ECONOMICS FOR MANAGERIAL DECISION MAKING-1 (ECONOMIC ANALYSIS SIMPLIFIED FOR YOU)1. ESSENCE OF ECONOMICSProblems of an economy; solutions of these problems; alternative system to tackle theproblems; economics, micro – economics & macro – economics; basis building blocks ofmicroeconomics – rationality, marginalism, opportunity cost, general & partialequilibrium.2. FALLACIES AND PITFALLSEconomics is about decision making, fallacies in decision making, fallacy of assumption,fallacy of composition, fallacy of subjectivity, fallacy of post hoc proctor hoc, fallacy ofsyllogism, fallacy of black & white or gray; fallacy of broken window, lessons for firm.3. DEMAND ANALYSIS AND CONSUMER BEHAVIOUR3.1DEMAND ANALYSISConcept of demand & demand functions; demand schedule & demand curve; types ofdemand; kinds of demand; factors influencing demand; expansion / contraction ofdemand vs. increase / decrease in demand, significance of demand analysis for the firm.3.2 ELASTICITY OF DEMANDConcept of elasticity, price elasticity of demand; meaning, values, determinants,measurement & implications; slope vs. elasticity; TR, TE & eDP, AR, MR & eDP,strategies to maximize total revenues, cross elasticity of demand; income elasticity ofdemand: meaning values & measurement; income elasticity vs. income sensitivity;advertising elasticity of demand; significance of the concept of elasticity of demand forthe firm.
3.3 UTILITY ANALYSISConsumer behaviour, choice & utility; concept of TU, MU & AU; LDMU; LEMU;equilibrium of a consumer; explanation of falling demand; income, substitution, & priceeffects & consumer choices; paradox of value; consumer surplus; significance for a seller.3.4 INDIFFERENCE CURVE ANALYSISMeaning; kinds; properties; inference map; budget line; equilibrium; applications of ICA.4. SUPPLY ANALYSIS & PRICE FORMATION4.1 SUPPLY ANALYSISConcept; types; factors dictating supply; supply curve & supply schedule; law of supply;expansion / contraction of supply vs. increase / decrease in supply4.2. ELASTICITY OF SUPPLYConcept; values; measurement; determinants; implications for the suppliers4.3 EQUILIBRIUM AND PRICE MAKINGConcept of equilibrium; shifts in demand & supply & impact on price & quantity; priceas allocating device for resources through surplus & scarcities; alternative nodes of pricefixation.5. PRODUCTION AND COST ANALYSIS
• Concept of production & production function; LR & VR; LVP; relationship between TP, MP, and AP, stages of production, concept of returns to scale & laws of returns, impact of technological change on return, concept of Isoquant, isocost lines & equilibrium; equilibrium under cost constraint & for a given output; economic region of production; expansion path.• Concept of cost; linkage between production & cost; cost classification. TC, AC, & MC and their relationship; cost curve under SR & LR; Economies of scale; economies of scope; implications for a firm; existence of small firms; engineering cost curves.6. REVENUE CURVES AND FIRM’S EQUILIBRIUMConcepts of TR, AR and MR; cost, revenue and equilibrium of a firm; equilibrium underalternative assumptions about firm’s objective functions.7. PERFECT COMPETITIONMeaning and characteristics; SR equilibrium, break – even analysis and shut down point,long run equilibrium; supply curve for a competitive firm – LR (horizontal, rising orfalling) and short run; efficiency of competitive markets; advantages of perfectcompetition; disadvantages of a competitive firm.8. MONOPOLYConcepts; source of monopoly power; measure of monopoly power; cost, revenue andequilibrium under monopoly; supply curve of a monopolist; shifts in demand and impacton monopoly firm; advantages and disadvantages of monopoly; monopoly vs. perfectcompetition.Price discrimination: meaning, conditions; types; equilibriumMonopsonyBilateral monopoly
9. MONOPOLISTIC COMPETITIONMeaning and characteristics; equilibrium of a firm in short run and in long run; sources ofdifferentiation; promotional costs and equilibrium.10. OLIGOPOLYMeaning; characteristics; Cournot’s model; kinked demand curve model; price leadershipmodel; cartels; game theory treatment of oligopoly.IMPORTANT NOTEThe treatment of the subject shall be non mathematical Emphasis, while teaching, will beon application of economics principle to the behaviour of the players in Indian Market.Reference books • Prasoon Majumder: Economic Analysis Simplified for You (IIPM/Vikas:2010): All chapters