E1 Intecon

[object Object],[object Object],[object Object],By Ajith Rohana Colonne B.Sc., MBA, M.A.(Econ) BUSINESS ECONOMICS LEARNING OBJECTIVES

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],MICROECONOMICS COURSE OUTLINE

[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],MACROECONOMICS COURSE OUTLINE

[object Object],[object Object],OTHER RELEVANT TOPICS COURSE OUTLINE

[object Object],[object Object],[object Object],[object Object],FOUR FACTORS OF PRODUCTION

RENEWABLE RESOURCES NON-RENEWABLE RESOURCES Pricing is based on Market Forces (Demand & Supply) Pricing is based on User Costs (present value of future prices)

LABOUR SPECIALIZATION OF LABOUR DIVISION OF LABOUR ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

CAPITAL FIXED CAPITAL WORKING CAPITAL ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

HUMAN CAPITAL SOCIAL CAPITAL Schwartz Model can be used to asses the value of Human Capital in an organization

ENTREPRENEURSHIP An Entrepreneur is a person who takes a higher investment risk with his assets, in view of a higher return

[object Object],[object Object],RESOURCE ALLOCATION There are three important concepts associated with resource allocation: ,[object Object],[object Object],[object Object]

SCARCITY Scarcity is the foundation of economic problems.

Certain Needs such as hunger and thirst recur

When one Want is satisfied, another Want emerges

Advertising creates Wants Demonstration creates Wants

CHOICE Choice gives rise to Opportunity Cost

OPPORTUNITY COST The cost of best alternative foregone If you win five million rupees in a lottery today, what will you do with that money? Settle the Debts

[object Object],[object Object],VEHICLE FIXED DEPOSIT If the Sense of Satisfaction (Utility) you derive by buying the vehicle is less than Rs. 1,400,000 (300,000+500,000+600,000) a year, you are not making a prudent decision. ,[object Object],DIRECT COST INDIRECT COST OPPORTUNITY COST

Suppose that you have Rs. 200 to buy Apples and Grapes. If a 1 kg of Apples is Rs. 50 and 1 kg of Grapes is Rs. 100, what are the Opportunity Costs of buying: ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

The Opportunity Cost is Zero for the following: ,[object Object],[object Object],[object Object]

SUNK COSTS Costs (or Losses) which have already been incurred in the past, but irrelevant to make decisions today. Suppose that you invested Rs. 1,500,000 in the Stock Market sometime back and now the investment is worth only Rs. 500,000. Financial Analysts predict the Stock Market to grow by 5% in the coming year and the market interest rate to be around 15%. Sell the Shares and go for a Fixed Deposit WHAT SHALL YOU DO?

PRODUCTIVITY Doing more with less. 2 + 2 = 3 INEFFICIENT 2 + 2 = 4 EFFICIENT 2 + 2 = 5 PRODUCTIVE Output / Input > 1 Improvement of Efficiency (& may be Effectiveness also).

Productivity enhancement of a specific industry Productivity enhancement of the country PRODUCTION POSSIBILITY CURVE Production Possibility Frontier A B a b Opportunity Cost National Productivity enhancement

There are three underlying assumptions with the Production Possibility Curve: ,[object Object],[object Object],[object Object]

VALUE & VALUE IN EXCHANGE Value is greater than Value in Exchange Value in Exchange is greater than Value

[object Object],[object Object],[object Object],[object Object],ECONOMIC WEALTH

[object Object],[object Object],[object Object],CLASSES OF OWNERSHIP

[object Object],[object Object],[object Object],THREE BASIC QUESTIONS ON PRODUCTION

The Market Pyramid in China, India & Brazil OPPORTUNITIES IN THE 21 ST CENTURY 105 700 800 Less than $5,000 27 125 330 60 $5,000 to $10000 15 63 9 7 2 $10000 to $20000 Greater than $20000 Tier 1 Tier 3 Tier 2 Purchasing power (in U.S, dollars) Population (in millions) China Brazil India Tier 4

Pareto Improvement: Transfer of income or wealth from one to another in a manner that it increases the utility or the sense of satisfaction of both the donor and the recipient. Etah - dairy farming

METHODS OF ASSISTING THE POOR ,[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],ECONOMIC SYSTEMS

TRADITIONAL ,[object Object],[object Object],[object Object],[object Object]

COMMAND (SOCIALIST) ,[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],[object Object]

[object Object],[object Object],[object Object],[object Object],REASONS FOR FAILURE

MARKET (CAPITALIST) ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

MIXED SYSTEMS ,[object Object],[object Object],[object Object],[object Object],[object Object],[object Object],[object Object]

END OF SESSION WEBSITE: neworiginalthinking.com

E1 Intecon

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