• Apply microeconomic principles to decision making within a firm
• Explain how perfectly competitive markets function
• Apply game theoretic models to analyze strategic situations.
• Explain the assumptions and relations of the main macroeconomic models
• Illustrate diagrammatically the main macroeconomic models
• Perform policy experiments including verbal interpretation

This is course provides an introduction to micro- and macroeconomics of relevance to managers.

The sessions on microeconomics show how these principles can be applied to company decision making. The emphasis is on (stylized) practical problems that may face anyone in a management position. The four main sections of the course are cost analysis, pricing strategy, price competition, and the economics of information. Cost analysis is necessary to determine the most cost efficient method of production, including which components are better sourced from other companies. An understanding of costs, together with demand conditions, is also important in deciding how products should be priced. The second part of the course deals with demand, market segmentation, and the use of quality and quantity discrimination. The next part introduces game theory as a framework for analyzing strategic issues in pricing and entry situations. In the final part the focus is on the role of asymmetric information and here we cover both economic incentives and bidding in auctions.

The sessions on macroeconomics focus on economic aspects that shape the environment of business. It reviews the current situation of the economy, both nationally and internationally, for example recent events in Greece, Brazil or China which may be of importance for the world economy. Key concepts are total production and income, unemployment, inflation, the rate of interest, the trade balance, exchange rates, etc. The aim is to be able to explain the determinants of economic developments, both in the short and long run, and to understand the impact on the economy from various shocks hitting the economy and the impact of subsequent policy.