Managerial Economics deals with applying economic concepts and tools to managerial decision making. It is a branch of microeconomics that is concerned with analyzing factors that affect business and aiding managers in decision-making. Some key topics covered include demand analysis, production and cost analysis, pricing decisions, and capital management. Managerial Economics helps provide a basis for business policies and planning by allowing managers to analyze costs, predict business trends, and understand external forces affecting their environment. The study of demand, including concepts like the law of demand, elasticity, shifting demand, and demand forecasting are important aspects of Managerial Economics.
Unit 2: Economic Analysis for Business Decision Dr K R Kumar
This document provides information from a lecture on demand analysis and forecasting by Dr. K R Kumar. It defines demand, the law of demand, and why demand curves slope downward. It then discusses elasticity of demand, including types like price, income, cross, and advertising elasticity. Determinants of elasticity and methods for demand forecasting are also covered, including qualitative methods like Delphi and nominal group technique, and quantitative methods like time series analysis and trend projection.
This document provides an overview of macroeconomics and microeconomics. It defines macroeconomics as dealing with the performance of an entire economy, including concepts like GDP, unemployment, inflation, and macroeconomic models. Microeconomics is defined as studying individual markets and decision-making of consumers and firms, covering topics like supply and demand, costs of production, and market structures. The document also lists various fields that fall under microeconomics such as labor economics, welfare economics, and financial economics.
This document provides an introduction to business economics. It defines business economics as the integration of economic theory with business practice to facilitate decision making. The key points covered include:
- Business economics applies economic theory and methodology to solve business problems and make optimal decisions.
- It is microeconomic in nature and focuses on firms. It is normative, pragmatic, and prescriptive to help management make correct decisions and plan for the future.
- The scope of business economics includes demand analysis, cost analysis, production, pricing, profit and capital management.
- A business economist studies macroeconomic factors and links them to firms, assists in planning, performs cost-benefit analyses, and conducts research and statistical analysis
The document discusses economics and business economics. Economics is defined as the study of how individuals and groups allocate scarce resources. Business economics applies economic theories and techniques to solve business problems and aid management decision making. It uses micro and macroeconomic approaches to understand issues like demand, costs, profits, and external factors that influence business. The key aspects of business economics are demand forecasting, cost analysis, profit analysis, and capital management. Overall, the document outlines the basic concepts, scope, importance and determinants of demand within the field of business economics.
Lecture slides for an undergraduate course on Basic Macroeconomics that I taught in the Fall of 2007.
This first lecture serves as an introduction to economics in general.
Managerial economics deals with application of economics principles to solve problems faced by managers at the corporate level. It draws upon economic theory as well as other disciplines like human behavior and technology. Managerial decisions are influenced by various factors including human factors like employee morale, technological factors like assessing new technologies, and environmental factors like political, social and economic conditions. While economic considerations are important, human factors also often influence managerial decisions by compromising what would otherwise make pure economic sense. Demand refers to consumer response related to purchase of goods and services based on factors like price, income, tastes and substitutes. Demand curves show the relationship between price and quantity demanded and can shift due to changes in these other factors.
This document provides an overview of the key topics that will be covered in a basic economics workshop, including:
- Introduction to microeconomics and macroeconomics concepts like supply and demand, markets, and economic growth.
- The nature of scarcity and how it requires individuals and societies to make choices that involve opportunity costs.
- Production possibilities frontiers and how resources constraints impact what combinations of goods can be produced.
- Distinguishing between microeconomic topics like demand, supply, and elasticity from macroeconomic topics like inflation and GDP.
- Differences between production in the short-run, when some resources are fixed, versus the long-run when all resources are variable.
The document discusses key concepts in business economics and macroeconomics. It defines business economics as the application of economic theory and analytical tools to improve business decision-making. It also discusses microeconomics topics like consumer behavior, market structures, and efficiency. For macroeconomics, it covers aggregates like GDP and inflation, and different views on the role of government in the economy between classical and Keynesian thought.
Unit 2: Economic Analysis for Business Decision Dr K R Kumar
This document provides information from a lecture on demand analysis and forecasting by Dr. K R Kumar. It defines demand, the law of demand, and why demand curves slope downward. It then discusses elasticity of demand, including types like price, income, cross, and advertising elasticity. Determinants of elasticity and methods for demand forecasting are also covered, including qualitative methods like Delphi and nominal group technique, and quantitative methods like time series analysis and trend projection.
This document provides an overview of macroeconomics and microeconomics. It defines macroeconomics as dealing with the performance of an entire economy, including concepts like GDP, unemployment, inflation, and macroeconomic models. Microeconomics is defined as studying individual markets and decision-making of consumers and firms, covering topics like supply and demand, costs of production, and market structures. The document also lists various fields that fall under microeconomics such as labor economics, welfare economics, and financial economics.
This document provides an introduction to business economics. It defines business economics as the integration of economic theory with business practice to facilitate decision making. The key points covered include:
- Business economics applies economic theory and methodology to solve business problems and make optimal decisions.
- It is microeconomic in nature and focuses on firms. It is normative, pragmatic, and prescriptive to help management make correct decisions and plan for the future.
- The scope of business economics includes demand analysis, cost analysis, production, pricing, profit and capital management.
- A business economist studies macroeconomic factors and links them to firms, assists in planning, performs cost-benefit analyses, and conducts research and statistical analysis
The document discusses economics and business economics. Economics is defined as the study of how individuals and groups allocate scarce resources. Business economics applies economic theories and techniques to solve business problems and aid management decision making. It uses micro and macroeconomic approaches to understand issues like demand, costs, profits, and external factors that influence business. The key aspects of business economics are demand forecasting, cost analysis, profit analysis, and capital management. Overall, the document outlines the basic concepts, scope, importance and determinants of demand within the field of business economics.
Lecture slides for an undergraduate course on Basic Macroeconomics that I taught in the Fall of 2007.
This first lecture serves as an introduction to economics in general.
Managerial economics deals with application of economics principles to solve problems faced by managers at the corporate level. It draws upon economic theory as well as other disciplines like human behavior and technology. Managerial decisions are influenced by various factors including human factors like employee morale, technological factors like assessing new technologies, and environmental factors like political, social and economic conditions. While economic considerations are important, human factors also often influence managerial decisions by compromising what would otherwise make pure economic sense. Demand refers to consumer response related to purchase of goods and services based on factors like price, income, tastes and substitutes. Demand curves show the relationship between price and quantity demanded and can shift due to changes in these other factors.
This document provides an overview of the key topics that will be covered in a basic economics workshop, including:
- Introduction to microeconomics and macroeconomics concepts like supply and demand, markets, and economic growth.
- The nature of scarcity and how it requires individuals and societies to make choices that involve opportunity costs.
- Production possibilities frontiers and how resources constraints impact what combinations of goods can be produced.
- Distinguishing between microeconomic topics like demand, supply, and elasticity from macroeconomic topics like inflation and GDP.
- Differences between production in the short-run, when some resources are fixed, versus the long-run when all resources are variable.
The document discusses key concepts in business economics and macroeconomics. It defines business economics as the application of economic theory and analytical tools to improve business decision-making. It also discusses microeconomics topics like consumer behavior, market structures, and efficiency. For macroeconomics, it covers aggregates like GDP and inflation, and different views on the role of government in the economy between classical and Keynesian thought.
This document discusses the importance and uses of microeconomics. It explains that microeconomics helps understand how economies operate by examining resource allocation, production and consumption efficiency, and economic welfare. It also discusses how microeconomics provides tools for business and economic decision making, such as determining optimal production levels, prices, and government policies. Finally, the document notes that microeconomics is useful for efficiently managing resources, making trade and exchange rate decisions, and predicting economic trends.
The document defines key economic concepts including scarcity, opportunity cost, specialization, markets, supply and demand, monetary policy, fiscal policy, and economic growth. Resources are limited so people must make choices, and choosing one alternative means forgoing the next best option or opportunity cost. Specialization and trade allow people and countries to focus on specific production and gain from interdependence. Markets facilitate exchange through the interaction of supply and demand which determine prices. Governments influence the economy through monetary policy, fiscal policy, and other economic policies and institutions with goals of stability, employment, and growth.
This document provides an introduction to microeconomics, including:
- Microeconomics studies the behavior of individual economic units like households, firms, and consumers, and how they make decisions and interact in markets.
