Texas Tech University.

BECO 4310-006 Applied Business Economics (Giberson)

2014 Spring


Michael Giberson


michael.giberson @ ttu.edu


BA W324

Office phone

(806) 834-3161

Office hours

MTWR 2:00-3:00 PM, F 12:00-1:00 PM, and by appointment .


MWF 1:00-1:50 AM, BA 005

Jump to Syllabus online (on this page below the Course Outline); Syllabus and Course Outline in pdf format.

Students are invited to follow Giberson's ENCO List on Facebook.


Quick link to Case Study Memo assignment. Note that the due dates for some assignments have been changed. Consult the course outline below for the most up-to-date information.


Latest Updates

May 4: Link to final exam review and other information.

Apr. 30: Link to Case-12-Monte Carlo model used in today's class.

Apr. 9: The schedule for the remainder of the semester has been revised.

Note especially that Case 11 is now made optional--if you complete Case 11, the grade on case 11 will replace your lowest "case memo" assignment grade. More details on how to get this credit to come.

Apr. 4: The due date for Case 9 and several subsequent dates/times/assignments have been moved. See the course outline below for details.

Click here to jump directly to April in the course outline.

Mar. 28: The due date for Case 8 has been moved to April 2. Read the case before class on March 31, we will preview the case in class that day.

Mar. 10: Note that the due date and schedule for discussing Case 7 has been moved to March 24.

Mar. 2: Midterm has been moved to Monday, March 10. A review guide for the midterm will be emailed Monday afternoon.

Feb. 21: Case 6 has been added at today's date in the course outline below. Note that the case memo assignment has be slightly changed, so read the case carefully.

Feb. 17: The due date and time for Case 5 has been shifted to Wednesday, February 19, in class. Exhibits 1, 5, and 6 from Case 5 are available via this link (Microsoft Excel format).

Jan. 31: The due date and time for Case 3 has been shifted to Wednesday, February 5, in class.

Jan. 16: The Case Study Memo assignment has been added just above the "Latest Updates." Links are provided below as well for each of the cases.

Jan. 14: Changes to the syllabus or course outline will be discussed in class and mentioned in this space.

Jan. 14: BECO 4310-006 students enrolled as of January 13 have been emailed directions concerning the text and case study coursepack needed for the course. Contact me by email as soon as possible if you have not received this information.


Course Outline

BECO 4310-006 Applied Business Economics
2014 Spring

This online version of the course outline will be updated and should be considered authoritative for information on assignments and due dates.

Class Date

Assigned Cases and Readings

Key topics, terms, concepts

JAN 15

JAN 17

M&P Ch. 1

Opportunity costs, accounting costs; Decisions should always be forward looking.

JAN 22

CASE-1 George’s T-Shirt (Case memo due; assignment)


JAN 24

M&P Ch. 2

Relevant costs, relevant revenues, sunk costs,
variable costs, avoidable fixed costs, unavoidable fixed costs.

JAN 27

CASE-2  Old Mule Farm (Case memo due; assignment)


JAN 29

“Relevant Costs and Revenues”

Relevant costs, relevant revenues (again), substitutability, complementarity.

JAN 31

“Relevant Costs and Revenues” – cont.



Reviewing Case 1 and Case 2, Preview of Case 3



NEW DUE DATE: CASE-3  Salem Telephone (Case memo due; assignment)



Schumpeter, “Creative Destruction,” one-page excerpt from Capitalism, Socialism, and Democracy.

Hartung, "Creative Destruction is Not a Management Philosophy," Forbes blog, January 14, 2012.

"ABCs of Creative Destruction," Knowledge@Wharton, June 6, 2001. 

"Creative destruction."

FEB 10

CASE-4  Catawba Industrial (Case memo due; assignment)


FEB 12

M&P Ch. 3

Demand, utility, marginal utility, marginal revenue, output effect, price effect.

FEB 14

M&P Ch. 3 – cont.

Price elasticity of demand, elastic demand, inelastic demand, cross-price elasticity of demand, substitutes and complements (again).

FEB 17

CASE-5  Springfield Nor’easters PREVIEW

Estimating demand.

