From Ford to Friedman: Teaching Microeconomics to Business Students

ABSTRACT Teaching microeconomics to MBA students offers a unique set of challenges and opportunities to instructors. That is, the process of teaching business students may differ considerably, but in predictable ways, when compared to the classroom experience commonly found in liberal arts programs. While it is certain that all students are consumers, most MBA students possess, or are in the midst of obtaining, a mindset characteristic of firms and producers. As a result, some topics can be reframed within this producer-focused mindset in order to be particularly effective. For instance, elasticity discussions can be reframed by stressing the goal of revenue generation for producers, and elasticity's role in supporting this task. Additional differences experienced when teaching MBA students include a larger variation in the skills, background and motivation of students. This note delves into some issues to be tackled by an instructor with experience teaching economics in a liberal arts setting who is then tasked with teaching MBA students, and presents some suggested solutions and teaching applications to help aid in this endeavor. Keywords: Microeconomics; business students; teaching economics Introduction As an increasing number of economists, particularly in the United States, make the transition from teaching in liberal arts programs to working at business schools - and hence teaching MBA students (Lafontaine, 2006) - conventional methods of teaching MBA-level microeconomics courses are coming under new scrutiny. For the instructors themselves, the novelty and potential difficulty of the task of teaching microeconomics to business students is not to be underestimated. Business students typically possess backgrounds and motivations substantially different, and particularly more diverse, than those of undergraduates or most students engaged in other graduate programs of study (Lafontaine, 2006). For this reason, it has become increasingly important to understand the ways in which a business background and outlook influence MBA students in their approach to, and their understanding of, a business economics course. In fact, one might even say that the naive intuitions of MBA students are often the inverse of the typical liberal arts students, being much more comfortable thinking as a firm or producer instead of being limited to the perspective of a consumer. Specifically, the average college undergraduate has, primarily, her own previous experience as a consumer to guide her initial outlook on microeconomics topics. As a result, she may struggle at first to understand topics that focus on the perspective of producers that are already second nature to MBA students, such as market segmentation and price discrimination. A business student generally considers profit maximization and the health and wellbeing of their business to be the primary objective. Therefore, when presented with examples of concepts, the message will often be refracted through the lens of whether it will be helpful in this endeavor, or other similar managerial concerns. This mindset makes the job of teaching economics to business students easier in some regards, but much more challenging in others. On the one hand, there is a readily available stock of concrete examples involving producers which are related to the concept of profit maximization. Using these illustrations reduces the instructor's need for abstract or esoteric explanations, but, on the other hand, because business students think like producers, they are also more prone to making certain characteristic managerial mistakes. An important caveat is warranted here. Of course, MBA students are not simply a homogenous group, but as a general rule, a great deal of self-selection has already occurred before an MBA student takes his seat in the classroom. The points made here are based on the literature, and observations that may prove useful to help ease an instructor's transition between what may seem to be very different worlds. …