Scarcity exists because human wants are unlimited while resources are limited. This forces individuals and societies to make choices. Economics is the study of how people make choices to allocate scarce resources. Microeconomics examines individual decision-making units while macroeconomics takes a broader view of the overall economy. Models are used to understand and predict economic events by simplifying reality and testing assumptions like ceteris paribus, which holds all other factors constant.
The activity of seeking wealth is as old as Human
Civilization. Human beings either as individuals or as groups
or as large kingdoms and empires have always been engaged
in acquiring and increasing the material wealth.
However, a discipline study of the wealth producing
activities was commenced about 230 years back when Adam
Smith, the father of Economics, published “The Nature and
Causes of Wealth of Nations”. Economics, as a discipline,
constitute the most important subject to analyze activities
related to wealth creation and distribution. The dimensions of
the subject of Economics are truly vast and encompasses all
aspects of our lives.
Welfare economics is the study of how the allocation of
resources and goods affects social welfare. This relates directly
to the study of economic efficiency and income distribution, as
well as how these two factors affect the overall well-being of
people in the economy. In practical terms, welfare economists
seek to provide tools to guide public policy to achieve beneficial
social and economic outcomes for all of society. However,
welfare economics is a subjective study that depends heavily on
chosen assumptions regarding how welfare can be defined,
measured, and compared for individuals and society as a
whole.
The activity of seeking wealth is as old as Human
Civilization. Human beings either as individuals or as groups
or as large kingdoms and empires have always been engaged
in acquiring and increasing the material wealth.
However, a discipline study of the wealth producing
activities was commenced about 230 years back when Adam
Smith, the father of Economics, published “The Nature and
Causes of Wealth of Nations”. Economics, as a discipline,
constitute the most important subject to analyze activities
related to wealth creation and distribution. The dimensions of
the subject of Economics are truly vast and encompasses all
aspects of our lives.
Welfare economics is the study of how the allocation of
resources and goods affects social welfare. This relates directly
to the study of economic efficiency and income distribution, as
well as how these two factors affect the overall well-being of
people in the economy. In practical terms, welfare economists
seek to provide tools to guide public policy to achieve beneficial
social and economic outcomes for all of society. However,
welfare economics is a subjective study that depends heavily on
chosen assumptions regarding how welfare can be defined,
measured, and compared for individuals and society as a
whole.
Microeconomics: Introduction and basic conceptsPie GS
1.1 Meaning and definition of microeconomics
1.2 Basic microeconomic issues: scarcity, efficiency and
alternative uses of resources
1.3 Differences between microeconomics and macroeconomics
1.4 Opportunity cost, normative economics and positive
economics
1.5 Importance of microeconomics in business decision making
1.6 Economic models: meaning and use of economic models
introduction , meaning ,terminology, economic efficiency ,model of efficiency,type of efficiency ,sufficient condition ,key concepts,monopoly and allocative inefficiency ,failure of efficiency ,key concept, summary etc.
Economics comes from the Greek word oikonomia which means household chores. Economics is considered a field of social science. Economics is relevant because it is part of everybody’s life. As a science, Economics is related to other sciences.
In monetary economics, the quantity theory of money (QTM) states that the general price level of goods and services is directly proportional to the amount of money in circulation, or money supply. The theory was challenged by Keynesian economics,but updated and reinvigorated by the monetarist school of economics. While mainstream economists agree that the quantity theory holds true in the long run, there is still disagreement about its applicability in the short run. Critics of the theory argue that money velocity is not stable and, in the short-run, prices are sticky, so the direct relationship between money supply and price level does not hold.
Alternative theories include the real bills doctrine and the more recent fiscal theory of the price level.
Microeconomics: Introduction and basic conceptsPie GS
1.1 Meaning and definition of microeconomics
1.2 Basic microeconomic issues: scarcity, efficiency and
alternative uses of resources
1.3 Differences between microeconomics and macroeconomics
1.4 Opportunity cost, normative economics and positive
economics
1.5 Importance of microeconomics in business decision making
1.6 Economic models: meaning and use of economic models
introduction , meaning ,terminology, economic efficiency ,model of efficiency,type of efficiency ,sufficient condition ,key concepts,monopoly and allocative inefficiency ,failure of efficiency ,key concept, summary etc.
