Post on 27-Nov-2014
MANAGERIAL ECONOMICS IS CONCERNED WITH THE APPLICATION OF ECONOMIC CONCEPTS AND ECONOMICS TO THE PROBLEM S OF FORMULATING RATIONAL DECISION MAKING
MANAGERIAL ECONOMICS
Use of basic economic theories in the business decision making
MANAGERIAL ECONOMICS
MANAGERIAL ECONOMICS IS THE INTEGRATION OF ECONOMIC THEORY WITH BUSINESS PRACTICE FOR THE PURPOSE OF FACILITATING DECISIONS AND FORWARD PLANING
ECONOMICS
IS A SOCIAL SCIENCE WHICH STUDIES HUMAN BEHAVIOUR IN RELATION TO OPTIMIZING
ALLOCATION OF AVAILABLE RESOURCES
TO ACHIEVE THE GIVEN ENDS
ECONOMICS
IS A STUDY OF THE CHOICE MAKING BEHAVIOUR OF THE PEOPLE
ECONOMICS CONTRIBUTE
A GREAT DEAL TOWARDS THE PERFORMANCE OF MANAGERIAL DUTIES JUST AS BIOLOGY CONTRIBUTE TO THE MEDICAL PROFESSION
MANAGERIAL ECONOMICS
IS THE STUDY OF ECONOMIC THEORIES,LOGIC AND TOOLS OF ECONOMICS ANALYSIS THAT ARE USED IN THE PROCESS OF BUSINESS DECISION MAKING
SCOPE OF MANAGERIAL ECONOMICS MANAGERAIL ECONOMICS
COMPRISES OF MICRO AND MACRO ECONOMICS
MICRO ECONOMICS
MICRO MEANS SMALL MICRO ECONOMIC ISE STUDY OF
PARTICULAR FIRMS,PARTICULAR HOUSEHOLDS,INDIVIDUAL PRICES,WAGES,INCOMES,INDIVIDUAL INDUSTRIES,PARTICULAR COMMODITIES
MICRO ECONOMICS IS THE MICRO SCOPIC STUDY OF THE ECONOMY
MANAGERIAL ECONOMICS
IS THE APPLIED ECONOMICS
MICRO ECONOMICS THEORY
THEORY OF DEMAND THEORY OF PRODUCTION AND COST FACTOR PRICING (THEORY OF
DISTRIBUTION THEORY OF ECONOMIC WELFARE THEORY OF INTERNATIONAL TRADE
MACRO ECONOMICS
MACRO MEANS LARGE MACRO ECONOMICS IS CONCERNED
WITH THE ANALYSIS OF THE ECONOMY AS A WHOLE
MACRO ECONOMICS STUDIES THE ENTIRE ECONOMIC SYSTEM
MACRO ECONOMICS IS NOT CONCERNED WITH A PARTICULAR DECISION MAKING UNIT BUT WITH ALL SUCH UNITS COMBINED TOGETHER
THEORIES OF PROFITS
HAWLEYS RISK THEORY OF PROFITS KNIGHTS THEORY OF PROFITS SCHUMPETER INNOVATION THEORY
OF PROFITS CLARKE DYNAMIC THEORY
OBJECTIVES OF THE BUSINESS FIRMS CONVENTIONAL THEORY OF FIRMS
ASSUME THAT PROFIT MAXIMIZATION AS THE SAME OBJECTIVE OF THE FIRMS
RECENT RESEARCHERS ON THIS ISSUE REVEALS THAT THE OBJECTIVE OF THE FIRMS PURSUE ARE MORE THAN ONE
SOME OTHER OBJECTIVES OF THE FIRMS MAXIMIZATION OF SALES REVENUE MAXIMIZATION OF FIRM GROWTH
RATE MAKING SATISFACTORY RATE OF
PROFIT LONG RUN SURVIVAL OF THE FIRMS ENTRY PREVENTION
DEFINATION ECONOMICS
ECONOMICS IS THAT BRANCH OF KNOWLEDGE THAT STUDIES PRODUCTION CONSUMPTION INVESTMENTS EXCHANGE DISTRIBUTION
PRODUCTION
PRODUCTION IS THAT ACTIVITY WHICH IS CONCERNED WITH INCREASING THE UTILITY OR VALUE OF GOODS AND SERVICES