FEB 19

NEW DUE DATE: CASE-5  Springfield Nor’easters (Case memo due; assignment)

Exhibits 1, 5, and 6 from Case 5 are available via this link (Microsoft Excel format).


FEB 21

CASE-6 Uber: Supply and Demand or Price Gouging?

Assigned: Lisa Chow, “When a $65 Cab Ride Costs $192,” Planet Money (NPR) January 24, 2014.

Optional Links:

  1. BusinessInsider, "Jerry Seinfeld's Wife Spent $415 During Uber's Surge Pricing...," December 16, 2013.
  2. Bloomberg TV, "Is Uber Price Gouging Riders With Surge Policy?" December 30, 2013.
  3. Planet Money, "Why Paying $192 For A 5-Mile Car Ride May Be Rational," February 07, 2014 (22 minute audio from NPR).
  4. Xia, Monroe and Cox, "The Price is Unfair! A Conceptual Framework of Price Fairness Perceptions," Journal of Marketing, Vol. 68 (October 2004), 1-15.
  5. Maxwell, The Price is Wrong: Understanding What Makes a Price Seem Fair and the True Cost of Unfair Pricing, Wiley, 2008.
Supply and demand, peak pricing, fairness in pricing.

FEB 24

CASE-6 Uber and Surge Pricing (Case memo due, link to Case 6 assignment)

In class activity


FEB 26

M&P Ch. 4  Class discusses reading

Law of diminishing returns, total product, marginal product, total cost, average variable cost, average fixed cost, marginal cost.

FEB 28

M&P Ch. 4 – cont.

Profit maximization.


M&P Ch. 4 – cont. In-class activity

Long run, short run, economies of scale, diseconomies of scale.


In-class activity



Group case memo activity - 1.


MAR 10



MAR 12

CASE-7  Preview


MAR 14

Midterm exams returned

In-class activity


MAR 24

CASE-7  Superior Manufacturing (Case memo due; assignment)


MAR 26

M&P Ch. 5


Mar 28

M&P Ch. 5 – cont.


MAR 31

M&P Ch. 5 - cont. and preview case 8.



CASE-8  Landau Company (Case memo due; assignment)

Absorption costing, variable costing


Continue case 8 discussion and preview case 9.



Preview Case 9

Transfer pricing


CASE-9  Birch Paper Company (Case memo due; assignment)

Mentioned in class: "The Profit (Season 2 Episode 207-Amazing Grapes)" and "Shark Tank," both on CNBC.


APR 11

Preview Case 10

Probabilistic methods, expected value, risk

APR 14

Guest speaker: Perils and pleasures of starting a small business.


APR 16


APR 18

CASE-10  George’s T-shirt Addendum (Case memo due; assignment)


APR 23

M&P Ch. 6

Preview Case 11


APR 25

Continue discussing M&P Ch. 6

CASE-11  Superior Manufacturing-Again (Case memo due; assignment)

The CASE-11 is OPTIONAL. If you choose to submit it, then it will replace your lowest 'case memo' grade.


APR 28

Preview Case 12


APR 30

CASE-12  Kimpton Hotel (Case memo due; assignment)



Group case memo activity - 2.



Overview of the class. Discuss final exam.




FINAL EXAM 1:30-4:00 PM




BECO 4310-006 Applied Business Economics
2014 Spring

Course description

The purpose of the course is to provide and understanding of how economics analysis can be productively applied to business decisions and strategy. Topics may include business valuation, pricing strategy, risk management, contracts, and organizational economics. Prerequisites for the course are ECO 2301 and ECO 2302.

Course materials

Primary course materials are Daniel Marburger and Ryan Peterson, Economic Decision Making Using Cost Data: A Manager’s Guide (Business Experts Press, 2013) and a “coursepack” of business cases and readings from Harvard Business Publishing: https://cb.hbsp.harvard.edu/cbmp/access/23727866.

The Marburger and Peterson book is available from a variety of sources online. The publisher offers an electronic version for $19.95 at http://ebooks.businessexpertpress.com/Books/9781606495131.

Expected learning outcomes

After completing this course, students will be able to:

Methods of assessing outcomes

Case study assignments – Each student will be required to submit a brief “case memo” for each of the twelve cases to be discussed in class. Case memos must be turned in on paper at the beginning of class on the first day that the case will be discussed in class. These assignment dates will be announced in class and clearly marked on the online course schedule.