- The key themes are the allocation of resources, the tradeoffs people make, and how prices determine optimal value.
- Economic theories provide explanations and make predictions, while models use mathematics to simulate and estimate phenomena.
- Markets are where buyers and sellers interact to set prices, and can be competitive or non-competitive depending on factors like government involvement.
- The document provides examples of microeconomic concepts like firms optimizing profits and concludes with sample exam questions.
The document is a presentation report on business economics submitted by a group of students. The objectives of their study are to understand inflation, its causes, the RBI's policies to control inflation, effects of inflation on the economy and common people. It provides definitions of inflation, deflation and hyperinflation. It discusses demand-pull and cost-push theories of inflation. The report also analyzes the economic implications of rising crude oil prices and its impact on inflation.
This document provides an overview of business economics. It begins by defining economics and differentiating between traditional economics and business economics. Key concepts in business economics are then outlined, including demand analysis, cost-benefit analysis, and profit maximization. The document also discusses how business economics relates to other disciplines like accounting, mathematics, and statistics. Finally, fundamental concepts in business economics are defined, such as the incremental concept, time perspective concept, and opportunity cost concept.
The document discusses concepts related to demand including the law of demand, determinants of demand, and elasticity of demand.
1) The law of demand states that other things being equal, the quantity demanded of a good decreases when its price rises, and increases when its price falls, resulting in an inverse relationship between price and quantity demanded.
2) Demand is influenced by various determinants including the price of the good, prices of related goods, income, tastes and preferences, population size, and income distribution.
3) Elasticity of demand is a concept that measures the responsiveness of quantity demanded to changes in various factors like price. It indicates how flexible or inflexible demand is in response
This document defines and compares microeconomics and macroeconomics. Microeconomics focuses on individual decision-making and factors like what, how, and for whom to produce. Macroeconomics focuses on large-scale economic factors like GDP, unemployment, and inflation. It also defines related economic terms like unemployment, GDP, inflation, demand, and investment.
This document outlines the chapter topics for a course on basic economics at Pangasinan State University. The chapter topics include definitions of economics and microeconomics and macroeconomics. It also discusses key economic concepts like scarcity, opportunity costs, economic resources and the three fundamental economic questions about what to produce, how to produce and for whom to produce. The document provides an overview of the course and serves as an outline for the instructor to follow.
Microeconomics studies how individuals and firms make choices given scarce resources. It examines how supply and demand determine prices and outputs in specific markets. Microeconomics analyzes the workings of individual markets and can help improve efficiency, inform business decisions, and evaluate policy impacts on welfare. However, it has limitations in assuming full employment and no government intervention.
The document provides definitions and explanations of key economic concepts:
1. Economics is defined as the study of how people choose to use scarce resources to satisfy unlimited wants. It involves production, distribution, and consumption of goods and services.
2. Scarcity means that resources are limited but wants are unlimited, so choices must be made. Opportunity cost is the next best alternative forgone in making a choice.
3. Demand is a consumer's willingness and ability to purchase a good at a given price, depicted by a downward sloping demand curve. The law of demand states that price and quantity demanded move in opposite directions.
4. A production possibility frontier shows the maximum output combinations of two goods given
Microeconomics is the study of economic behavior of individual consumers, producers, workers, and suppliers. It analyzes how these individual economic units reach equilibrium and covers topics like consumer behavior, product pricing, and firm behavior. Microeconomics considers individual markets in isolation and makes simplifying assumptions. Macroeconomics studies aggregates for the whole economy like total output, employment, prices, and growth. It considers how disturbances in one market can affect others and covers topics like national income, prices, trade balances, and fiscal policy. Micro and macroeconomics are complementary as concepts from micro like consumption behavior form the basis of macro concepts and micro depends on understanding of macro aggregates.
Adam Smith is considered the father of modern economics. He defined economics as the science of wealth and was interested in how the wealth of nations could be increased. Economics studies how individuals and societies choose to use scarce resources to satisfy unlimited wants. It can be divided into microeconomics, which focuses on individual agents and markets, and macroeconomics, which looks at aggregate economic measures such as growth, unemployment, and inflation. The goal of economics is to understand how economies work and how economic policy can be used to promote efficiency and economic well-being.
Business economics deals with the application of economic theories and principles to solve business problems and aid management decision making. It involves using economic methodology to analyze issues like demand forecasting, cost analysis, profit analysis, and capital management at the level of individual firms. The study of business economics has both theoretical and practical significance. It helps understand economic behavior, assess economic performance, aid in economic planning and policymaking, and solve problems faced by various groups like businessmen, bankers, and policymakers. Overall, business economics integrates economic theory with business practice to facilitate optimal business decision making and planning.
Introduction to Business, Management and EconomicsMuhamad SHABAREK
This document provides an overview of management and business concepts. It defines business, outlines the four factors of production (land, labor, capital, enterprise), and discusses efficiency and effectiveness. It also covers economic systems such as capitalism, socialism, and communism. Key business concepts like supply and demand, competition, and forms of business ownership are summarized. The roles of government in economic policy and international trade are also addressed.
Managerial economics deals with applying economic theory and methodology to managerial decision making. It aims to help managers make optimal choices related to production, cost, pricing, revenue, profits and resource allocation. Some key concepts in managerial economics include demand analysis and forecasting, production functions, cost analysis, inventory management, pricing systems, and allocating scarce resources efficiently. Microeconomic concepts like elasticity, marginal costs and revenues are important analytical tools for managerial decision making under conditions of uncertainty.
The document provides an introduction to the field of economics. It defines economics as the study of how societies allocate scarce resources to produce goods and services. It also distinguishes between microeconomics, which examines individual components like industries and households, and macroeconomics, which examines the overall economy. The scientific approach in economics uses techniques like observation, analysis, and statistical analysis to understand economic phenomena. Some pitfalls to avoid in economic reasoning are failing to isolate variables, making post hoc fallacies, and committing the fallacy of composition. Economics studies scarcity and how it affects production and consumption. Economic knowledge can help individuals, societies, and policymakers.
This document provides an introduction to economic analysis. It discusses positive and normative economics, the interdependence of microeconomics and macroeconomics, and how economic analysis informs typical managerial decisions. The roles of economists, finance managers, and functional areas are also outlined. Production possibility curves are introduced as helping to understand the problem of scarcity.
Why Study Economics?To Learn a Way of ThinkingTo Understand SocietyTo Understand Global AffairsTo Be an Informed VoterThe Scope of EconomicsMicroeconomics and MacroeconomicsThe Diverse Fields of EconomicsThe Method of EconomicsTheories and ModelsEconomic Policy
This document provides an overview of microeconomics topics covered in an assignment, including:
1) Microeconomics examines the economic decisions of individuals and small organizations regarding allocation of scarce resources and how supply and demand determine prices.
2) Key microeconomics topics covered include demand and supply theory, elasticities, consumer demand, production theory, and different market structures such as perfect competition and monopoly.
3) The document also discusses assumptions of rationality and completeness in microeconomic models and distinguishes positive from normative economics.
This document provides an overview of introductory economics concepts. It begins by defining key terms like economics, microeconomics, macroeconomics, and scarcity. It then discusses the basic concepts of supply and demand, explaining the supply-demand curve and factors that can cause shifts in supply and demand. The document also covers price stability, full employment, economic growth, and other basic objectives of economics. It provides examples of inflation and its causes. Overall, the document presents foundational microeconomics concepts.
The document provides an overview of economics, including definitions and concepts. It discusses:
- Definitions of economics from Aristotle defining it as household management to Lionel Robbins defining it as relationship between scarce means and ends.
- Types of economic analysis including micro vs macro, positive vs normative, and short run vs long run.
- The concept of scarcity referring to the gap between limited resources and unlimited wants, requiring trade-offs.
- Managerial economics dealing with applying economic concepts to business decision making like pricing, investment, and production decisions.
This document discusses the importance and uses of microeconomics. It explains that microeconomics helps understand how economies operate by examining resource allocation, production and consumption efficiency, and economic welfare. It also discusses how microeconomics provides tools for business and economic decision making, such as determining optimal production levels, prices, and government policies. Finally, the document notes that microeconomics is useful for efficiently managing resources, making trade and exchange rate decisions, and predicting economic trends.