MANUFACTURNG SHIRT WITH HELP OF CLOTH IS THE ACT OF PRODUCTION
CONSUMTION
CONSUMPTION IS THAT ECONOMIC ACTIVITY WHICH IS CONCERNED WITH THE USE OF GOODS AND SERVICES FOR THE DIRECT SATIFACTION OF INDIVIDUAL AND COLLECTIVE WANTS
EATING BREAD IS THE CONSUMPTION ACTIVITY
SERVICES OF DOCTORS IS THE CONSUMPTION ACTIVITY
ECONOMICS
ECONOMICS IS THE SCIENCE YHAT STUDIES HUMAN BEHAVIOUR AS A RELATIONSHIP BETWEEN ENDS AND SCARCE MEANS WHICH HAVE ALTERNATIVE USES
ECONOMICS IS A SCIENCE OF CHOICE IT DEALS WIH HOW THE RESOURCES OF
SOCIETY SHOULD BE ALLOCATED TO THE SATISFACTION OF DIFFERENT WANTS
ENDS MEANS WANTS
ECONOMICS
HAS ITS ORIGIN FROM TWO GREEK WORDS
OIKOS(HOUSEHOLD) NOMOS(TO MANAGE) ECONOMICS WAS USED TO MEAN
HOME MANAGEMENT WITH LIMITED FUNDS AVAILABLE IN THE MOST POSSIBLE ECONOMICAL MANNER
DIFFERENCE BETWEEN ECONOMICS AND MANAGERIAL ECONOMICS ECONOMICS TELLS US ABOUT BODY
OF PRINCIPLE WHILE THE MANAGERIAL ECONOMICS TELLS DEALS WITH THE APPLICATION OF ECONOMIC PRINCIPLES TO THE PROBLEM OF THE FIRM
DIFFERENCE BETWEEN ECONOMICS AND MANAGERIAL ECONOMICS ECONOMICS HAS BOTH
CHARACTERSTICS OF MICRO AND MACRO
MANAGERIAL ECONOMICS HAS MAJOR CHARACTERSTICS OF MICRO
DIFFERNCE BETWEEN ECONOMICS AND MANAGERIAL ECONOMICS MICRO ECONOMICS AS A PART OF
ECONOMICS DEALS WITH INDIVIDUALS AND FIRMS
WHILE MANAGERIAL ECONOMICS DEALS ONLY WITH FIRMS AND NOT WITH INDIVIDUALS
DIFFERENCE BETWEEN ECONOMICS AND MANAGERIAL ECONOMICSMICRO ECONOMICS BEING PART OF
ECONOMICS DEALS WITH DISRIBUTION THEORY OF RENT,INTEREST,PROFIT.WAGES
WHILE MANAGERIAL ECONOMICS DEALS ONLY IN PROFITS.
CHARACTERTICS OF MANAGERIAL ECONOMICS MANAGERIAL ECONOMICS IS A
MICRO ECONOMICS THE STUDY UNIT OF MANAGERIAL
ECONOMICS IS THE FIRM IT DOES NOT STUDY THE ENTIRE ECONOMY
MANGERIAL ECONOMICS DEALS WITH THEORY OF FIRM IN OTHER WORDS IT IS ECONOMIES OF FIRM
ROLE OF MANAGERIAL ECONOMIST MANAGERIAL ECONOMIST CAN PLAY
A VERY IMPORTANT ROLE BY ASSISTING MANAGEMENT IN USING THE SPECIALIZED TECHNIQUES , SKILLS WHICH ARE REQUIRED TO SOLVE THE DFFICULT PROBLEM OF SUCCESSFUL DECISION MAKING AND FORWARD PLANNING
ROLE OF MANAGERIAL ECONOMISTWHILE MAKING A SPECIFIC DECISION
MANAGERIAL ECONOMIST HAS TO STUDY BOTH INTERNAL AND EXTERNAL FACTORS
ROLE OF MANAGERIAL ECONOMIST EXTERNAL FACTORS : ARE THOSE
FACTORS IN WHICH MANAGEMENT DOES NOT HAVE ANY CONTROL LIKE GOVT POLICIES, FOREIGN TRADE POLICIES ,EXTERNAL COMPETITION ETC
INTERNAL FACTORS