Group case memos – Each student will collaborate on two brief case memos, one during the class period just before the midterm exam and the second prior to the final exam. Additional details on this in-class activity will be provided in advance of the assignments.

In-class activities – A number of classes will involve brief in-class activities. You must be present, participate in the activity, and ensure your name is recorded on the day’s record sheet in order to obtain credit for your participation in these activities. These opportunities are not announced in advance.

Midterm exam – The midterm exam is planned for March 7.

Final exam – The final exam is scheduled for Thursday, May 8, from 1:30 to 4:00 PM.


This course has a total of 100 points available, allocated as letter grades in the following manner:

• A (Excellent) 90 – 100
• B (Good) 80 – 89.9
• C (Average) 70 – 79.9
• D (Inferior) 60 – 69.9
• F (Failure)  0 – 59.9

Your overall course average will be rounded up to the nearest tenth of a point.

(An average fractionally above an 89.9 will become an A, but at an average of exactly 89.9 or below will be a B. Similarly at the grade boundaries at 79.9, 69.9, and 59.9. I may adjust the dividing lines between letter grades modestly if it makes sense to do so.)

Points toward your course average are available as follows:

• Case study assignments 30%
• Group case study memos 10% (2 x 5 points ea.)
• In-class activities 10% (10 x 1 point ea.)
• Midterm 25%
• Final 25%
Additional class policies

“Cold Calling” Policy

Come to class prepared to contribute. It will be my practice to call on students to summarize or otherwise contribute to discussions of the case studies and other readings. If I call on you and you are not prepared to discuss assigned readings, you may lose one “in-class activities” point. If you are not prepared to contribute to class discussion, you may notify me before class begins and I will not call on you that day.

Policy on Late Assignments and Missed Exams

Late case memos will be accepted for up to 24 hours beyond the original due date and time. Late case memos must be submitted by email and only late case memos may be submitted by email (therefore all case memos submitted by email will be treated as late). If you know you will miss class, please make arrangements to have your assignment turned in during class or bring it to my office before the due date.

It is your responsibility to turn in assignments on time. Rely on the BA printers at your own risk. It is recommended that you do not wait until just before class time to attempt printing your assignments.

Make arrangements with the instructor if you miss either of the two scheduled group case memos or miss either exam. You cannot make-up or substitute for missing in-class activities except for absences due to university-sponsored trips or due to observing religious holy days.

Academic Integrity / Dishonesty (Operating Procedure 34. 12)

As stated in the TTU Catalog: “It is the aim of the faculty of Texas Tech University to foster a spirit of complete honesty and a high standard of integrity. The attempt of students to present as their own any work that they have not honestly performed is regarded by the faculty and administration as a serious offense and renders the offenders liable to serious consequences, possibly suspension.”

Disability Accommodation (Operating Procedure 34.22)

Any student who, because of a disability, may require special arrangements in order to meet the course requirements should contact the instructor as soon as possible to make any necessary arrangements. Students should present appropriate verification from Student Disability Services during the instructor’s office hours. Please note: instructors are not allowed to provide classroom accommodations to a student until appropriate verification from Student Disability Services has been provided. For additional information, please contact Student Disability Services in West Hall or call 806-742-2405.


In general, I expect that you will be in class and assume that if you choose not to be in class it is for good reason. A student who will miss class due to a university-approved trip or to observe a religious holy day should make that intention known to the instructor prior to the absence so that accommodations can be made in accordance with university policies. You do not need to present me with doctor’s notes in the event of an illness. However, please do contact me if an illness will keep you from attending multiple classes.

When you miss class, it is your responsibility to catch up or cover missing materials or assignments. The class website and your fellow students should be your first recourse in such cases, not your instructor.

Religious Holy Day Observance (Operating Procedure 34.19)

A student who intends to observe a religious holy day should make that intention known in writing to the instructor prior to the absence. A student who is absent from classes for the observance of a religious holy day will be allowed to take an examination or complete an assignment scheduled for that day within a reasonable time after the absence.

Course Communication

Course announcements, assignments, supplemental readings, and any changes to this syllabus will be discussed in class and posted to this class website.