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BS1102 – ECONOMIC ENVIRONMENT OF BUSINESS

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Module Number: BS1102

Title of Module:  Economic Environment of Business

Number of Aston Credits: 10

Total Number of ECTS Credits:  5

Staff Member Responsible for the Module:

Dr Chris JonesEconomics & Strategy GroupSouth Wing, Room 1020a, Extension 3036Email: c.jones2@aston.ac.uk 

 Availability: Office hour appointments can be booked using the online bookingsystem:  https://wass.aston.ac.uk/wass/pages/login.page.php   Please just searchfor my name. Appointments are limited to 10 minutes, if there is space availablethis can be extended. I would highly encourage students to come in groups ifthey wish.

Other Staff Contributing to the Module Include: 

TBC

Pre-Requisite(s) for the Module: None

Module Learning Outcomes:

Upon successful completion of the module students will be able to:

(1) Appreciate economic concepts, relationships and economic policy and whythey are important to the business environment.

(2) Describe and illustrate the differences between Microeconomics andMacroeconomics. And an appreciation of the different schools of thought

in the later.

(3) Explain why economists use economic models to help understand thecomplexity of much economic phenomenon.

(4) Evaluate, analyse and put into practice economic models in bothMicroeconomics and Macroeconomics

(5) Critically understand and evaluate the workings of an advanced mixedeconomy such as that of the United Kingdom.

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Module Content:

Microeconomics

1. Introduction (week 15)Module arrangements, aims, approach to teaching and learning, parameters.What is economics.Some historyScarcity and opportunity cost.Friedman vs. Galbraith: videoGovernment vs. The Market1st Economic model: Demand & Supply

2. Part 1: Demand & Supply Responsiveness (week 16)

Price elasticity of demand, elasticity and total revenue, cross price elasticity ofdemand, income elasticity of demand, elasticity of supply.

Part 2: An Introduct ion to the Theory of the Firm (week 16)Short run vs. long runThe firm as a “black-box”Profit MaximisationCost & RevenueThe Shut-down ruleLong-run average cost

3. Market Structure 1: Perfect Competit ion & Monopoly (week 17)Perfect CompetitionMonopolyJoseph Schumpeter

4. Market Structure 2: Imperfect Competi tion (week 18)Monopolistic CompetitionOligopoly – Kinked Demand CurveGame TheorySummary of Market Structure

5. Market Failure (week 19)Equity & EfficiencyCompetitive Equilibrium: Marginal Private Cost and Benefit.Examples of Market FailureExternalitiesPublic Goods

 Aymmetric InformationMoral Hazard

 Adverse Selection

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Macroeconomics

1. Introduct ion to Macroconomics (week 20)The Circular Flow of Income (Simple)The Output, Income and Expenditure measures of GDP.The Circular Flow of Income (Advanced)Economic growth: A simulationThe Business cycle

2. The Keynesian Model (week 21)John Maynard KeynesThe Circular Flow re-cap

 Aggregate DemandThe Consumption Function

The equilibrium level of output: The 45 degree line.The multiplier.Paradox of ThriftDemand Management: Fiscal policy & Monetary Policy.

3. Money and Banking (week 22)The functions of moneyHow banks create moneyThe money multiplierDifferent measures of moneyHow Central Banks control the rate of interest.

Why Central Banks control the rate of interestQuantitative EasingModeling the Money MarketThe Monetary Transmission MechanismThe Costs of inflationThe Exchange Rate

4. AD and AS Analysis (week 23) AD with flexible prices and wagesShort rum aggregate supply.Long run aggregate supply.

 Applying the model: (1) Credit Crunch; (2) Stagflation.Economic Schools of ThoughtUnemployment

5. The Global Economy (week 24)GlobalisationForeign Direct InvestmentInternational TradeRicardo’s Theory of Comparative AdvantageTrade PolicyRevision

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International Dimensions:

While much attention will focus on the UK economy, the module offers anappreciation of the workings of any mixed enterprise economy. Specificinternational dimensions include a consideration of the current developments inthe World Economy.

Corporate Connections:

Efforts are made, through mini case studies, to apply relevant economic conceptsto real life business situations.

Links to Research

Various parts of the course, particularly the lectures on economic growth andinternational trade will link in with Dr Chris Jones’s research

Learning and Teaching Rationale and Methods

Ten two-hour lectures, (weeks 15-24), and five fortnightly seminars (weeks 15-24)

The lecture programme introduces students to key concepts, and indicates theappropriate areas for further study. The seminar programme provides anopportunity for students to clarify, reinforce, and extend their understanding of the

subject. Seminars will focus on the most challenging aspects of the course andwill be very relavant for the essay component of the exam.

How are the 100 Learning Hours per Module Achieved?

Contact time 25 hoursPrivate Study 70 hoursMid-term Quiz 3 hoursExam 2 hours

Total 100 hours

Ethical Approval:

This module does not require any primary research and no ethical approval willbe necessary.

 Assessment and Feedback Rationale and Methods

 Assessment is 100% based on a closed book 2 hour examination in term 3. Theexamination will comprise a multiple choice test worth 40%, with 40 multiplechoice questions. 20 questions will be on Microeconomics and 20 questions will

be on Macroeconomics. The remaining 60% consists of 2 essays. 1 essay will be

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on Microeconomics (30%) and 1 essay will be on Macroeconomics (30%). Therewill be a choice of two essays for Microeconomics and a choice of two essays forMacroeconomics. So in total there will be 4 essay questions on the exam paperin which students will do 2.

The multiple choice test is designed to assess the range of student knowledgeand understanding of the subject, including the students’ appreciation of keyissues in the module, and their ability to apply them.

The essay questions are designed to assess the students’ ability to analysevarious economic phenomenon and to enhance their report writing skills.

In addition to the formal assessment there will also be an online quiz posted onBlackboard during Week 22. This will be comprised of 30 multiple choice

questions. The quiz will enable students to get detailed feedback from theiranswers and it will help as a revision tool.