ARE THOSE FACTORS WHICH ARE CONTROLLABLE BY THE MANAGEMENT EXAMPLES FIXING THE SALES AND PRODUCTION OF THE BUSINESS S, DETERMINING THE TARGET PROFITS OF THE BUSINESS,PRODUCTION SCHEDULE ,WAGES POLICIES ETC
DEFINATIONS ECONOMICS
ECONOMICS IS RELATED TO ONE ASPECT OF HUMAN BEHAVIOR OF MAXIMIZING SATIFACTION FROM SCARCE RESOURCES
MICRO ECONOMICS
IS THE STUDY OF ECONOMIIC ACTIONS OF INDIVIDUALS AND SMALL GROUP OF INDIVIDUALS,THIS INCLUDES THE STUDY OF PARTICULAR F FIRMS,PARTICULAR HOUSEHOLDS,INDIVIDUAL PRICES ,WAGES,INCOME,INDIVIDUAL INDUSTRIES,INDIVIDUAL COMMODITIES
EXAMPLES OF MICRO ECONOMICS THE DETERMINATION OF
EQUILIBRIUM OUTPUT OF THE FIRM THE WAGES OF PARTICULAR TYPE OF
LABOUR PRICE OF PARTICULAR COMMODITY
LIKE RICE,TEA, OR CAR
MACRO ECONOMICS
IS THE STUDY OF AGGREGATES OR AVERAGES COVERING THE ENTIRE ECONOMY SUCH AS TOTAL EMPLOYMENT,UNEMPLOTMENT,NATIONAL INCOME,NATIONAL OUTPUT,TOTAL INVESTMENT,TOTAL CONSUMPTION,TOTAL SAVINGS,AGGREGATE SUPPLY,AGGREGATE DEMAND AND GENERAL PRICE LEVEL,INTEREST RATES
MACRO ECONOMICS
IT IS THE AGGREGATIVE ECONOMICS IT DEALS WITH ECONOMIC AFFAIRS
IN THE LARGE
MACRO ECONOMICS
IS ALSO KNOWN AS THE THEORY OF INCOME AND EMPLOYMENT
IT IS CONCERNED WITH THE PROBLEM OF UNEMPLOYMENT ,ECONOMIC FLUCTUATIONS ,INFLATION, DEFLATION,STAGNATION,INTERNATIONAL TRADE AND ECONOMIC GROWTH
CONSUMER DEMAND
CONSUMER DEMAND IS THE BASIS OF ALL THE PRODUCTIVE ACTIVITY
DEMAND IS THE MOTHER OF PRODUCTION
INCREASING DEMAND FOR THE PRODUCT OFFER HIGH BUSINESS PROSPECTS
DEMAND DEFINATION
DESIRE FOR A COMMODITY BACKED BY THE ABILITY AND WILLINGNESS TO PAY FOR IT
BASIS OF CONSUMER DEMAND
CONSUMER DEMAND A COMMODITY BECAUSE THEY DERIVE UTILITY FROM THE CONSUMPTION OF THE COMMODITY
UTILIY
IS THE WANT SATISFYING PROPERTY OF THE COMMODITY
MARGINAL UTILITY
IT IS DEFINED AS THE UTILITY DERIVED FROM THE ADDITIONAL UNIT CONSUMED
IN OTHER WORDS IT IS DEFINED AS THE ADDITION TO THE TOTAL UTILITY FROM THE CONSUMPTION OF ONE ADDITIONAL UNIT
LAW OF DIMINISHING MARGINAL UTILITY THE LAW OF DIMINISHING MARGINAL
UTILITY IS ONE OF THE FUNDAMENTAL LAWS OF ECONOMICS
IN SIMPLE WORDS WHEN A PERSON CONSUMES MORE UNITOF A COMMODITY UTILITY DERIVED FROM SUCCESSIVE UNITS GOES ON DIMINISHING
LAW OF DIMINISHING MARGINAL UTILITY THIS LAW IS APPLICABLE OF ALL
KINDS OF CONSUMER GOODS DURABLE AND NONDURABLE
LAW OF DEMAND
WHENEVER THERE IS RISE IN PRICES DEMAND FALLS
WHENEVER THERE IS FALL IN PRICES DEMAND INCREASE
SHAPE OF DEMAND CURVE
DEMAND CURVE IS DOWN WARD SLOPING
SLOPING DOWN WARD TOWARD RIGHTS
FACTORS AFFECTING DEMAND
