Economics for Managers

1
Economics for Managers

• Professor Lyon
• On-Line MBA Program
• Indiana University

2
Today

• About Economics
• About this Course

3
The Invisible Hand

• Adam Smith
• Guides private interest into the service of the
  public
• Greed is Good?

4
Why Study Economics?

• It provides a systems view of business
• It gives you the tools to understand why
  industries differ
• It helps you predict the effect of changes in
  public policy or in your rivals actions
• It helps you make better decisions

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Political/Economic/ Legal/Social
Environment
Firms
Product Markets
Factor Markets
Prices
Prices
Labor
HRM
Marketing
You
Operations
Consumer Demand
Matls.
Finance/ Fin. Acct.
Rivals
Capital
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Do Markets Always Work?

• National Defense?
• Environment?
• Monopolies, e.g. Microsoft or Cinergy?
• Health Care?

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Can Government Do Better?

• Department of Defense?
• EPA or OSHA regulations?
• Public utility regulation?
• Tax breaks for employer-provided health insurance?

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Promises and Expectations

• Learning is a team effort
• YOU are the players, I am the coach
• There are certain promises I will make to you
  about my role in class
• There are also certain expectations I have about
  your role in class

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My Promises/Commitments

• I am committed to you finding a career path
• That you love
• That pays well
• That makes the world a better place

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My Promises

• I promise to create an environment where you can
  learn
• How to use demand and cost information to set
  prices
• How to analyze an industry
• How to think strategically about business rivalry
• I promise to be available to coach you in
  developing these skills

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My Expectations

• I expect you to take responsibility for your own
  learning
• I expect you to ask for help when you need it
• I expect you to complete assignments on time
• I expect you to work with your classmates as
  needed to complete projects

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A Final Word

• Economics teaches you a new way to think
• Try out what you are learning by reading articles
  from the business press and using concepts from
  class to interpret them
• Apply what we are doing in class to understand
  whats happening in your company and your
  industry
• Have fun!