Introductory Economics for Managers M. Ryan Sanjaya Outline Motivation Course outline Organization Fundamentals of managerial economics Motivation “Introductory Economics for Managers” Economics Manager The science of making decisions in the presence of scarce resources. A person who directs resources to achieve a stated goal. Managerial Economics (Economics for Managers) The study of how to direct scarce resources in the way that most efficiently achieves a managerial goal. Motivation ZDNet indo.wsj.com Harvard Business Review Jakarta Post Bloomberg USA Today Forbes online.wsj.com Liputan6.com Course outline Sesi Topik 1 Basic Concept of Economics and Managerial Economics (1) 2 Basic Concept of Economics and Managerial Economics (2) 3 Quantitative Demand Analysis 4 The Theory of Individual Behavior -- student presentation -5 Production and Cost Analysis 6 Organization of the Firm 7 The Nature of Industry -- student presentation -Ujian tengah semester Referensi MB Ch. 1, SN Ch. 1-2, FM Ch. 1 MB Ch. 2, SN Ch. 1-2 MB Ch. 3, FM Ch. 6 MB Ch. 4 MB Ch. 5, FM Ch. 7 MB Ch. 6, GLS Ch. 4 MB Ch. 7, GLS Ch. 3 Sesi Topik 8 Managing in Competitive, Monopolistic, and Monopolistically Competitive Markets 9 Basic Oligopoly Models -- student presentation -10 Pricing and Business Strategy 11 Economics of Information 12 Aspek Makro (1): peran pemerintah 13 Aspek Makro (2): faktor internal/domestik -- student presentation -14 Aspek Makro (3): faktor eksternal Ujian akhir semester PRESENTASI. Sebelum ujian tengah semester Kelompok 1-2: Topik 1-3 Kelompok 3-4: Topik 4-6 Referensi MB Ch. 8, FM Ch. 8-9 MB Ch. 9, GLS Ch. 5 MB Ch. 11, FM Ch. 12 MB Ch. 12, FM Ch. 17, 19, 20 MB Ch. 14, NGM Ch. 6, 15 NGM Ch. 10, 11, 16 FM Ch. 11, NGM Ch. 18 Setelah ujian tengah semester Kelompok 5-6: Topik 7-8 Kelompok 7-8: Topik 9-12 Kelompok dan nama anggota harap dikirimkan via email oleh ketua Kelas sebelum kuliah minggu ke-2 Course outline BUKU TEKS UTAMA [MB] Baye, Michael R., Managerial Economics and Business Strategy, McGraw Hill, 2010. BUKU TEKS PENDUKUNG [SN] Samuelson, Paul A. & William D. Nordhaus, Economics, 19th Edition, McGraw Hill, 2010. [FM] Froeb, Luke M. & Brian T. McCann, Managerial Economics: A Problem Solving Approach, Second Edition, South-Western, 2010. [GLS] Grimm, Curtis M., Hun Lee, & Ken G. Smith, Strategy as Action Competitive Dynamics and Competitive Advantage, Oxford University Press, 2006. [NGM] Mankiw, N. Gregory, Principles of Macroeconomics, Sixth Edition, SouthWestern, 2012. Artikel jurnal dan bacaan populer lainnya. Organization Penilaian Jenis penilaian Ujian tengah semester Ujian akhir semester Presentasi kelompok Tugas individu, kuis, dan kehadiran TOTAL Bobot 30% 30% 20% 20% 100% Minimal kehadiran 75% agar dapat mengikuti ujian Izin tidak masuk: harus tertulis dan dilaporkan ke bagian akademik dan ke dosen The Fundamentals Effective management Understand incentives Use marginal analysis Understand markets Understand profits Identify goals & constraint Recognize time value of money Understand Goals & Constraints Goals Large profits Good services Reduce risks Constraints Limited annual budget Availability of technology Number of workers Understand Profits: Economic vs. Accounting Profits Accounting Profits Total revenue (sales) minus dollar cost of producing goods or services. Reported on the firm’s income statement. Economic Profits Total revenue minus total opportunity cost. Opportunity Cost Accounting Costs Opportunity Cost The explicit costs of the resources needed to produce produce goods or services. Reported on the firm’s income statement. The cost of the explicit and implicit