PRICE OF THE COMMODITY PRICE OF COMPLEMENTORY GOODS PRICE OF SUBTITUTE GOODS INCOME OF THE CONSUMER TASTE AND PREFERENCE OTHERS FACTORS
ROLE OF MANAGERIAL ECONOMICS IN DECISION MAKING UNDER RISK AND UNCERTAINITY
ROLE OF MANAGERIAL ECO
ECONOMICS PROVIDES TOOLS AND TECHNIQUES THAT MANAGERS NEED TO ACHIEVE THE GOALS OF THE ORGANIZATION THEY MANAGE
WORKING KNOWLEDGE OF ECONOMICS IS ESSENTIAL FOR MANAGERS
MANAGERS ARE PRACTICING ECONOMIST
ROLE OF MANAGERIAL ECO
IN PERFORMING THE FUNCTIONS MANAGER HAS TO TAKE MANY DECISIONS UNDER THE CONDITION OF RISK AND UNCERTAINITY
ROLE OF MANAGERIAL ECO
RISK AND UNCERTAINITY ARISE MAINLY DUE TO UNCERTAIN BEHAVIOUR OF THE MARKET FORCES ,CHANGING ENVIRONMENT,EMERGENCE OF COMPETITORS,GOVT POLICIES ,SOCIAL AND POLITICAL CHANGES,EXTERNAL INFLUENCE ON THE DOMESTIC MARKETS
ROLE OF MANAGERIAL ECO
COMPLEXITY OF THE MODERN BUSINESS ADD TO THE COMPLEXITY OFTO THE BUSINESS DECISION MAKING
ROLE OF MANAGERIAL ECO
DEGREE OF UNCERTAINTY AND RISK CAN BE GREATLY REDUCED IF MARKETS COONDITIONS ARE PREDICTED WITH SOME RELIABILITY
ECONOMICS OFFER TOOLS, TECHNIQUES,VARIOUS LAWS TO PREDICT THE FUTURE COURSE OF MARKETS CONDITIONS AND BUSINESS PROSPECTS
ROLE OF MANAGERIAL ECO
APPLICATION OF ECONONICS THEORIES CONTRIBUTE A GREAT DEAL IN RATIONAL DECISION MAKING
ROLE OF MANAGERIAL ECO
ECONOMICS THEORIES STATE THE FUNCTIONAL RELATIONSHIP BETWEEN TWO OR MORE ECONOMIC VARIABLES
ECONOMIC THEORIES GIVES A CLEAR UNDERSTANDING OF VARIOUS ECONOMIC CONCEPT LIKE
DEMAND SUPPLY COST PRODUCT MARKETS EXCHANGE RATES INFLATION ETC
CONCLUSION
APPLICATION OF ECONOMIC THEORIES TO THE PROBLEM OF BUSINESS NOT ONLY GUIDES ASSIST IN THE PROCESS OF DECISION MAKING BUT ALSO CONTRIBUTE A GOOD DEAL TO THE VALIDITY OF THE DECISIONS
Complimentary goods
The goods which are used jointly to satisfy particular want
Tea and sugar Petrol and car Bulb and electricity IF THE PRICE FOR COMLIMENTARY
GOOD RISES THAN DEMAND FOR OTHER GOOD WILL FALL
Exceptions to law of demand INFERIOR GOODS IGNORANCE GOODS OF OSTENTATION STATUS
SYMBOL) EMERGENCY FUTURE EXPECTATION OF RISE IN
PRICE GOOD TO BE BECOME SCARCE IN
FUTURE
PAY BACK PERIOD
DISADVANTAGES TIME VALUE OF MONEY IS IGNORED FORECASTING OF CASH INFLOWS IS
NOT EASY PROFITS AFTER PAY BACK PERIOD IS
IGNORED ADVANTAGES SIMPLE NO CALCULATIONS
DEFINATION PAY BACK PERIOD TIME REQUIRE TO RECOVER THE
INVESTMENT SHORTEST THE PAY BACK PERIOD
BETTER THE PROPOSAL
INVESTMENT DECISION CAPITAL BUDGETING TECHNIQUES PAY BACK PERIOD NPV ACCOUNTING RATE OF RETURN IRR PROFITABILITY INDEX