Economics comes from the Greek word oikonomia which means household chores. Economics is considered a field of social science. Economics is relevant because it is part of everybody’s life. As a science, Economics is related to other sciences.
In monetary economics, the quantity theory of money (QTM) states that the general price level of goods and services is directly proportional to the amount of money in circulation, or money supply. The theory was challenged by Keynesian economics,but updated and reinvigorated by the monetarist school of economics. While mainstream economists agree that the quantity theory holds true in the long run, there is still disagreement about its applicability in the short run. Critics of the theory argue that money velocity is not stable and, in the short-run, prices are sticky, so the direct relationship between money supply and price level does not hold.
Alternative theories include the real bills doctrine and the more recent fiscal theory of the price level.
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.
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.
PPT_Unit-1.pptxEconomics unit 1Economics unit 1SkyCook1
Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1Economics unit 1
An economic theory
Risk bearing theory of Knight
Innovation theory of Schumpeter
Leibenstein X-efficiency theory
Harvard School theory
Theory of Market Equilibrium by Hayek
McClelland’s Achievement Motivation Theory
Theory of Change
Theory of Adjustment of Price
Theory of Entrepreneurial Supply
Theory of Personal Resourcefulness
Theory of Cultural Values
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Sustainability has become an increasingly critical topic as the world recognizes the need to protect our planet and its resources for future generations. Sustainability means meeting our current needs without compromising the ability of future generations to meet theirs. It involves long-term planning and consideration of the consequences of our actions. The goal is to create strategies that ensure the long-term viability of People, Planet, and Profit.
Leading companies such as Nike, Toyota, and Siemens are prioritizing sustainable innovation in their business models, setting an example for others to follow. In this Sustainability training presentation, you will learn key concepts, principles, and practices of sustainability applicable across industries. This training aims to create awareness and educate employees, senior executives, consultants, and other key stakeholders, including investors, policymakers, and supply chain partners, on the importance and implementation of sustainability.
LEARNING OBJECTIVES
1. Develop a comprehensive understanding of the fundamental principles and concepts that form the foundation of sustainability within corporate environments.
2. Explore the sustainability implementation model, focusing on effective measures and reporting strategies to track and communicate sustainability efforts.
3. Identify and define best practices and critical success factors essential for achieving sustainability goals within organizations.
CONTENTS
1. Introduction and Key Concepts of Sustainability
2. Principles and Practices of Sustainability
3. Measures and Reporting in Sustainability
4. Sustainability Implementation & Best Practices
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fundamentals of economics
1. Topic 1
Fundamentals of Economics
Introduction and Goals of the Firm
• Key Concepts
• Summary
• Practice Quiz
• Online Exercises
1
2. What will you learn
in this chapter?
You will be acquainted
with the foundation of
the economic way of
thinking
* Return to previous slide
while in slide show mode
2
3. What are the 3 building
blocks in the economic
way of thinking?
• scarcity & choice
• model building
• pitfalls of economic
reasoning
3
4. What is the
economic problem?
Providing for people’s
wants and needs in a
world of scarcity
4
5. What is meant by
scarcity?
The condition in which
wants are forever greater
than the available supply
of time, goods, and
resources
5
13. What is
entrepreneurship?
The creative ability of
individuals to seek profits
by combining resources
to produce innovative
products.
13
14. Labor
Labor
Land
Land Capital
Capital
Entrepreneurshiporganizes
Entrepreneurship organizes
resourcesto produce goods
resources to produce goods
andservices
and services
14
15. What is economics?
The study of how
society chooses to
allocate its scarce
resources to the
production of goods
and services in order to
satisfy unlimited wants15
17. What is
microeconomics?
The branch of economics
that studies decision-
making by a single
individual, household,
firm, industry, or level of
government 17
18. What is the purpose of
an economic model?
To forecast or predict
the results of various
changes in variables
18
19. What is the
scientific method?