The document defines key economic concepts including scarcity, opportunity cost, specialization, markets, supply and demand, monetary policy, fiscal policy, and economic growth. Resources are limited so people must make choices, and choosing one alternative means forgoing the next best option or opportunity cost. Specialization and trade allow people and countries to focus on specific production and gain from interdependence. Markets facilitate exchange through the interaction of supply and demand which determine prices. Governments influence the economy through monetary policy, fiscal policy, and other economic policies and institutions with goals of stability, employment, and growth.
This document provides an introduction to microeconomics, including:
- Microeconomics studies the behavior of individual economic units like households, firms, and consumers, and how they make decisions and interact in markets.
- The key themes are the allocation of resources, the tradeoffs people make, and how prices determine optimal value.
- Economic theories provide explanations and make predictions, while models use mathematics to simulate and estimate phenomena.
- Markets are where buyers and sellers interact to set prices, and can be competitive or non-competitive depending on factors like government involvement.
- The document provides examples of microeconomic concepts like firms optimizing profits and concludes with sample exam questions.
The document is a presentation report on business economics submitted by a group of students. The objectives of their study are to understand inflation, its causes, the RBI's policies to control inflation, effects of inflation on the economy and common people. It provides definitions of inflation, deflation and hyperinflation. It discusses demand-pull and cost-push theories of inflation. The report also analyzes the economic implications of rising crude oil prices and its impact on inflation.
This document provides an overview of business economics. It begins by defining economics and differentiating between traditional economics and business economics. Key concepts in business economics are then outlined, including demand analysis, cost-benefit analysis, and profit maximization. The document also discusses how business economics relates to other disciplines like accounting, mathematics, and statistics. Finally, fundamental concepts in business economics are defined, such as the incremental concept, time perspective concept, and opportunity cost concept.
The document discusses concepts related to demand including the law of demand, determinants of demand, and elasticity of demand.
1) The law of demand states that other things being equal, the quantity demanded of a good decreases when its price rises, and increases when its price falls, resulting in an inverse relationship between price and quantity demanded.
2) Demand is influenced by various determinants including the price of the good, prices of related goods, income, tastes and preferences, population size, and income distribution.
3) Elasticity of demand is a concept that measures the responsiveness of quantity demanded to changes in various factors like price. It indicates how flexible or inflexible demand is in response
This document defines and compares microeconomics and macroeconomics. Microeconomics focuses on individual decision-making and factors like what, how, and for whom to produce. Macroeconomics focuses on large-scale economic factors like GDP, unemployment, and inflation. It also defines related economic terms like unemployment, GDP, inflation, demand, and investment.
This document outlines the chapter topics for a course on basic economics at Pangasinan State University. The chapter topics include definitions of economics and microeconomics and macroeconomics. It also discusses key economic concepts like scarcity, opportunity costs, economic resources and the three fundamental economic questions about what to produce, how to produce and for whom to produce. The document provides an overview of the course and serves as an outline for the instructor to follow.
Microeconomics studies how individuals and firms make choices given scarce resources. It examines how supply and demand determine prices and outputs in specific markets. Microeconomics analyzes the workings of individual markets and can help improve efficiency, inform business decisions, and evaluate policy impacts on welfare. However, it has limitations in assuming full employment and no government intervention.
The document provides definitions and explanations of key economic concepts:
1. Economics is defined as the study of how people choose to use scarce resources to satisfy unlimited wants. It involves production, distribution, and consumption of goods and services.
2. Scarcity means that resources are limited but wants are unlimited, so choices must be made. Opportunity cost is the next best alternative forgone in making a choice.
3. Demand is a consumer's willingness and ability to purchase a good at a given price, depicted by a downward sloping demand curve. The law of demand states that price and quantity demanded move in opposite directions.
4. A production possibility frontier shows the maximum output combinations of two goods given
Microeconomics is the study of economic behavior of individual consumers, producers, workers, and suppliers. It analyzes how these individual economic units reach equilibrium and covers topics like consumer behavior, product pricing, and firm behavior. Microeconomics considers individual markets in isolation and makes simplifying assumptions. Macroeconomics studies aggregates for the whole economy like total output, employment, prices, and growth. It considers how disturbances in one market can affect others and covers topics like national income, prices, trade balances, and fiscal policy. Micro and macroeconomics are complementary as concepts from micro like consumption behavior form the basis of macro concepts and micro depends on understanding of macro aggregates.
Adam Smith is considered the father of modern economics. He defined economics as the science of wealth and was interested in how the wealth of nations could be increased. Economics studies how individuals and societies choose to use scarce resources to satisfy unlimited wants. It can be divided into microeconomics, which focuses on individual agents and markets, and macroeconomics, which looks at aggregate economic measures such as growth, unemployment, and inflation. The goal of economics is to understand how economies work and how economic policy can be used to promote efficiency and economic well-being.
Business economics deals with the application of economic theories and principles to solve business problems and aid management decision making. It involves using economic methodology to analyze issues like demand forecasting, cost analysis, profit analysis, and capital management at the level of individual firms. The study of business economics has both theoretical and practical significance. It helps understand economic behavior, assess economic performance, aid in economic planning and policymaking, and solve problems faced by various groups like businessmen, bankers, and policymakers. Overall, business economics integrates economic theory with business practice to facilitate optimal business decision making and planning.
Introduction to Business, Management and EconomicsMuhamad SHABAREK
This document provides an overview of management and business concepts. It defines business, outlines the four factors of production (land, labor, capital, enterprise), and discusses efficiency and effectiveness. It also covers economic systems such as capitalism, socialism, and communism. Key business concepts like supply and demand, competition, and forms of business ownership are summarized. The roles of government in economic policy and international trade are also addressed.
Managerial economics deals with applying economic theory and methodology to managerial decision making. It aims to help managers make optimal choices related to production, cost, pricing, revenue, profits and resource allocation. Some key concepts in managerial economics include demand analysis and forecasting, production functions, cost analysis, inventory management, pricing systems, and allocating scarce resources efficiently. Microeconomic concepts like elasticity, marginal costs and revenues are important analytical tools for managerial decision making under conditions of uncertainty.
The document provides an introduction to the field of economics. It defines economics as the study of how societies allocate scarce resources to produce goods and services. It also distinguishes between microeconomics, which examines individual components like industries and households, and macroeconomics, which examines the overall economy. The scientific approach in economics uses techniques like observation, analysis, and statistical analysis to understand economic phenomena. Some pitfalls to avoid in economic reasoning are failing to isolate variables, making post hoc fallacies, and committing the fallacy of composition. Economics studies scarcity and how it affects production and consumption. Economic knowledge can help individuals, societies, and policymakers.
This document provides an introduction to economic analysis. It discusses positive and normative economics, the interdependence of microeconomics and macroeconomics, and how economic analysis informs typical managerial decisions. The roles of economists, finance managers, and functional areas are also outlined. Production possibility curves are introduced as helping to understand the problem of scarcity.
Why Study Economics?To Learn a Way of ThinkingTo Understand SocietyTo Understand Global AffairsTo Be an Informed VoterThe Scope of EconomicsMicroeconomics and MacroeconomicsThe Diverse Fields of EconomicsThe Method of EconomicsTheories and ModelsEconomic Policy
This document provides an overview of microeconomics topics covered in an assignment, including:
1) Microeconomics examines the economic decisions of individuals and small organizations regarding allocation of scarce resources and how supply and demand determine prices.
2) Key microeconomics topics covered include demand and supply theory, elasticities, consumer demand, production theory, and different market structures such as perfect competition and monopoly.
3) The document also discusses assumptions of rationality and completeness in microeconomic models and distinguishes positive from normative economics.
This document provides an overview of introductory economics concepts. It begins by defining key terms like economics, microeconomics, macroeconomics, and scarcity. It then discusses the basic concepts of supply and demand, explaining the supply-demand curve and factors that can cause shifts in supply and demand. The document also covers price stability, full employment, economic growth, and other basic objectives of economics. It provides examples of inflation and its causes. Overall, the document presents foundational microeconomics concepts.
The document provides an overview of economics, including definitions and concepts. It discusses:
- Definitions of economics from Aristotle defining it as household management to Lionel Robbins defining it as relationship between scarce means and ends.
- Types of economic analysis including micro vs macro, positive vs normative, and short run vs long run.
- The concept of scarcity referring to the gap between limited resources and unlimited wants, requiring trade-offs.
- Managerial economics dealing with applying economic concepts to business decision making like pricing, investment, and production decisions.
