Managerial economics applies economic theory and analytical tools to guide rational decision-making in business, helping managers use scarce resources efficiently to achieve goals like profit maximization by analyzing production, pricing, and investment, often using a structured rational choice model of problem definition, alternative development, evaluation, and selection. While assuming logical choice for optimal outcomes, modern approaches also incorporate behavioral economics to understand deviations from pure rationality, acknowledging bounded rationality and factors like biases. 

Maximization of shareholder’s value is the broad objective of every modern organization. This is the discounting future stream of cashflow. For simplicity, we represent cashflow with profit π . Where (TR-TC= Profit).

TR maximization depends on (i). Demand & forecasting, (ii). Pricing policy, (iii).  New product development etc.

TC minimization depends on (i). Production techniques, (ii). Cost function, (iii). Process development etc.

The cost of capital r must also be minimized and it depends on (i). Riskiness of firm, (ii). Condition in the capital market.

 Course Contents

Module One: Nature and Scope of Managerial Economics 

Definition of managerial economics, its relationship to other disciplines (statistics, mathematics, accounting), and its role in bridging economic theory and business practice.

Module Two: Demand Analysis and Forecasting 

Concepts of demand and demand functions, determinants of demand, price, income, and cross-elasticity of demand, and techniques for forecasting future sales.

Module Three: Production and Cost Analysis 

Production functions (short-run and long-run), laws of returns, economies of scale and scope, and various cost concepts (fixed, variable, marginal, and opportunity costs).

Module Four: Market Structures and Pricing 

Pricing and output decisions under different market conditions, including perfect competition, monopoly, monopolistic competition, and oligopoly.

Module Five: Profit Management

Nature and measurement of profit, profit maximization as a business objective, and techniques for profit planning
like break-even analysis.

Module Six: Capital Management and Investment Analysis

Planning and control of capital expenditure, cost of capital, and evaluation of projects using methods like Net Present
Value (NPV) and Internal Rate of Return (IRR).

Module Seven: Rational Decision-Making Framework

Rational decision-making is treated as a systematic process to evaluate alternatives based on logical criteria. Key steps here are: 

·    Define the Problem: Identifying the specific context and setting for the decision.

·   Determine the Objective: Establishing clear goals, such as profit maximization or utility maximization.

·   Explore Alternatives: Identifying all possible courses of action and relevant variables under control.

·    Predict Consequences: Using models (deterministic or probabilistic) to forecast the outcomes of each alternative.

·    Make a Choice: Selecting the optimal action using tools like marginal analysis, game theory, or linear programming.

·   Sensitivity Analysis: Assessing how the optimal choice might change if underlying conditions or key variables are altered

Duration: Four (4) days                                                                                     Fee: N350,000

For Whom: 

Manager, admin officer, investors, business & mkt analyst etc