• Problem identification
• Model development
• Testing a theory
19
20. Identify the problem
Identify the problem
Develop a model based
Develop a model based
on simplified assumptions
on simplified assumptions
Collect data and
Collect data and
test the model
test the model
20
21. What are the two
common pitfalls in
understanding how
the economy works?
• failing to understand the
ceteris paribus assumption
• confusing association with
causation
21
23. What is
ceteris paribus?
A Latin phrase that
means that while certain
variables can change,
“all other things remain
unchanged”
23
24. What is the difference
between association
and causation?
We cannot always assume
that when one event
follows another, the first
caused the second
24
25. Why do some
economists disagree?
The answer lies in
understanding the
difference between
positive and normative
economics
25
29. • What are the three building blocks in the econom
• What is the economic problem?
• What is meant by scarcity?
• What are resources?
• What are the three categories of resources?
• What is entrepreneurship?
• What is economics?
• What is macroeconomics?
• What is microeconomics?
29
30. • What is the scientific method?
• What are the two common pitfalls in understand
• Why do some economists disagree?
• What assumption is always made when
testing a model?
• What is ceteris paribus?
• What is the purpose of model building?
• What is positive economics?
• What is normative economics?
30
32. Scarcity is the fundamental
economic problem that human
wants exceed the availability to time,
goods, and resources. Individuals
and society therefore can never
have everything they desire.
32
33. Resources are factors of
production classified as land,
labor, and capital.
Entrepreneurship is a special
type of labor. An entrepreneur
combines resources to produce
innovative products.
33
34. Economics is the study of how
individuals and society choose to
allocate scarce resources in order
to satisfy unlimited wants. Faced
with unlimited wants and scarce
resources, we must make choices
among alternatives.
34
35. Society
Chooses
Resources
Scarcity
Unlimited
wants
35
36. Macroeconomics applies an
economy wide perspective that
focuses on such issues as inflation,
unemployment, and the growth rate
of the economy.
36
37. Microeconomics examines
individual decision-making units
within an economy.
Microeconomics studies such
topics as a consumer’s response
to changes in the price of coffee
and the reasons for changes in the
market price of personal
computers.
37
38. Models are simplified descriptions
of reality used to understand and
predict economic events. An
economic model can be stated
verbally or in a table, graph, or
equation. If the evidence is not
consistent with the model, the
model is rejected.
38
39. Collect data
and test
the model
Develop
a model based
on assumptions
Identify
the
problem 39
40. Ceteris paribus holds “all other
factors unchanged” that might
affect a particular relationship. If
this assumption is violated, a
model cannot be tested. Another
reasoning pitfall is to think
association means causation.
40
41. Positive economics uses testable
statements. Often a positive
argument is expressed as an “if-the”
statement.
Normative economics is based on
value judgments or opinions and
uses words such as good, bad,
ought to, and ought not to.
41
43. 1. Scarcity exists
a. when people consume beyond
their needs.
b. only in rich nations.
c. in all countries in the world.
d. only in poor nations.
C. No matter what economic system
a country has, it is always faced
with the problem of scarcity.
43
44. 2. Which of the following would eliminate
scarcity as an economic problem?
a. Moderation of people’s competitive
instincts.
b. Discovery of large new energy
reserves.
c. Resumption of steady productivity
growth.
d. None of the above.
e. All of the above.
D. Because it is impossible to
provide everyone with everything
they want, we will always have
scarcity. 44
45. 3. Which of the following is not a
resource?
a. Land.
b. Labor.
c. Money.
d. Capital.
C. Money is not a resource because it
has no intrinsic value. Money that is
used to make an investment is called
financial capital.
45
46. 4. Economics is the study of
a. how to make money.
b. how to operate a business.
c. people making choices because of
the problem of scarcity.
d. none of the above.
C. Economics is the study of how people
must decide among alternatives to meet
their wants and needs in this world of
scarcity.
46
47. 5. Microeconomics approaches the
study of economics from the
viewpoint of
a. individuals or specific markets.
b. the operation of the Federal
Reserve.
c. economy wide effects
d. the national economy.
