2. Learning Objectives
To analyze the concept of
economics
To know how Economics plays a
role in one’s life
To understand the scope of
economics
3. Economic Terms
Economic good, Economic activity
Income and employment
Economic development
Choosing between alternative
choices with limited resources
4. Importance of Economics
Theoretical Economics Practical Importance
Informative Professional value
Mental Training Useful for
Analyse functioning of householders
economic system Useful for labour
Teaches mutual leaders
dependence Solving problems of
Useful citizenship poverty
Wages
5. Subject matter of Economics
Deals with wealth
Scarce means i.e. limited resources
Unlimited wants
Alternative uses of scarce means
Scarcity & Efficiency are twin themes of
economics
A rational consumer will use scarce
resources in most efficient manner
6. Definitions of Economics
Adam Smith, ‘An inquiry into the
nature and causes of wealth’, 1776
Marshall, ‘A study of mankind in
ordinary business in life, it examine
that part of individual and social
actions which is closely related with
attainment and use of material
requisites’
7. About Economics
Economics is a science which studies
human behavior as a relationship
between ends and scarce means which
have alternative uses (Robbins).
Economics – science or art
Positive or normative
Land, labour, capital , organisation
8. Stages of Economic Evolution
Hunting and fishing stage
Pastoral stage
Agricultural
Handicrafts stage
Domestic stage
Industrial stage
Services led economy – knowledge
9. Questions before Economists
What to produce Type of Economies
How to produce
For whom to Capitalist or free
produce market economy
Socialist Economy
Mixed Economy
10. Process of Economy
Production
Consumption
Investment
Factors of Production
Land, Labour, Capital, Organization
Division of labor ----Specialisation
11. A production possibility curve
8
7
6
Units of food (millions)
5 Units of food Units of clothing
(millions) (millions)
4
8m 0.0
7m 2.2m
3 6m 4.0m
5m 5.0m
4m 5.6m
2
3m 6.0m
2m 6.4m
1 1m 6.7m
0 7.0m
0
0 1 2 3 4 5 6 7 8
Units of clothing (millions)
12. Opportunity Cost
What is opportunity cost?
Does IMT education involve any
opportunity cost?
13. Branches of Economics
Microeconomics Macroeconomics
Study of individual Studies economy as a
units as firm or whole. It is aggregate
household. How in character and takes
individuals make the entire economy as
choices. a unit of study.
Price theory Eg. GDP of India,
Provides main source population etc.
of decision making
Eg.Airtel sales
14. Different subjects in Economics
International economics
Growth
Banking
Economic history
Agriculture economics
Applied economics……..
15. Real Life examples
Euro Disney
Multinational product and pricing
Building a bridge (funding a public project)
An R & D decision (uncertainty and decision)
Air fare pricing
Movies tickets pricing
16. The Changing Environment of
Economics
Globalization of Economic Activity
Spread of IT
Dismantling of tradition hierarchy
Information or knowledge Economy
Technological Change
Telecommunications Advances
The Internet and the World Wide Web
17. Macro Economics – Term 2
Formulation and execution of
economic policies
Income
Employment
18. Macroeconomics
Growth rates, GDP
Global recession
Business Cycles, Unemployment
Exchange rates (Yuan – effect on
other countries)
Euro crisis
Inflation
Interest rates
19. Business Environment - term 3
Purchasing power
Foreign companies in India
1991 – before and after, LPG
CSR
Corporate governance
Foreign Universities bill
IPL and after…….
20. Term 1 – Microeconomics - ME
Price theory applied to managerial
principles
21. What is Managerial Economics?
Managerial Economics =
Management + Economics.
Management deals with principles
helping in decision making under
uncertainty and improves efficiency
Economics provides propositions for
optimum allocation of scarce
resources for achieving goals
22. How does ME help managers?
E c o n o m ic s : B u s in e s s
T h eo ry an d M anagem ent -
M e t h o d o lo g y D e c is io n p r o b le m s
M a n a g e r ia l E c o n o m ic s
A p p lic a t io n o f E c o n o m ic s
t o s o lv in g b u s in e s s
p r o b le m s
O p t im a l s o lu t io n t o
b u s in e s s p r o b le m s