introduction to the subject MANAGERIAL ECONOMICS

1. Managerial Economics
Introduction

2. Economics
 Branched off from Political Economy
 Art of Household management
 Concerns use of scarce resources among
alternative uses
 Objective is to optimise the output and
achieve social welfare
 Basic assumption: Man is rational
 Provides models and predicts behaviour
 Major divisions – Micro and Macro

3. Management
 Deals with optimum utilisation of
resources so as to achieve the
corporate goals
 Major role of management is
decision making

4. Managerial Economics
 Applied economics – Application of
economic concepts to managerial
decision making

5. SCOPE OF MANAGERIAL ECONOMICS
CORPORATE OBJECTIVE
PROFIT MAXIMISATION (OR)
WEALTH MAXIMISATION
REVENUE EXPENSES
SALE VOLUME RESOURCES COST OF
PRICE USED RESOURCES
MARKET DEMAND PRODUCTION
BUSINESS ENVIRONMENT
SOCIAL LEGAL POLITICAL ECONOMIC
Business Cycle National Income Fiscal Policy Monetary Policy

6. SCOPE OF MANAGERIAL ECONOMICS
CORPORATE OBJECTIVE
PROFIT MAXIMISATION (OR)
WEALTH MAXIMISATION
REVENUE EXPENSES
SALE VOLUME RESOURCES COST OF
PRICE USED RESOURCES
MARKET DEMAND PRODUCTION
BUSINESS ENVIRONMENT
SOCIAL LEGAL POLITICAL ECONOMIC
Business Cycle National Income Fiscal Policy Monetary Policy