A. Microeconomics is the study of the
decision- making process for
individuals, business owners, and
government.
47
48. 6. A review of the performance of the
U.S. economy during the 1990’s is
primarily the concern of
a. macroeconomics.
b. microeconomics.
c. both macroeconomics and
microeconomics.
d. neither macroeconomics nor
microeconomics.
A. Macroeconomics is the study of
the economy as a whole.
48
49. 7. An economic theory claims that a rise I
gasoline prices will cause gasoline
purchases to fall, ceteris paribus. The
phrase “ceteris paribus” means that
a. other relevant factors like consumer
incomes must be held constant.
b. the gasoline prices must first be
adjusted for inflation.
c. the theory is widely accepted, but
cannot be accurately tested.
d. consumers need for gasoline
remains the same regardless of
A. price.
Anytime price changes we always
make the assumption that nothing
else changes. 49
50. 8. An economist notices that sunspot
activity is high just prior to recessions
and concludes that sunspots cause
recessions. The economist has
a. confused association with and
causation.
b. misunderstood the ceteris paribus
assumption.
c. Used normative economics to
answer a positive question.
d. built an untestable model.
A. Just because one action follows
another, does not mean that the first
caused the second.
50
51. 9. Which of the following is a statement
of positive economics?
a. The income tax system collects a
lower percentage of the incomes of
the poor.
b. A reduction in the tax rates of the
rich makes the tax system more fair.
c. Taxes ought to be raised to finance
health care.
d. All of the above are primarily
statements of positive economics.
A. Positive economic statements are
testable by facts and explain the world as
it is without making value judgements.51
52. 10. Which of the following is a statement of
positive economics?
a. An unemployment rate of greater than
8 percent is good because prices will
fall.
b. An unemployment rate of 7% is a
serious problem.
c. If the overall unemployment rate is 7%,
black unemployment rates will average
15%.
d. Unemployment is a more severe
problem than inflation.
C. Other answers are based on a value
judgement between
black and white 52
unemployment rates.
53. 11. Which of the following is a
statement of normative economics?
a. A minimum wage is good because
it raises wages for the working
poor.
b. The minimum wage is supported
by unions.
c. The minimum wage reduces jobs
for unskilled workers.
d. The minimum wage encourages
firms to substitute capital for labor
A. Even though the minimum wage
reduces jobs for some working poor,
it is a value judgement that the
minimum wage is beneficial overall. 53
54. 12. Select the normative statement that
completes the following sentence: If
the minimum wage is raised rapidly,
then
a. inflation increases.
b. workers will gain their rightful
share of total income.
c. profits will fall.
d. unemployment will rise.
B. To say that workers have right
to a certain part of total income
entails a value judgement.
54
56. Exercise 1
Does the Internet raise or lower the cost of
making friends?
As you consider this question, visit a virtual
meeting place: the American Intercultural
Student Exchange (http://www.aise.com). Or
you may wish to participate in a live chat with
other people on the Internet—if so, visit
Yahoo! (http://chat.yahoo.com). Explain how
scarcity relates to the Internet.
56
57. Exercise 2
Visit World Factbook
(http://www.odci.gov/cia/publications/factbook/inde
x.html) and follow these steps:
1. Select the United States.
2. Note the land area and population in the United
States.
3. Compute the land area per person by dividing
the land area of the United States by its population
size.
4. Select Japan. Repeat steps 2 and 3 for Japan.
5. How does the scarcity of land influence land-use
choices? Would you find as many golf courses
inJapan as in the United States? Explain. 57
58. Exercise 3
If water is inexpensive and readily available,
why does the demand for bottled water, which
can cost more than $2 for a 12-ounce bottle,
remain strong? Why are consumers willing to
pay such a steep price for bottled water? For
references, visit the Evian water Web site at
http://www.evian.com.
58
59. Exercise 4
Visit the White House home page—
http://www.whitehouse .gov/. Look under
Current News. Choose a topic you think
pertains to economics. Does the subject
matter pertain to macroeconomics or
microeconomics? Is the analysis primarily
normative or positive?
59