resources that are foregone when a decision is made. Economic Profits Total revenue minus total opportunity cost. Opportunity Cost: Example Mahasiswa MM UGM Frekuensi kuliah per minggu: 4 pertemuan/minggu x 2,5 jam/pertemuan = 10 jam/minggu Frekuensi kuliah per semester: 14 minggu/semester x 10 jam/minggu = 140 jam/semester Frekuensi kuliah sampai selesai: 4 semester x 140 jam/semester = 560 jam Explicit cost: uang kuliah Rp100 juta Opportunity cost: apa saja yang bisa dilakukan dengan 560 jam kuliah? Bekerja: asumsi gaji Rp50.000/jam Rp50.000 x 560 jam = Rp28 juta Opportunity Cost: Example Iklan Mastin Frekuensi: 20 kali per hari (@ 30 detik) Tarif (per 30 detik pada prime time): Rp12 juta – Total explicit cost: Rp240 juta per hari – Opportunity cost: apa saja yang bisa dibeli dengan Rp240 juta per hari? – 2400 banner iklan ukuran 3 meter – Gaji 1 karyawan freshgraduate selama 6 tahun 8 bulan – 4138 baris iklan di harian Kompas Profits as a Signal Profits signal to resource holders where resources are most highly valued by society. Resources will flow into industries that are most highly valued by society. Sustainable Industry Profits Understand Incentives Incentive structure affect people’s performance Conflict of interest The manager: employee should work hard for the benefit of the firm! The employee: I work hard not for the firm, but for my family Incentive compatible: the incentive fits with firm’s goals Incentive plan: employee’s bonus is (positively) correlated with firm’s profit Understand Markets ConsumerProducer Rivalry ConsumerConsumer Rivalry ProducerProducer Rivalry Government & Market Recognize Time Value of Money Present value analysis The money you have now is worth more than the same amount you have next year PV = FV/(1 + i)n What’s the present value of Rp1 billion in 10 years if interest rate is 4%? PV = Rp1 billion/1.0410 ≈ Rp675.7 million For a stream of income PV = ∑FVt/(1 + i)t Recognize Time Value of Money Present value analysis Present value PV = FV/(1 + i)n Present value (stream of income) PV = ∑FVt/(1 + i)t Net present value NPV = ∑FVt/(1 + i)t – C0 Use Marginal (Incremental) Analysis Control Variable Examples: Output Price Product Quality Advertising R&D Basic Managerial Question: How much of the control variable should be used to maximize net benefits? Net Benefits Net Benefits = Total Benefits – Total Costs Profits = Revenue – Costs Quick review: calculus Quick review: calculus Y Y = a + bX b 1 Y = cX2 + dX + e a X Quick review: calculus Jika k adalah angka konstan y = f (x) = k f '(x) = ¶y =0 ¶x Untuk fungsi 1 variabel y = f (x) = kx n f '(x) = ¶f = knx n-1 ¶x Contoh: - Turunan pertama y = 2x f’(x) = 2 y = 2x2 – 3x + 4 f’(x) = 4x – 3 - Turunan parsial y = 2x1x2 – x1 ¶y = 2x2 -1 ¶x1 ¶y = 2x1 ¶x2 Marginal Benefit (MB) Change in total benefits arising from a change in the control variable, Q: B MB Q Slope (calculus derivative) of the total benefit curve. Marginal Cost (MC) Change in total costs arising from a change in the control variable, Q: C MC Q Slope (calculus derivative) of the total cost curve Marginal Principle To maximize net benefits, the managerial control variable should be increased up to the point where MB = MC. MB > MC means the last unit of the control variable increased benefits more than it increased costs. MB < MC means the last unit of the control variable increased costs more than it increased benefits. The Geometry of Optimization: Total Benefit and Cost Total Benefits & Total Costs Costs Benefits Slope =MB B Slope = MC C Q* Q The Geometry of Optimization: Net Benefits Net Benefits Maximum net benefits Slope = MNB Q* Q
