This subject builds on the microeconomic principles learnt in the Principles of Economics subjects and provides an analysis of the way in which the market system functions as a mechanism for coordinating the independent choices of individual economic agents. This subject provides a practical application of microeconomic theory to enable business decision-making in the context of dynamic market conditions. More specifically, it will examine the theory of consumer choice, isoquant theory of production, allocative efficiency and competition, models of monopolistic competition and oligopoly, input pricing, pricing strategy and microeconomic policies to address problems of market failure. Game Theory and its application to managerial decision-making is also introduced. Upon completion, students should be able to identify and evaluate consumer and business alternatives in order to achieve economic objectives efficiently.
|Academic unit:||Bond Business School|
|Subject title:||Markets and Corporate Behaviour|
Delivery & attendance
|Attendance and learning activities:||Attendance at all class sessions is expected. Students are expected to notify the instructor of any absences with as much advance notice as possible.|
|Prescribed resources:|| |
|[email protected] & Email:||[email protected] is the online learning environment at Bond University and is used to provide access to subject materials, lecture recordings and detailed subject information regarding the subject curriculum, assessment and timing. Both iLearn and the Student Email facility are used to provide important subject notifications. Additionally, official correspondence from the University will be forwarded to students’ Bond email account and must be monitored by the student.|
To access these services, log on to the Student Portal from the Bond University website as www.bond.edu.au
Assumed knowledge is the minimum level of knowledge of a subject area that students are assumed to have acquired through previous study. It is the responsibility of students to ensure they meet the assumed knowledge expectations of the subject. Students who do not possess this prior knowledge are strongly recommended against enrolling and do so at their own risk. No concessions will be made for students’ lack of prior knowledge.
Assumed Prior Learning (or equivalent):
Assurance of learning
Assurance of Learning means that universities take responsibility for creating, monitoring and updating curriculum, teaching and assessment so that students graduate with the knowledge, skills and attributes they need for employability and/or further study.
At Bond University, we carefully develop subject and program outcomes to ensure that student learning in each subject contributes to the whole student experience. Students are encouraged to carefully read and consider subject and program outcomes as combined elements.
Program Learning Outcomes (PLOs)
Program Learning Outcomes provide a broad and measurable set of standards that incorporate a range of knowledge and skills that will be achieved on completion of the program. If you are undertaking this subject as part of a degree program, you should refer to the relevant degree program outcomes and graduate attributes as they relate to this subject.
Subject Learning Outcomes (SLOs)
On successful completion of this subject the learner will be able to:
- Analyse decision-making by individual consumers and producers by applying relevant theories to explain different market structures.
- Explain how firms maximise profit and conduct strategic interactions with other firms in an oligopoly environment.
- Analyse price determination in product and input markets under various conditions to explain how firms use market power to extract consumer surplus and how firms use various pricing strategies to achieve these goals in the real world.
- Analyse individual consumer behaviour using the indifference curve.
- Critically evaluate policies designed to affect individual behaviour and market outcomes.
|Essay §||Each week students will receive a set of essay questions regarding the content covered in that week. Homework assignments require students to solve problems of theoretical and quantitative nature. This involves critical analysis and descriptive evidence.||30%||Ongoing||1, 2, 3, 4, 5.|
|Paper-based Examination (Closed)||Comprehensive Final Examination consisting of short-answer and analytical questions.||40%||Final Examination Period||1, 2, 3, 4, 5.|
|Paper-based Examination (Closed)||Mid-semester Examination consisting of short-answer and analytical questions relating to material covered to date||30%||Week 7 (Mid-Semester Examination Period)||1, 2, 3, 4, 5.|
- § Indicates group/teamwork-based assessment
- * Assessment timing is indicative of the week that the assessment is due or begins (where conducted over multiple weeks), and is based on the standard University academic calendar
- C = Students must reach a level of competency to successfully complete this assessment.
|High Distinction||85-100||Outstanding or exemplary performance in the following areas: interpretative ability; intellectual initiative in response to questions; mastery of the skills required by the subject, general levels of knowledge and analytic ability or clear thinking.|
|Distinction||75-84||Usually awarded to students whose performance goes well beyond the minimum requirements set for tasks required in assessment, and who perform well in most of the above areas.|
|Credit||65-74||Usually awarded to students whose performance is considered to go beyond the minimum requirements for work set for assessment. Assessable work is typically characterised by a strong performance in some of the capacities listed above.|
|Pass||50-64||Usually awarded to students whose performance meets the requirements set for work provided for assessment.|
|Fail||0-49||Usually awarded to students whose performance is not considered to meet the minimum requirements set for particular tasks. The fail grade may be a result of insufficient preparation, of inattention to assignment guidelines or lack of academic ability. A frequent cause of failure is lack of attention to subject or assignment guidelines.|
For the purposes of quality assurance, Bond University conducts an evaluation process to measure and document student assessment as evidence of the extent to which program and subject learning outcomes are achieved. Some examples of student work will be retained for potential research and quality auditing purposes only. Any student work used will be treated confidentially and no student grades will be affected.
Students must check the [email protected] subject site for detailed assessment information and submission procedures.