This document provides an overview of macroeconomics concepts. It begins with defining economics and its origin from the Greek words oikos and nomus, meaning household management. It then discusses the central problem of scarcity due to limited resources and unlimited wants. Factors of production and the circular flow model showing the flow of resources and payments between households and businesses are introduced. Opportunity cost, basic economic questions around consumption, distribution and growth, and the types of economic systems are also summarized. Finally, it distinguishes between positive and normative economics and microeconomics versus macroeconomics.
Managerial economics applies economic theory to business decision-making. It helps managers optimize the allocation of scarce resources and make decisions to maximize profit and minimize costs. Managerial economics draws on quantitative and statistical methods to address problems of uncertainty. The goal is to integrate economic theory with business practice to facilitate planning and decision-making. Key topics covered include supply and demand analysis, production and cost theory, profit measurement and maximization, and the role of businesses in society.
This document provides an introduction and overview of economics. It begins by defining economics as the study of how society copes with problems related to production, consumption, distribution and exchange of goods and services. It then briefly outlines the history of economics from early barter systems to modern concepts like welfare states. The document discusses several definitions of economics provided by influential economists like Adam Smith, Alfred Marshall, Lionel Robbins, and Paul Samuelson. It also defines key economic concepts like scarcity, utility, factors of production, and the four basic economic questions. The document concludes by outlining different types of economic systems and branches of economics like microeconomics and macroeconomics.
Managerial economics provides tools and techniques to help managers make decisions. It applies economic theory to solve practical business problems and optimize the use of scarce resources. Decision-making involves identifying problems, generating alternatives, selecting an option, and implementing and evaluating the solution. Managers often face uncertainty due to incomplete information about demand, costs, and other factors. They must choose the best option from available alternatives to allocate resources efficiently and achieve organizational goals.
Managerial Economics
?
Subject: MANAGERIAL ECONOMICS Credits: 4
SYLLABUS
Basics of Managerial Economics
Introduction to Economics, Basics of Managerial Economics, Introduction to Economics, Nature and Scope of
Managerial Economics, Managerial Economics & Economics Related Disciplines Interrelationship with Other
Subjects, Economics Tools
Demand Theory
Demand Analysis, Elasticity Concepts, Demand Forecasting, and Importance of Demand forecasting
Cost of Production:
Cost Analysis, Economic of Scale, Cost Reduction and Cost control, Capital Budgeting
Production Theory
Introduction to Production Concept, Production Analysis, Stage of Production, Return to Scale, Supply
Analysis
Market Analysis
Introduction to market Structure, Perfect Competition, Monopoly, Oligopoly and Pricing
Suggested Readings:
1. Managerial Economics – Analysis, Problems and Cases, P.L. Mehta, Sultan Chand Sons, New Delhi
2. Managerial Economics – Varshney and Maheshwari, Sultan Chand and Sons, New Delhi
3. Managerial Economics – D. Salvatore, McGraw Hill, New Delhi
4. Managerial Economics – Pearson and Lewis, Prentice Hall, New Delhi
5. Managerial Economics – G.S. Gupta, T M H, New Delhi
5
------------------------------------------------------------------------------------------------------------
NATURE AND SCOPE OF ECONOMIC ANALYSIS
------------------------------------------------------------------------------------------------------------
Structure
1.1 Introduction to Economics
1.2 Concept of Economics in Decision Making
1.3 Scope of Managerial Economics
1.4 Relationship between Managerial Economics and Other Subjects
1.5Tools and Techniques of Decision Making
1.6 Review Questions
------------------------------------------------------------------------------------------------------------
1.1 INTRODUCTION TO ECONOMICS
------------------------------------------------------------------------------------------------------------
This unit introduces you to the basic concepts of Economics. After going through this
unit you will come to know how Economics is helpful for Managers in their Decision
making process.
Objectives: • To analyze the concept of economics- scarcity and efficiency • Micro Economics and macro economics • Concept of managerial economics • How managerial economics differ from economics and its relationship with
management
Good morning students, the basic purpose of our studying of economics are the efficient
utilization of scarce resources. We always have to make choices amongst various
alternatives available for efficient utilization of our scarce resources. The twin theme of
economics is scarcity and efficiency. We will discuss this twin theme in detail before
coming to managerial economics.
Scarcity and Efficiency: The first question which comes here is what is Economics?
Economics is the study of how society choo.
Managerial economics analyzes tools and techniques for decision making in businesses. It uses microeconomic and macroeconomic concepts to understand business problems and determine optimal solutions. Microeconomics focuses on decisions of individuals and firms, while macroeconomics examines the aggregate economy and policies like fiscal and monetary policy that influence economic growth and stability. The law of demand and supply are core concepts explaining the relationship between price and quantity in markets.
Managerial economics examines tools and techniques for decision making at the firm level. It uses microeconomic analysis to help managers make optimal choices. Macroeconomics analyzes the aggregate economy, factors like GDP, inflation, and unemployment. Government uses fiscal and monetary policy to influence demand and achieve economic goals like growth and stability. While micro focuses on individual markets, macro considers long-run growth driven by economic aggregates.
The document provides information about the fundamentals of economics course "HU200". It outlines the course objectives which are to enable students to understand consumer decisions, economic choices made by individuals and firms, forces of demand and supply, and apply economic techniques in real applications. It also lists the course contents which include basic economics concepts, supply and demand, production cost, and feasibility studies. The assessment methods include semester works, midterm exam, oral exam, practical exam and final exam worth a total of 150 marks.
This document outlines the syllabus for a 4-credit Managerial Economics course. It covers topics such as demand theory, cost of production, production theory, and market analysis. The course introduces economic concepts useful for managerial decision making, including price and income elasticity of demand, cost and output relationships, and different market structures. It also discusses the role of economics in addressing the three fundamental problems of any economy: what to produce, how to produce, and for whom to produce. Managerial decision making involves identifying problems, generating alternatives, selecting a solution, and implementing and evaluating it.
This document provides an overview of the subject Managerial Economics. It discusses key topics that will be covered, including basics of managerial economics, demand theory, cost of production, production theory, and market analysis. The syllabus outlines suggested readings and the nature and scope of economic analysis. It defines economics and discusses concepts like scarcity, efficiency, microeconomics, macroeconomics, and the meaning and role of managerial economics. It also covers decision making, factors that affect decision making like certainty, risk and uncertainty, and the steps involved in managerial decision making.
This document provides an overview of the content covered in a fundamentals of economics course, including: 1) basic microeconomic and macroeconomic concepts, the theory of demand and supply, production, and costs; 2) different market forms; 3) money, banking, and monetary policy; and 4) definitions of economics from prominent economists and key topics like scarcity, choice, and the classification of economics. The course aims to explain fundamental economic concepts and analyze individual and aggregate economic behavior.
C:\fakepath\chapter one basics of micro economicspcte
The document discusses key concepts in economics including:
- Economics is the study of how scarce resources are allocated among unlimited wants
- People have unlimited wants but limited resources, so they must make choices
- Scarcity means not enough resources are available for free and can lead to shortages
- Poverty occurs when people do not have enough income to obtain scarce goods
- Resources (land, labor, capital) are used to produce goods and services
- Microeconomics studies individual parts of the economy while macroeconomics looks at aggregates and the whole economy
This document provides an overview of the key concepts in managerial economics. It begins by outlining the topics that will be covered in the course, including microeconomic and macroeconomic foundations, concepts like scarcity and opportunity cost, production possibilities curves, profit maximization theories, and equilibrium. It then defines economics and distinguishes between microeconomics and macroeconomics. Several theories of the firm are introduced, including profit maximization, revenue maximization, growth maximization, and managerial utility maximization. The principles of opportunity cost, margins, and time value of money are also summarized.
Business Economics - Unit-2 for IMBA, Osmania UniversityBalasri Kamarapu
This document provides an overview of Business Economics as a course. It outlines 5 units that will be covered: 1) nature and scope of business economics, 2) demand concepts and elasticity of demand, 3) production and cost concepts, 4) budget line, and 5) market structures and pricing. Key concepts from Unit 2 on demand include the law of demand, determinants of demand, elasticity of demand including types and uses, the concept of supply, determinants of supply, and the law of supply. Elasticity of supply is also briefly discussed including different types.
