Managerial economics


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Managerial economics

  1. 1. - Prof. Prasad Joshi Prof.  Prasad  Joshi   24  August  2011  
  2. 2. —  When wants exceed the resources available to satisfy them, there is scarcity—  Faced with scarcity, people must make choices—  Economics is the study of the choices people make to cope with scarcity—  Choosing more of one thing means having less of something else—  The opportunity cost of any action is the best alternative forgone   Prof.  Prasad  Joshi   24  August  2011  
  3. 3. The study of the decisions of people and businesses and the interaction of those decisions in markets. The goal of microeconomics is to explain the prices and quantities ofindividual goods and services. Prof.  Prasad  Joshi   24  August  2011  
  4. 4. The study of the national economy and the globaleconomy and the way that economic aggregates, growsand fluctuates. The goal of macroeconomics is to explainaverage prices and the total employment, income, andproduction. Prof.  Prasad  Joshi   24  August  2011  
  5. 5. Production costs are as low as possible and consumers are as satisfied as possible with the combination ofgoods and services that is being produced. Prof.  Prasad  Joshi   24  August  2011  
  6. 6. The increase in incomes and production per person. Itresults from the ongoing advance of technology, theaccumulation of ever larger quantities of productiveequipment and ever rising standards of education   Prof.  Prasad  Joshi   24  August  2011  
  7. 7. The absence of wide fluctuations in the economicgrowth rate, the level of employment, and averageprices   Prof.  Prasad  Joshi   24  August  2011  
  8. 8. A mechanism that allocates scarce resources amongalternative uses. This mechanism achieves five things:What,How,When,Where,Who   Prof.  Prasad  Joshi   24  August  2011  
  9. 9. —  Household - Any group of people living together as a decision-making unit. Every individual in the economy belongs to a household—  Firm - An organization that uses resources to produce goods and services. All producers are called firms, no matter how big they are or what they produce. Car makers, farmers, banks, and insurance companies are all firms   Prof.  Prasad  Joshi   24  August  2011  
  10. 10. —  Government - A many-layered organization that sets laws and rules, operates a law-enforcement mechanism, taxes households and firms, and provides public goods and services such as national defense, public health, transportation, and education—  Market - Any arrangement that enables buyers and sellers to get information and to do business with each other   Prof.  Prasad  Joshi   24  August  2011  
  11. 11. —  Land - Natural resources used to produce goods and services. The return to land is rent—  Labor - Time and effort that people devote to producing goods and services. The return to labour is wages—  Capital - All the equipment, buildings, tools and other manufactured goods used to produce other goods and services. The return to capital is interest—  Entrepreneurial ability - A special type of human resource that organizes the other three factors of production, makes business decisions, innovates, and bears business risk. Return to entrepreneurship is profit. Prof.  Prasad  Joshi   24  August  2011  
  12. 12. Prof.  Prasad  Joshi   24  August  2011