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C03

Microeconomics for Managers

How prices, competition and incentives really work, and how to use them to make better business decisions.

Start the course →22 lessons · first 2 free
  1. Demand Curves From Real DataNorthlight's CEO wants to know how many people stop coming if tickets go up. Last year's numbers seem to say higher prices sell MORE tickets. Find out why that's a trap, fit a real demand curve to a clean price test, and use it to predict sales at any price. · 14 minFree
  2. Elasticity and RevenueThe finance director wants every price up 10% to grow revenue. Will it work? Measure how sensitive customers are to price (elasticity), see where a price rise adds revenue and where it loses it, and find the customers who are very different from the average. · 14 minFree
  3. Optimal PricingThe price that brings in the most revenue is not the one that makes the most money. Add costs, then add the popcorn every ticket buyer brings, and find Northlight's best ticket price with marginal revenue = marginal cost. Then learn how much of a cost rise to pass on to customers. · 15 min🔒 VIP
  4. Costs and ScaleShould Northlight buy another cinema chain to spread its head office? And why does a streaming service get cheaper per customer almost forever? Explore average and marginal cost, economies and diseconomies of scale, the minimum efficient scale, and the sunk-cost trap. · 15 min🔒 VIP
  5. Short Run vs Long RunThe Riverside cinema lost $73,000 last year and the finance director wants it shut tomorrow. But closing doesn't end the lease. Learn the shut-down rule, find out which costs you can actually escape, decide day by day which days to open, and see why the answer changes when the lease runs out. · 14 min🔒 VIP
  6. Perfect CompetitionA snack craze has pushed popcorn-corn prices up 25%, and a supplier offers to lock in today's price for three years. Step into the shoes of a corn farmer who can't set the price, see how high prices pull new farms in, and work out where the price ends up in the long run. · 15 min🔒 VIP
  7. Surplus, Taxes and Price ControlsThe state wants either a $3 tax on every cinema ticket or a legal price cap of $8. Northlight asks Rosa to testify. Measure who gains from a market (consumer and producer surplus), find out who really pays a tax, and see what a price cap does to queues and empty screens. · 15 min🔒 VIP
  8. Monopoly and Market PowerHillcrest is the only cinema for 40 miles. Hana wants to charge $18: "Where else will they go?" Find out why even a monopoly faces a limit, what market power costs customers and society, where it comes from, and what the law lets you do with it. · 15 min🔒 VIP
  9. Price DiscriminationStudents and adults react to prices very differently. One price for everyone leaves money on the table on both sides. Set a different price for each group, design fences that keep them apart, compare the three kinds of price discrimination, and learn where it crosses the line from smart to unfair (or illegal). · 15 min🔒 VIP
  10. Bundling and Two-Part PricingSome customers love the film, some love the snacks. Sell them separately and you leave money behind; sell a combo and almost everyone pays more. Then design a membership: a yearly fee plus a cheap ticket, and see why it can double what a regular customer is worth. · 15 min🔒 VIP
  11. Oligopoly: Competing on Quantity and PriceIn Lakeside, Northlight and Starplex are the only two cinemas. Each one's best move depends on the other's. Plan shows when the rival plans shows too and find where you both settle (Cournot), then see why a pure price fight between identical cinemas can wipe out every dollar of profit (Bertrand), and how to avoid it. · 16 min🔒 VIP
  12. Game Theory: The Prisoner's DilemmaStarplex and Northlight both keep weekend tickets at $12, and both are tempted to cut to $9 to steal the other's crowd. If both cut, both lose. Play the price game once, then play it ten weeks in a row against rivals with different styles, and discover what makes peace last. · 16 min🔒 VIP
  13. Sequential Games and CommitmentMaple Grove is growing fast and has room for only one big cinema. Northlight can move first. Solve games played in turns by thinking backwards from the end, see why moving first (and locking yourself in) can win, and learn to tell a credible threat from an empty one. · 16 min🔒 VIP
  14. Entry and Entry DeterrenceStarplex is scouting Pine Falls, where Northlight is alone. Should Northlight make the town look unprofitable to a newcomer, or make room? Run the entrant's numbers, find the capacity that keeps it out, and learn which deterrence tactics work, which don't, and which are illegal. · 16 min🔒 VIP
  15. Vertical Relationships: Double MarginalizationA studio wants a flat $11 fee for every ticket Northlight sells of its next big film. Each side adding its own markup makes tickets dearer, sells fewer seats and shrinks the total profit for both. See why, then fix it with a revenue share or a two-part deal, and understand why studios and cinemas fight about popcorn. · 15 min🔒 VIP
  16. AuctionsA festival hit's regional rights are up for sealed bids, and Northlight wants them. Bid against rival chains in two auction formats and discover the right bid for each, run the winner's curse that ruins overconfident bidders, then switch sides and set a reserve price for Northlight's own ad-slot auction. · 16 min🔒 VIP
  17. Lemons and Signals: Hidden InformationNorthlight needs used digital projectors, and sellers know far more than buyers about which ones are about to fail. See how hidden quality can make good products vanish from a market, then fix it: inspections, warranties as signals that only good sellers can afford, and screening menus that make people reveal who they are. · 16 min🔒 VIP
  18. Moral Hazard and ContractsNorthlight can't watch every cinema manager every night. Design a pay deal that makes extra effort worth it without loading managers with too much risk, see what happens when a bonus rewards only what's easy to measure, and spot moral hazard in insurance and outsourcing too. · 16 min🔒 VIP
  19. Network Effects and PlatformsRosa pitches Northlight Indie: an app where independent filmmakers post films and local viewers stream them. Viewers come only if there are films; filmmakers come only if there are viewers. Seed it past the tipping point, then price the two sides, and discover why it can pay to charge one side nothing (or even pay it). · 16 min🔒 VIP
  20. Externalities and RegulationNeighbours of the Riverside cinema are fed up with late-night noise and parked cars, and the council is drafting rules. Measure the cost Northlight's late shows push onto others, compare a ban, a fee per show and a deal with the neighbours, then see how trading carbon permits cuts emissions at the lowest cost. · 16 min🔒 VIP
  21. Behavioral Economics for ManagersReal customers don't calculate like the models: a menu option nobody buys can change what everyone buys, a pre-ticked box decides more than price, and the same deal feels different as a discount or a surcharge. Test popcorn menus, design a default, and learn where helpful nudges end and manipulative dark patterns begin. · 15 min🔒 VIP
  22. Boss: Price a New Streaming ServiceThe board wants Northlight+ in every home in the region, and Hana wants it priced at a 'premium' $12.99. Use the whole course: read the demand test, set the profit-maximising price, cover the huge fixed costs, design two tiers that separate fans from casual viewers, block a rival's cheap launch, and set an honest free trial. Then present your plan to the board. · 22 min🔒 VIP