the price, the more people want. We'll also learn about the supply curve, which is an opposite curve going in the opposite direction. It's upward sloping. What does that mean?
That the higher the price, the more firms are willing to provide to the market. And somewhere we're going to get to an equilibrium where demand equals to supply, and we'll get into that during the semester. We're also, inside of this demand and supply lecture, we're going to talk about elasticity. And that is the sensitivity to price changes.
Not all products and services have the same elasticity. Sometimes when the price goes up, demand doesn't go down very much. In other products and services, when the price goes up, demand falls significantly. That is the concept of elasticity, and we're going to look at that inside demand and supply. The second set of...
Ideas that we're going to talk about in managerial economics. Deal with cost. As business leaders and you going out and running businesses, either your own or running somebody else's business, you're going to be concerned about costs.
So one, you need to know how to measure them, what they mean, and their significance. So we're going to take a look at both the long-term and the short-term costs. of production and see how those vary depending upon whether we have perfect competition or imperfect competition.
We're also going to take a look at how resources get paid. Okay, economists and business leaders define resources as land, labor, capital, and entrepreneurial ability. That's you, okay?
And we're going to take a look at how those resources get compensated, okay? So we're going to take a look at resource compensation. Finally, in this particular class, we're going to take a look at four areas that are not only significant to business leaders, but they seem to be always present in the news, both historically and they're going to be in the news in the future. So we're going to take a look at four of those areas.
These are very, very practical areas in terms of management of business. and management of resources. The first is the government.
We're going to take a look at the government's influence in the economy, government's influence on how resources are consumed, and how resources are allocated between groups through spending. And taxes. Government has a significant influence on the economy when it inserts itself into the free enterprise system. They do allocate resources because they do buy things and they do tax.
You need to understand exactly the significance of that both at the federal level, at the state level, and at the local level. Now we're going to go through all three of those in this semester. Next thing we're going to take a look at is energy economics.
That is, take a look at how the cost of oil, electricity, natural gas, and other factors of production influence both demand and supply. Last two. Our also controversy, or we're going to take a look at health care cost. We're going to take a look at the whole sector.
The health care sector makes up about one-sixth of the overall economy in the United States. It's significant. Okay, so we're going to take a look at cost. Cost.
We're going to take a look at how insurance. subsidizes some of those costs and we're going to explore how insurance can sometimes lead to an overconsumption of resources because people don't understand the cost they just understand insurance okay and then finally we're going to take a look at immigration Historically, in the United States, immigration has played a significant role in the growth of the labor force, in the skills brought to the workplace, in the diversity that's brought to the workplace in order to make the most productive use of workers that a business can do. So, in the final lecture of this, we're going to take a look at both the legal and illegal immigration and how both of those have influenced the supply of labor, the wage rate, and other issues relative to the consumption of resources at the federal, state, and federal level. and local level.
As you can see, this is going to be a pretty comprehensive class. Theory, practice, and it's going to get you some tools to help you understand exactly how the economy works, how cost works, and the government's role inside of the economy. Let's have a good time.
Economics is the dismal science. I don't think so, but many have tagged the discipline with that label. So, you're probably asking yourself, what have I signed up for? Well, I'm going to give you a reason why you should have signed up.
Economic study was given this description by Thomas Carlyle. who was inspired to coin the phrase after reading Malthus'gloomy prediction that population would always grow faster than food, thereby dooming mankind to an ending poverty and hardship. Not a pretty picture. While this story is well known, it also leaves absent many facts.
Somewhat like today's 24-7 news cycle. At the most trivial level, Carlyle's target wasn't Malthus, but at economists such as John Stuart Mill, who argued that it was institutions, not race, that explained why some nations were rich and others poor. Carlyle attacked Mill Not for supporting Malthus's opinions about the dire consequences of population growth, but for supporting the emancipation of slaves. So, why am I raising this? Because many times as you go through life as business leaders or as voters, you're going to be given opinions without any facts to support them.
Look below the surface for the facts. For example, read a contrarian article or just change the channel. Most importantly, ask a lot of questions. What are the objectives? This class will enlighten you and perhaps dispel a few misunderstandings that you already have.
Our objective is to make you better business leaders by understanding how economics fits into decision making, so that you can master the principles essential for understanding many business problems and to apply the economic perspective and reason accurately and objectively about economic matters. Also, it's intended to make you better citizens and voters by understanding the short and long-term consequences of economic policy decisions being made every day. The book for the class is McConnell's Economics 20. The book is filled with learnings on economic theory and provides many practical examples in the chapter sidebars.
In order to enhance your practical learning experience, you'll be required to participate in an online discussion about a current economic-related event. Each student will be required to submit one current event topic during the semester based on an article in a leading publication. Each week, all students will be required to read the posted current event topic and provide their own comments and perspectives. This process is intended to be an online exchange of ideas led by you folks. There will be a weekly quiz on the subject material.
I think that that's important for you, both to practice, to understand where you're a little weak, maybe, or where you really grasp the information. And to me, it gives you frequent feedback. It helps to reinforce the learning and to practice for the exams. I will also provide a final word.
On the current event topics that were posted that week, I will bring my own insights into the discussion. I'm particularly fond of pointing out where there were lots of opinions and no facts. I'm interested in taking what we do through the week in the current event topic and broadening your learning experience relative to the issue.
There will be a midterm and final exam. As support, an exam study guide will be provided prior to the exam. The guide will indicate the major areas to be tested. Finally, I'll always be available to answer your questions either by email or phone during the semester. You can get my contact information in the syllabus.
Each week, an announcement will be posted covering an introduction to the chapter and some administrative issues such as CET schedules or exam updates. The week will start every Monday. During the week, you should listen to the video or the audio lecture. and enhance your learning experience by reading the chapter. There will be PowerPoint slides provided for review, and these slides will exactly match the lecture so that you can go back after listening to the lecture or prior to studying for an exam or a quiz to go back and take a look at exactly what were the major points of the chapter and the lecture.
Additionally, data charts will be provided to update the student on the latest information that may not be in the book. Some of the data just goes through 2012. I like to give data where appropriate. I like to give data updates that are a little more current, and the one that's in Module 0 goes through 2016 or later. depending upon when you're taking this class. Additionally, I will give you some optional reading.
I mean, I really stress the point optional. I like to pick out articles where I find them that are current, relevant to the particular chapter being discussed. and I post them in the module. The current event topic is posted on Tuesday. The class comments on Wednesday through Saturday.
And as I've mentioned previously, you do not have to comment on every single post. Sometimes we have a lot of folks in the class. In order to get through the class, we have to have two or three CET postings during the week. Pick the one that interests you, or pick the one that you think that you can provide informative feedback on. You're going to get a quiz to reinforce the learning, and I give you immediate feedback on the weekly quiz on your blogs and on your exams with my process.
Discovering facts is always important. Shown on this chart are websites that provide detailed economic information. All of the information is available for free.
In this particular class, you will get a lot of theory, and you're going to get some good practical knowledge. You'll become better business leaders when you understand the foundations of managerial economics, and you'll become better political analysts as you more fully understand the policy arguments that are presented by politicians and the media every day.