This document discusses the field of economics and managerial economics. It defines economics as the study of how societies allocate scarce resources among competing uses. It then outlines several areas economics explores, such as markets, monetary policy, trade, and growth. Managerial economics is defined as applying economic principles and analysis to business decision-making. The purpose is to help managers make optimal choices given limited resources. Some key topics in managerial economics include demand, production, market structure, and capital investment. It also examines how managerial economics relates to other business disciplines like marketing, finance, and accounting.
This document discusses key concepts in economics including:
1. Economics analyzes the production, distribution, and consumption of goods and services. Microeconomics focuses on individual agents like consumers and firms, while macroeconomics looks at whole economies.
2. Scarcity means human wants exceed limited resources, so not all goals can be achieved. Opportunity cost is the next best alternative given up when making a choice.
3. The basic economic problems are what to produce, how to produce it, and who gets it. Market and planned economies answer these differently based on private vs public decision making.
BNF 1113 Introduction to Microeconomics.pptxsadiqfarhan2
This document provides an overview of a microeconomics course. The course aims to teach students microeconomic concepts and theories in order to analyze business opportunities and risks. Key topics covered include demand/supply, consumer and firm behavior, market structures, and cost theory. Students will be evaluated based on midterm and final exams. Recommended textbooks are provided.
This document provides an introduction and overview of microeconomics. It defines microeconomics as the study of individual economic decision-making units like households and firms, and the determination of prices and outputs. The document outlines some key microeconomics concepts like scarcity, choice, opportunity cost, production possibility frontier, factors of production, and circular flow. It also discusses different economic systems and schools of economic thought.
How to Build a Module in Odoo 17 Using the Scaffold MethodCeline George
Odoo provides an option for creating a module by using a single line command. By using this command the user can make a whole structure of a module. It is very easy for a beginner to make a module. There is no need to make each file manually. This slide will show how to create a module using the scaffold method.
This presentation was provided by Steph Pollock of The American Psychological Association’s Journals Program, and Damita Snow, of The American Society of Civil Engineers (ASCE), for the initial session of NISO's 2024 Training Series "DEIA in the Scholarly Landscape." Session One: 'Setting Expectations: a DEIA Primer,' was held June 6, 2024.
A workshop hosted by the South African Journal of Science aimed at postgraduate students and early career researchers with little or no experience in writing and publishing journal articles.
How to Add Chatter in the odoo 17 ERP ModuleCeline George
In Odoo, the chatter is like a chat tool that helps you work together on records. You can leave notes and track things, making it easier to talk with your team and partners. Inside chatter, all communication history, activity, and changes will be displayed.
A Strategic Approach: GenAI in EducationPeter Windle
Artificial Intelligence (AI) technologies such as Generative AI, Image Generators and Large Language Models have had a dramatic impact on teaching, learning and assessment over the past 18 months. The most immediate threat AI posed was to Academic Integrity with Higher Education Institutes (HEIs) focusing their efforts on combating the use of GenAI in assessment. Guidelines were developed for staff and students, policies put in place too. Innovative educators have forged paths in the use of Generative AI for teaching, learning and assessments leading to pockets of transformation springing up across HEIs, often with little or no top-down guidance, support or direction.
This Gasta posits a strategic approach to integrating AI into HEIs to prepare staff, students and the curriculum for an evolving world and workplace. We will highlight the advantages of working with these technologies beyond the realm of teaching, learning and assessment by considering prompt engineering skills, industry impact, curriculum changes, and the need for staff upskilling. In contrast, not engaging strategically with Generative AI poses risks, including falling behind peers, missed opportunities and failing to ensure our graduates remain employable. The rapid evolution of AI technologies necessitates a proactive and strategic approach if we are to remain relevant.
বাংলাদেশের অর্থনৈতিক সমীক্ষা ২০২৪ [Bangladesh Economic Review 2024 Bangla.pdf] কম্পিউটার , ট্যাব ও স্মার্ট ফোন ভার্সন সহ সম্পূর্ণ বাংলা ই-বুক বা pdf বই " সুচিপত্র ...বুকমার্ক মেনু 🔖 ও হাইপার লিংক মেনু 📝👆 যুক্ত ..
আমাদের সবার জন্য খুব খুব গুরুত্বপূর্ণ একটি বই ..বিসিএস, ব্যাংক, ইউনিভার্সিটি ভর্তি ও যে কোন প্রতিযোগিতা মূলক পরীক্ষার জন্য এর খুব ইম্পরট্যান্ট একটি বিষয় ...তাছাড়া বাংলাদেশের সাম্প্রতিক যে কোন ডাটা বা তথ্য এই বইতে পাবেন ...
তাই একজন নাগরিক হিসাবে এই তথ্য গুলো আপনার জানা প্রয়োজন ...।
বিসিএস ও ব্যাংক এর লিখিত পরীক্ষা ...+এছাড়া মাধ্যমিক ও উচ্চমাধ্যমিকের স্টুডেন্টদের জন্য অনেক কাজে আসবে ...
it describes the bony anatomy including the femoral head , acetabulum, labrum . also discusses the capsule , ligaments . muscle that act on the hip joint and the range of motion are outlined. factors affecting hip joint stability and weight transmission through the joint are summarized.
Executive Directors Chat Leveraging AI for Diversity, Equity, and InclusionTechSoup
Let’s explore the intersection of technology and equity in the final session of our DEI series. Discover how AI tools, like ChatGPT, can be used to support and enhance your nonprofit's DEI initiatives. Participants will gain insights into practical AI applications and get tips for leveraging technology to advance their DEI goals.
Assessment and Planning in Educational technology.pptxKavitha Krishnan
In an education system, it is understood that assessment is only for the students, but on the other hand, the Assessment of teachers is also an important aspect of the education system that ensures teachers are providing high-quality instruction to students. The assessment process can be used to provide feedback and support for professional development, to inform decisions about teacher retention or promotion, or to evaluate teacher effectiveness for accountability purposes.
Main Java[All of the Base Concepts}.docxadhitya5119
This is part 1 of my Java Learning Journey. This Contains Custom methods, classes, constructors, packages, multithreading , try- catch block, finally block and more.
Exploiting Artificial Intelligence for Empowering Researchers and Faculty, In...Dr. Vinod Kumar Kanvaria
Exploiting Artificial Intelligence for Empowering Researchers and Faculty,
International FDP on Fundamentals of Research in Social Sciences
at Integral University, Lucknow, 06.06.2024
By Dr. Vinod Kumar Kanvaria
Pride Month Slides 2024 David Douglas School District
Economics unit 1
1. Managerial Economics and Indian
Economic Policy
Dr.M.Kalaivani, Assistant Professor(Sr.G)
DOMS
SRM INSTITUTE OF SCIENCE AND TECHNOLOGY,
VADAPALANI CAMPUS,
DOMS
2. TEXT BOOK
• Mark Hirschey and Bentzen, Managerial Economics.
Cengage Learning, 2017.
• Uma Kapila, “Indian Economy, 17th Edition: Performance
and Policies”, Academic Foundation, 2017.
3. Introduction: Meaning, Nature, Scope and Importance of Managerial
Economics-
Meaning of Demand: Theory of demand, Law of Demand, Elasticity of
Demand, Shifting and expansion of demand– Exceptions to law of demand.
Demand Forecasting, Methods of Demand Forecasting
Meaning of Supply: Theory of supply- Market Equilibrium
UNIT I - The Economic Way of Thinking
8. INTRODUCTION
• Economics is a study of ‘Choices’ or ‘Choice- Making’
• Choice-making is relevant for every individuals, families,
societies, institutions, areas, state and nations and for the whole
world.
• Hence, Economics has wide applications and relevance to all
individuals and institutions.
9. Economics
Economics: ‘A Queen of Social Sciences’
Economics ‘OIKOS’ ‘NOMOS’ (Greek Words)
‘OIKOS’
‘NOMOS’
‘HOUSE’
‘MANAGEMENT’
According to J.S. Mill Economics is “The practical science of
production and distribution of wealth.”
‘It is the study of How people produce and spend
income.’
10. Economics as defined by authors of
Economics books
Paul Samuelson (Economics)
“the study of how people and society end up choosing, with or without use of money, to employ
scarce resources that could have alternative uses to produce various commodities among
various persons and groups in society.”
Roger Le Roy Miller (Economics, Today and Tomorrow) “Economics concerns situations in
which choices must be made about how to use limited resources, when to use them and for
what purposes. Resources can be defined as the things people use to make the commodities
they want.”