Policy on late submission and extensions
A late penalty will be applied to all overdue assessment tasks unless an extension is granted by the subject coordinator. The standard penalty will be 10% of marks awarded to that assessment per day late with no assessment to be accepted seven days after the due date. Where a student is granted an extension, the penalty of 10% per day late starts from the new due date.
Policy on plagiarism
University’s Academic Integrity Policy defines plagiarism as the act of misrepresenting as one’s own original work: another’s ideas, interpretations, words, or creative works; and/or one’s own previous ideas, interpretations, words, or creative work without acknowledging that it was used previously (i.e., self-plagiarism). The University considers the act of plagiarising to be a breach of the Student Conduct Code and, therefore, subject to the Discipline Regulations which provide for a range of penalties including the reduction of marks or grades, fines and suspension from the University.
Feedback on assessment
Feedback on assessment will be provided to students within two weeks of the assessment submission due date, as per the Assessment Policy.
If you have a disability, illness, injury or health condition that impacts your capacity to complete studies, exams or assessment tasks, it is important you let us know your special requirements, early in the semester. Students will need to make an application for support and submit it with recent, comprehensive documentation at an appointment with a Disability Officer. Students with a disability are encouraged to contact the Disability Office at the earliest possible time, to meet staff and learn about the services available to meet your specific needs. Please note that late notification or failure to disclose your disability can be to your disadvantage as the University cannot guarantee support under such circumstances.
Additional subject information
A peer-evaluation system will be used in this subject to help determine the individual marks for all group assessments. As part of the requirements for Business School quality accreditation, the Bond Business School employs an evaluation process to measure and document student assessment as evidence of the extent to which program and subject learning outcomes are achieved. Some examples of student work will be retained for potential research and quality auditing purposes only. Any student work used will be treated confidentially and no student grades will be affected.
Summarises the concepts of goals, constraints, incentives, and market rivalry economic decisions to distinguish economic versus accounting profits and costs. Also explains the role of profits in a market economy, applying the five forces framework to analyse the sustainability of an industry’s profits. Includes several analytic techniques and principles of effective managerial decision-making.
Explains the laws of demand and supply and examines the factors that can cause demand and supply to shift and methods to calculate their effects. Specifically, this includes consumer surplus, producer surplus, price determination in a competitive market, excise taxes, ad valorem taxes, price floors, price ceilings and related factors are considered. The application of supply and demand analysis as a qualitative forecasting tool to see the “big picture” in competitive markets is also demonstrated.
The application of various elasticities of demand as a quantitative forecasting tool is examined. Specifically, the relationship between the elasticity of demand and total revenues. Also discusses three factors that influence whether the demand for a given product is relatively elastic or inelastic. The determination of elasticities from linear and log-linear demand functions and the use of regression analysis to estimate demand functions is also demonstrated.
Explains four basic properties of a consumer’s preference ordering and their ramifications for a consumer’s indifference curve. Illustrates the effect of changes in prices and income on an individual’s opportunities and on a consumer’s equilibrium choice. Methods for isolating the substitution and income effects of a price change are explained as is an approach to derive an individual’s demand curve from indifference curve analysis and market demand from a group of individuals’ demands.
Examines alternative ways of measuring the productivity of inputs and the role of the manager in the production process. This includes the calculation of input demand and the cost minimising combination of inputs and the use of isoquant analysis to illustrate optimal input substitution. The comparison of various costs, the derivation of a cost function from a production function and the illustration of the average and marginal cost relationship are also presented.
Identifies the conditions under which a firm operates as perfectly competitive, monopolistically competitive or monopolistically. Also explains how long-run adjustments impact perfectly competitive, monopoly, and monopolistically competitive firms and the ramifications of each of these market structures on social welfare. The question of whether a firm making short-run losses should continue to operate or shut down its operations is also considered.
Explains how beliefs and strategic interaction shape optimal decisions in oligopoly environments. Identifies the conditions under which a firm operates in a Sweezy, Cournot, Stackelberg, or Bertrand oligopoly and the ramifications of each for optimal pricing decisions, output decisions, and firm profits. The application of reaction (or best-response) functions to identify optimal decisions and likely competitor responses in oligopoly settings is also presented. The ramifications for market power and the sustainability of long-run profits is explained.
Applies normal form and extensive form representations of games to formulate decisions in strategic environments that include pricing, advertising, coordination, bargaining, innovation, product quality, monitoring employees and entry to distinguish amongst possible strategies. Also explains the roles of trigger strategies, interest rates and the presence of an indefinite or uncertain final period on achieving cooperative (collusive) outcomes.
Applies simple elasticity-based mark-up formulas to determine profit-maximising prices in environments where a business enjoys market power, including monopoly, monopolistic competition, and Cournot oligopoly. The formulation of pricing strategies—and the conditions for their optimal application—that permit firms to extract additional surplus from consumers are explained. The effectiveness of price-matching guarantees, brand loyalty programs, and randomised pricing strategies are also examined with respect to their effect on profitability in the context of intense competition.
Identifies strategies to manage risk and uncertainty, including diversification and optimal search strategies. The calculation of profit-maximising output and price in an environment of uncertainty is explained. The effects of asymmetric information about “hidden actions” or “hidden characteristics” strategies for mitigating these potential problems are also explained. The context of auction is introduced to explain how differing auction rules and information structures impact the incentives in the determination of optimal bidding strategies.