1. MANAGERIAL ECONOMICS
BY
SHRUTI SATIJA
Managerial Economics Unit-I CONCEPT OF
1 MANAGERIAL ECONOMICS (Batch 2012-14) 10/25/2012
2. MANAGERIAL ECONOMICS
Douglas - “Managerial economics is .. the
application of economic principles and
methodologies to the decision-making process
within the firm or organization.”
Pappas & Hirschey - “Managerial economics
applies economic theory and methods to
business and administrative decision-making.”
Managerial Economics Unit-I MANAGERIAL
2 ECONOMICS (Batch 2012-14) 10/25/2012
3. These Definitions Cover a Number
of Different Approaches
1. Analysis based on the theory of the firm
2. Analysis based upon management
sciences
3. Analysis based upon industrial
economics
Related to, but not the same as management science
Managerial Economics Unit-I MANAGERIAL
3 ECONOMICS (Batch 2012-14) 10/25/2012
and industrial economics.
4. The Use of Economic Models
Derives useful theories with testable
propositions about WHAT IS.
Provides the basis for value judgments on
economic outcomes. WHAT SHOULD BE
Managerial Economics Unit-I MANAGERIAL
4 ECONOMICS (Batch 2012-14) 10/25/2012
5. ECONOMICS IS WHAT
ECONOMISTS DO
Managerial Economics Unit-I MANAGERIAL
5 ECONOMICS (Batch 2012-14) 10/25/2012
6. Economists are primarily engaged in analyzing
and providing answers to manifestations of the
most fundamental problem, SCARCITY.
Scarcity results from:
Human wants are virtually unlimited and insatiable,
Economic resources to satisfy these demands are limited.
Managerial Economics Unit-I MANAGERIAL
6 ECONOMICS (Batch 2012-14) 10/25/2012
7. Thus we can’t have everything
what we want
We must make choices:
What to produce
How to produce
For whom to produce.
Managerial Economics Unit-I MANAGERIAL
7 ECONOMICS (Batch 2012-14) 10/25/2012
8. Market demand curve
Shows the amount of a commodity that
buyers would like to purchase at various
prices
Price
Demand
Quantity
9. Market supply curve
Shows the amount of a commodity that
sellers would offer at various prices
Price
Supply
Quantity
10. Market equilibrium price
A price that can be maintained
Price Supply E is the state of balance, from
which there is no tendency to
change.
E
P
Demand
Quantity
Q