Hall and Loeberman (Macroeconomics: Principles andApplications)
“The study of choice under the condition of scarcity”
11. Common words among definitions…
Scarcity- a situation wherein the amount of something
available is insufficient to satisfy the desire for it.
Resources-The labor, capital, land and natural resources and
entrepreneurship that are used to produce goods and services.
Unlimited – without limits, infinite
Wants –desires
12. Finally…
ECONOMICS – is a social science that deals with how people
organize themselves in order to allocate scarce resources in
order to produce goods and services that will satisfy the
unlimited and multiplying wants and needs of man.
13. DIVISIONS OF ECONOMICS
ECONOMICS
MICROECONOMICS
Specific
Deals with the economic behavior of
the individual units such as
consumers, firms, the owners of factors
of productions
MACROECONOMICS
General, economy as a whole
Deals with the economic behavior of the
whole economy or its aggregate such as
government, business, unemployment,
inflation and the like.
Refers to management of income,
expenditures, wealth or resources of a
nation.
14.
15. Managerial Economics
• Branch of Economics.
• ‘Managerial Economics is the study of Economic
Theories, Principles and Concepts which is used in
Managerial Decision Making.’
• ‘Managerial Economics is the Application of various
Theories, Concepts and Principles of Economics in the
Business Decisions.’
• It also Includes ‘The Application of Mathematical and
Statistical tools in Management decisions.’
17. Managerial Economics
Managerial Decisions
Choice of product
Choice of production method
Choice of price, Etc…
Managerial Economics
‘Application of Economic
Concepts, Theories and
Analytical tools to find
solutions for managerial
problems.
Application of
Economic concepts,
Theories and
Principles in
decision Making
Application of
Analytical tools
such as,
Mathematical and
Statistical tools
18. Difference between Managerial Economics
and Economics
•Economics
1. Comprehensive and wider scope
2. It has both Micro and Macro in nature
3. It is both Normative and positive science
4. It is concerned with the formulation of
theories and principles
5. It discusses general problems
Managerial Economics
1.Narrow and limited scope
2.It is essentially Micro in nature
and Macro in analysis
3.It is mainly a Normative science
4.It is concerned with the
application of theories and
principles of economics
5.It discusses Individual problems
19. Nature of Managerial Economics
Science as well as Art of decision making.
It is essentially Micro in nature but Macro in analysis.
It is mainly a Normative science(assumed) but positive in
analysis.
It is concerned with the application of theories and principles of
economics.
It discusses Individual problems.
It is dynamic in nature not a Static.
It discuss the economic behavior of a firm.
It concentrates on optimum utilization of resources.
20. Scope of Managerial Economics
Objectives of a Firm.
Demand Analysis and Forecasting.
Production and cost analysis.
Pricing decisions.
Profit Analysis
Capital management.
Market structure.
Inflation and economic conditions.
21. Importance OF ME
Basis of Business Policies
Business Planning and forecasting
Its very much helpful to Analyse Cost and production level
Predicting business future
Helpful in Understanding the External forces constituting the
environment.
Reconciling theoretical concepts of economics in relation to the
actual business behavior and conditions.
22. DEMAND
• Meaning of Demand: Theory of demand, Law of Demand, Elasticity
of Demand, Shifting and expansion of demand– Exceptions to law of
demand.
24. Demand Analysis
Meaning of Demand:
Demand for a particular commodity refers to the
commodity which an individual consumer or household is
willing to purchase per unit of time at a particular price.
Demand for a particular commodity implies:
Desire of the customer to buy the product;
The customers willingness to buy the product;
Sufficient purchasing power in the customers possession to buy
the product.
The demand for a particular commodity by
as an Individual demand for the commodity and
Summation of the individual demand is known as the
Market demand.
26. DEMAND CURVE
• It shows the price and output relationship.
• Tabular representation of price and demand
• The geometrical representation of demand schedule is
called the demand curve.
27. LAW OF DEMAND
• As the price of a good rises, quantity demanded of that good
falls.
• As the price of a good falls, quantity demanded of that good
rises.
• Ceteris paribus("all other things being equal.”)
Law of demand expresses the functional relationship D = f(P)
where, P is price and
D is quantity demanded of a commodity
28. DETERMINANTS OF DEMAND
• Price of Product
• Income of the Consumer
• Price of Related Good
• Tastes and Preferences
• Advertising
• Consumer’s expectation of future Income and Price
• Growth of Economy
• Seasonal conditions
• Population
29. DEMAND FUNCTION
• When we express the relationship between demand and its
determinant mathematically, the relationship is known as demand
function.
• The demand for product X can be written in functional form
as-
Dx= f (Px, Y, Po, T, A, Ef, N )
Px – price of the product x, Y- Income, Po- Price of other
products, T- Taste and Preference, A- Advertising, Ef-Expected
future price and income,N-Other determinents
30. Exceptions and Limitations of law of Demand
•Inferior goods/ Giffen goods
•Veblen Effect (Goods having prestige value)
•Price expectation
•Fear of shortage
•Change in income
•Change in fashion
•Basic necessities of life
•Ignorance
31. Giffen Goods / paradox
• Giffen goods are the inferior goods whose demand increases with the increase in its
prices. There are several inferior commodities, much cheaper than the superior
substitutes often consumed by the poor households as an essential commodity.
• Whenever the price of the Giffen goods increases its quantity demanded also increases
because, with an increase in the price, and the income remaining the same, the poor
people cut the consumption of superior substitute and buy more quantities of Giffen
goods to meet their basic needs.
32. Veblen effect
• Veblen effect is for prestigious goods like diamond
People sometimes buy certain commodities like diamonds at high prices not due to their
intrinsic worth but for a different reason. The basic object is to display their riches to
the other members of the community to which they themselves belong.
This is known as ‘snob appeal’, which induces people to purchase items of
conspicuous consumption. Such a commodity is also known as Veblen good (named
after the economist Thorstein Veblen) whose demand rises (fails) when its price rises
(falls).
33. Why the demand curve slope downwards?
• Law of diminishing marginal utility.
• Income effect.
• Substitution effect.
• New consumers.
• Old Buyers.
34. Why demand Curve Slope Downwards
• Law of diminishing the marginal utility
• The law of diminishing marginal utility states that with each increasing quantity of the commodity, its marginal
utility declines.
• For example, when a person is very hungry the first chapatti that he eats will give him the most satisfaction. As
he will consume more chapattis, his level of satisfaction will diminish.
• Substitution effect
• Tea and coffee are substitute goods. If the price of tea rises, consumers will shift to coffee.
• Income effect
• Income increases the purchasing power of the people will get increase
• New Consumer
• Due to the fall in the prices of a commodity new buyers get attracted towards it and buy it. Thus, this increases
the demand for the commodity.
• Old buyers
• When the prices of the goods fall the old buyers tend to buy more goods than usual thereby increasing its
demand. This causes the downward sloping of demand curve.
35. ELASTICITY OF DEMAND
• Elasticity of demand is defined as the responsiveness of the quantity of a good to
changes in one of the variables on which demand depends-
1. Price Elasticity of the Demand
2. Income Elasticity of the Demand
3. Various otherfactors
DEFINATION-’’The elasticity of demand measures the response of the demand for the
commodity to change in price”.
36. Definition Of Price Elasticity Of Demand
• The change in the quantity demanded of a product due to
a change in its price is known as Price elasticity of
demand. Thus, the sensitiveness or responsiveness of
demand to change in price is as called elasticity of
demand
37. Computing the Price Elasticity of Demand
The price elasticity of demand is computed as the percentage change in
the quantity demanded divided by the percentage change in price.
Price Elasticity = Percentage Change in Qd
Of Demand Percentage Change in Price
38. Kinds Of Price Elasticity Of Demand
1) Perfectly elastic demand
2) Relatively elastic demand
3) Elasticity of demand equal to utility
4) Relatively inelastic demand
5) Perfectly inelastic demand
39. Perfectly Elastic Demand
- Elasticity equals infinity
Quantity Demand
Price
Demand
$4
1. At any price
above $4, quantity
demanded is zero.
2. At exactly $4,
consumers will
buy any quantity.
3. At a price below $4,
quantity demanded is infinite.
When there is little
changes in price will
have infinite changes
in Demand. it is known
as perfect elastic
demand.
40. Relatively Elastic Demand
- Elasticity is greater than 1
Quantity
Price
4
$5
1. A 25%
increase
in price...
Demand
100
50
2. ...leads to a 50% decrease in quantity.
When the proportionate
change in demand is
greater than the
proportionate changes in
price, it is known as
relatively elastic demand
41. Unit Elastic Demand
- Elasticity equals 1
Quantity
Price
4
$5
A 25%
increase
in price...
Demand
100
75
leads to a 25% decrease in quantity.
When the proportionate
change in demand is equal to
proportionate changes in
price, it is known as unitary
elastic demand
42. Relatively Inelastic Demand
- Elasticity is less than 1
Quantity
Price
4
$5
A 25%
increase
in price
Demand
100
90
leads to a 10% decrease in quantity.
When the proportionate change in
demand is less than the proportionate
changes in price, it is known as
relatively inelastic demand
43. Perfectly Inelastic Demand
- Elasticity equals 0
Quantity
Price
4
$5
Demand
100
Quantity demanded
Price
When a change in price,
howsoever large change
no changes in quantity
demand, it is known as
perfectly inelastic demand
44. ALL KINDS OF DEMAND CAN BE SHOWN IN ONE
DIAGRAM AS FOLLOW
D
D2
D3
D4
Y
X
0 D5
DEMAND
P
R
I
C
E
WHERE
D1) Perfectly elastic
demand
D2)Relatively elastic
demand
D3)Elasticity of demand
equal to utility
D4)Relatively inelastic
demand
D5)Perfectly inelastic
demand
D1
45. Determinants of Elasticity of Demand
• Availability of Substitutes
• Proportion of Income spent on Commodity
• Different Use of Commodity
• Habit of Consumer
• Nature of the Commodity
• Postponement of the Use
46. (2) Income Elasticity Of Demand
Income elasticity of demand measures how much
the quantity demanded of a good responds to a
change in consumers’ income.
It is computed as the percentage change in the
quantity demanded divided by the percentage
change in income.
47. Measurement Of Income Elasticity Of Demand
Proportionate change in Demand
Income Elasticity Of Demand =
Proportionate change in Income
i.e.
Income Elasticity Of Demand =
Q Y
∆q ∆ y
+
48. Measurement Of Income Elasticity Of Demand
• Here , ∆q = Change in the quantity demanded.
Q = Original quantity demanded.
∆y = Change in income. Y =
Original income.
• For e.g. ,when Income of the consumer = 2,500/-
, he purchases 20 units of X, when income =
3,000/- he purchases 25 units of X
49. Types Of Income Elasticity Of Demand
• Positive Income elasticity of demand
• Negative Income elasticity of demand
• Zero Income elasticity of demand
50. Positive Income elasticity of demand
Y
D
Y1
Y
D
O X
D D1
Quantity Demanded
Income Income increases
equally the
demand is also
increasing
51. Negative Income elasticity of demand
Income
Y1
Y
Total Revenue
D1 D
Quantity Demanded (000s)
if the quantity
demanded for a
commodity decreases
with the rise in income
of the consumer and
vice versa
D
52. Zero Income elasticity of demand
Y
X
O
D
D
Quantity Demanded
Income
Income increases the
demand of the
product is stable
there is no changes
in demand
53. Cross Elasticity of Demand
•Substituted products elasticity of demand
Eg- Coffee and Tea, Pepsi& Coke, Car & Bike,
Apple &Banana
•Complementary products elasticity of demand
56. (3) Elasticity Of Substitution
• The selection between two product or thing is called
substitution
• So Elasticity of Substitution measures the rate at which
the particular product is substituted .
• Thus EOS is the degree to which one product could be
substituted in context of price and proportion
Eg – Coffee and Tea, Pepsi& Coke, Car & Bike, Apple
&Banana
57. Elasticity Of Substitution
Proportionate change in the quantity ratios
of goods x & y
Proportionate change in the price ratios of
goods x & y.
Elasticity of Substitution =
58. Substitution Effect
Price of Coffee
Quantity demanded of Tea
10
5
10 units 20 units
D
When there is a change
in product X there
would a change in
Quantity demanded in
product Y
59. Elasticity of Complimentary
•Complimentary elasticity of demand express the
relationship between the change in the demand for a
given product in response to a change in the price of
some other product(Substituted product)
• E.g. if the X tea demand reduces tremendously than it
effect could be seen in demand of sugar and
milk.(Complementary Products)
60. Complimentary elasticity of demand
• say car, and B, say gas, are complimentary goods, and an
increase in price of B will reduce the quantity demanded of
A. This is because people consume both A and B as a bundle
and an increase in price reduces their purchasing power and
decreases quantity demanded.
61. Measurement complimentary Elasticity of
Demand
Proportionate change in Price of
product Y
i.e.
∆qx
Qx Py
∆p y
+
Proportionate change in Demand
for product X
Cross Elasticity of Demand =
Cross Elasticity of Demand =
62.
63. Advertising Elasticity of Demand
• Advertising elasticity of demand is the measure of
the rate of change in demand due to change in
advertising expenditure
• Advertising elasticity of demand refers to the
proportionate change in demand of a commodity due to
proportionate change in advertising expenses.
64. Advertising Elasticity of Demand
Proportionate change in Advertising
expenditure
i.e.
∆qx
Q A
∆a
÷
Proportionate change in Quantity
Demand for product
Advertising Elasticity of Demand =
Advertising Elasticity of Demand =
65. Factors Influencing Elasticity Of Demand
• Nature of commodity
• Availability of substitutes
• Number of uses
• Consumers income
• Level of price and range of price change
• Proportion of expenditure
• Durability of the commodity
• Habit of the consumer
• Complementary goods
• Time
• Recurrence of demand
• Possibility of postponement
66. As against this, a shift in the demand curve
represents a change in the demand for the
commodity
Price remains unchanged, the rightward shift of
the demand curve from D to D1 is termed as an
increase in demand, as demand goes up from Q
to Q1. The leftward shift of the demand curve from
D to D2 is known as a decrease in demand, as
demand goes down from Q to Q2.
Shifting and expansion of demand
68. INTRODUCTION
Our life is full of uncertainties and so is the buisness. Changes are even
seen in the behaviour of consumer depending on his tastes and preferences
over time .
In short all calculations and speculations of a firm regarding the details
of his product depends on demand.
And in this topic we will study about various methods to calculate those
predictions and objectives behind them.
69. MEANING
• A forecast is a guess or anticipation or a prediction about any event which is
likely to happen in the future.
• For example : An individual may forecast his job prospects, a consumer may
forecast an increase in his income and therefore purchases, similarly a firm
may forecast the sales of its product.
• Demand Forecasting means predicting or estimating the future demand for a
firm’s product or products .
• Important aid in effective and efficient planning It is backbone of any
business
70. NEED AND SIGNIFICANCE
• It is necessary to forecast demand in buisness because :
1.Effective planning : provides scientific and reliable basis for anticipating future
operations
2.Reduction of uncertainty : aims at reducing the area of uncertainty that
surrounds mangerial decision making with respect to costs , production, sales ,
profit etc .
3.Investment decision : investments are made keeping in mind the the returns
and returns depend on market demand.
4. Resource allocation : efficient allocation of resources when future estimates
are available .
71. 5. Pricing decisions : in order to pursue optimal pricing strategies firm need to have
complete information about the future demand.Two concepts arises here :
(a)Overoptimistic :these estimates may lead to an excessively high price and lost sales.
(b)Overpessimistic : these estimates of demand may lead to a price which is set too
low resulting in losses.
6.Competitve strategy : the level of demand for a product will influence decisions ,
which the firm will take regarding the non-price factors .
7. Managerial control : forecasting disclose the areas where control is lacking . It is
must in order to control costs of production .
73. A) Qualitative Techniques/ Opinion Polling Method
-In this method, the opinion of the buyers, sales force and expert
could be gathered to determine the emerging trend in the market.
- Suited for short term demand forecasting.
-Demand forecasting for new product can b made by qualitative
techniques.
1) Consumer Survey Method
2) Sales Force Opinion Method
3) Delphi Method
74. 1) Consumer Survey Method
Survey method include:
a) Complete Enumeration Survey
b) Sample Survey and Test Marketing
c) End Use
In this method, an organization conducts surveys with consumers to
determine the demand for their existing products and services and anticipate
the future demand accordingly.
75. 1) Consumer Survey Method
a) Complete Enumeration Survey:
Under this method, a forecaster contact almost all the potential users of the product
and ask them about their future purchase plan. The probable demand for a product
can be obtained by adding all the quantities indicated by the consumers.
b) Sample Survey & Test Marketing:
Only few customers selected and their views collected. Based on the assumption that
the sample truly represents the population.
This method is simple and does not cost much.
The main disadvantage is that the sample may not be a true representation of the
entire population.
76. 1) Consumer Survey Method
c) End Use Method:
This method Focuses on Forecasting the demand for
intermediary Goods. Under this method, the sales of a Product are projected
through a survey of its end users.
Example:
Milk is a commodity which can be used as an intermediary good for the
production of ice cream, and other dairy products.
77. 2) Sales Force Opinion Method
-In this method , instead of consumers, the opinion of the opinion of salesman is
sought.
-It is also referred as the “grass root approach” as it is a bottom- up method that
requires each sales person in the company to make an individual forecast for his or her
particular sales territory.
-The main advantage is that the collecting data from its own employees is easier for a
firm than to do it from external parties.
-The main disadvantage is that the sales force may give biased views as the projected
demand affects their future job prospects.
78. 3) Expert Opinion Method / Delphi Technique
This method is also known as expert opinion method.
In this method seeks the opinion of groups of Expert through mail about the expected level
of Demand..
If the forecasting is based on the opinion of several experts, then it is known panel
consensus
These opinion exchanged among the various experts and their reactions are sought and
analyzed.
The advantage is that the forecast is reliable as it is based on the opinion of people
who know the product very well.
The disadvantage is that the method is subjective and not based on scientific analysis.
79. B) Quantitative Techniques/ Statistical or Analytical Methods
These are forecasting techniquesthat make use of historical
quantitative data.
A statistical concept is applied to the existing data in order to generate the
predicted demand in the forecast period.
1) Trend Projection Method
2) Barometric Method
3) Regression Method
4) Econometric Method
80. 1) Trend Projection Method
-An old firm can use its own data of past years regarding sales in past years.
-These data are known as time series of sales.
-Assumes that past trend will continue in future.
The trend can be estimated by using any one of the following methods:
a)Graphical Method
b) Least Square Method
c)Time Series Data
d) Moving Average Method
e)Exponential Smoothing
81. a) Trend Projection Method :
• This method is used when a detailed estimate has to be made.
• Time plays a n important role in this method .
• This method uses historical and cross –sectional data for estimating
demand
This technique assumes that whatever has been the pattern of demand in
the past, will continue to hold good in the future as well.
82. Graphical method :
• A trend line can be fitted through a series graphically .
• Old values of sale for different areas are plotted on graph and a free hand
curve is drawn passing through as many points as possible .
• Based on trend equation, we find ‘Line of Best Fit’ and then it is
projected in a scatter diagram,dividing points equally on both sides
83. Least Square Method :
• It is a mathematical procedure for fitting a line to a set of
observed data points.
• The "least squares" method is a form of mathematical regression
analysis used to determine the line of best fit for a set of data,
providing a visual demonstration of the relationship between the
data points. Each point of data represents the relationship
between a known independent variable and an unknown
dependent variable.
84. c) Time Series Data:
• Data collected over a period of time recording historical changes in price,
income, and other relevant variables influencing demand for a commodity.
d) Moving Average Method:
• The moving average of the sales of the past years is computed.
• The computed moving average is taken as forecast for the next year or
period.
• This is based on the assumption that future sales are the average of the past
sales.
85. e) Exponential Smoothing:
• It uses a weighted average of past data as the basis for a forecast.
• The procedure gives heaviest weight to more recent information and
smaller weights to observations in the more distant past.
• The reason for this is that the future is more dependent on the recent
past than on the distant past.
86. 2) Barometric Method
This method is based on the past demands of the product and tries to
project the past into the future. The economic indicators are used to
predict the future trends of the business. Based on future
trends, such as saving, investment, and income. This technique helps
in determining the general trend of business activities.
For example, suppose government allots land to the XYZ society for
constructing buildings. This indicates that there would be high
demand for cement, bricks, and steel.
87. 3) Regression Method
This method is undertake to measure the relationship between two variables
where correlation appears to exist.
E.g. The age of the air condition machine and the annual repair expenses.
This method is purely based on the statistical data.
4) Econometric Method
It is assumed that demand is determined by one or more variables. E.g. income,
population, etc.
90. What Is Supply?
● Supply is the willingness and ability of the sellers to produce and
offer to sell different quantities of a good at different prices during a
specific time period.
● Quantity supplied is the number of units of a good produced
and offered for sale at a specific price.
94. THESUPPLYCURVE
• The Supply Curve is the graphical representation of
Supply Schedule.
Price of Coffee Quantity supplied of Coffee
1
2
6
9
3 12
4 15
5 18
95. DETERMINANTS OF SUPPLY
• Px- Price of the commodity
• Pr- Price of related goods
• Pf- price of factors of production
• G- Government Policy
• St- State of technology
• F-Number of firms
• S-Season and Weather
• E-Future Expecations
96. SHIFTIN SUPPLYCURVE
{CHANGES IN SUPPLY}
• Expansion/Contraction in supply curve occurs due
to change in its own Price others factors
Remaining constant.
97. Price Elasticity of Supply
The degree of sensitivity of producers to a change in price is measured by the concept
of price elasticity of supply.
Price elasticity of supply is the percentage change in quantity supplied resulting from a
percent change in price.
Price Elasticity of Supply =
Percentage Change in Quantity Supply
Percentage Change in Price
98. Types of Elasticity of Supply
Perfectly Elastic ES =
Relatively Elastic ES >1
Unit Elastic ES =1
Relatively Inelastic ES <1
Perfectly Inelastic ES =0
99. A Variety of SupplyCurves
Perfectly Inelastic Supply - Elasticity equals 0
Price
100Quantity Supply
$10
$5
1. An increase in price
2. leaves the quantity
supplied unchanged.
Price
Quantity Supply
100
$5
$4
1. A 22 % increase in price...
2. ...leads to 10% increase in
Quantity.
110
Supply
Supply
Relatively Inelastic Supply- Elasticity is less than 1
100. Unit Elastic Supply - Elasticity equals 1
Relatively Elastic Supply - - Elasticity is greater than 1
A Variety of SupplyCurves
Price
Quantity Supply
$5
$4
1. A 25 % increase in price...
2. ...leads to a 25% increase in
Quantity Supply
Price
Quantity Supply
100
$5
$4
1. A 22 % increase in price...
2. …leads to a 67% increase
in Quantity Supply
167
100 125
101. Quantity Supply
Supply
$4
Price
1. At any price
above $4, quantity
supplied is infinite.
2. At exactly $4,
producers will
supply any quantity.
3. At a price below$4,
Quantity supplied is zero.
Perfectly Elastic Supply - Elasticity equals infinity
102. Market Equilibrium
• The operation of the market depends on the
interaction between buyers and sellers.
• An equilibrium is the condition that exists when quantity
supplied and quantity demanded are equal.
• At equilibrium, there is no tendency for the market price to
change.
104. 2 Marks
• Define Economics
• Define Managerial economics
• What are the major classification of Economics
• Economics is science or art?
• Scarcity of resources – describe
• Differentiate Managerial economics and Economics
• Define Demand
• What is Giffen paradox?
• What is Veblen effect?
• What is the law of demand
• Why demand curve slopes downward
• What are the exceptions in law of demand
• What determines law of demand
• Define law of diminishing marginal utility
• Define Demand Forecasting
• Why demand forecasting is important?
• Define Elasticity of Demand
• How will you measure the price elasticity of demand
• Define Substitution product
• Give an example for complimentary products
• Define supply
• Why supply cure slopes downward
• What is the relationship between Supply and price
105. 10 Marks
• Explain the Nature and characteristics of Managerial economics
• Define Managerial economics? Explain the scope of managerial economics?
• Why ME is Important?
• Differentiate Economics and Managerial Economics
• Explain the Determinants of Demand
• Explain the Demand Function
• Explain the Law of Demand
• Explain Elasticity of Demand
• What are different types of price elasticity of demand?
• Explain the Exception to the law of Demand
• Explain Law of Supply
• Explain the elasticity of Supply
• Shifting and Expansion of Demand curve – Explain
• Market equilibrium – Explain
• Explain the demand forecasting Methods
• What are the factors influencing the Supply