CHANGES IN DEMAND
WHAT HAPPEN TO THE DEMAND IF THERE IS ANY CHANGE IN THE FACTORS OTHER THAN PRICE
THERE IS SHIFT IN DEMAND CURVE THAT IS RIGHT OR LEFT IF THERE IS RIGHT WARD SHIFT THAN IT IS
INCREASE IF THERE IS LEFTWARD SHIFT THAN IT IS
DECREASE THE FACTORS WHICH CHANGES ARE
INCOME,TASTE,FASHION,PRICE OF RELATED GOODS ETC
CHANGE IN DEMAND(CHANGE IN QUANTITY DEMANDED) WHEN THERE IS CHANGE IN DEMAND
DUE TO PRICE OF THE COMMODITY ITSELF
THE PROCESS IS CALLED EXTENSION AND CONTACTION
THERE IS THE MOVEMENT ALONG SAME DD CURVE
UPWARD MOVEMENT IS CALLED CONTACTION AND DOWN WARD MOVEMENT IS EXTENSION
ELASTICITY OF DEMAND
RESPONSIVENESS OF DEMAND TO CHANGE IN PRICE
TYPES OF ELASTICITY
PRICE ELASTICITY INCOME ELASTICITY CROSS ELASTICITY
FACTORS AFFECTING ELASTICITY OF DEMAND NATURE OF THE COMMODITY SUBTITUTES VARIETY OF USES DEFERRED CONSUMPTIONS HABITS INCOME GROUP PROPOTION OF INCOME SPENT LEVEL OF PRICES
NATIONAL INCOME
NATIONAL INCOME IS THE MONEY VALUE OF ALL FINAL GOODS AND SERVICES PRODUCED IN COUNTRY DURING A PERIOD OF ONE YEAR
MARKETS
REFERS TO PARTICULAR PLACE WHERE GOODS ARE PURCHASED AND SOLD
NPV
PV INFLOWS – PV CASH OUTFLOWS
MARKETS
BUT IN ECONOMICS MARKETS IS USED IN A WIDE SPREAD PERSPECTIVE
IN ECONOMICS MARKET DOES NOT REFER TO PARTICULAR PLACE BUT THE WHOLE AREA WHERE THE BUYERS AND SELLERS OF THE PRODUCT ARE SPREAD
ACCORDING TO PROF COURNAT ECONOMIST UNDERSTAND MARKETS
NOT ANY PLACE IN WHICH GOODS ARE BOUGHT AND SOLD BUT WHOLE OF THE REGION IN WHICH BUYERS AND SELLERS ARE IN SUCH FREE INTERCOURSE WITH ONE ANOTHER
MONOPOLY
ONE SELLER LARGE NO OF BUYERS NO CLOSE SUBSTITUTE OF THE
PRODUCT STRONG BARRIERS TO ENTRY FIRM IS THE PRICE MAKER PRICE ELASTICITY IS VERY LOW PRICE DISCRIMINATION NO SELLINF COST
CHARACTERSTICS OF MARKETS AN AREA PRODUCT BUYERS AND SELLERS FREE COMPETITION ONE PRICE
FORMS OF MARKET STRUCTURE PERFECT COMPETITION MONOPOLY DUOPOLY OLIGOPOLY MONOPOLISTIC COMPETITION
CHARACTERSTICS OF PERFECT COMPETITION LARGE NO OF BUYERS AND SELLERS FREE ENTRY FREE EXIT HOMOGENEOUS PRODUCT PROFIT MAXIMIZATION GOAL PERFECT MOBILITY OF GOODS AND
FACTORS PERFECT KNOWLEDGE OF MARKET
CONDITION ABSENCE OF TRANSPORT COST ABSENCE OF SELLING COST
PURE COMPETITION AND PERFECT COMPETITION FIRST FOUR CONDITIONS PURE
COMPETITION ADDITIONAL FOUR CONDITION PURE
COMPETITION
CHARACTERSTICS OF MONOPOLISTIC COMPETITION MANY NO OF SELLERSLARGE NO OF BUYERSFREE ENTRY FREE EXITPRODUCT DIFFERENTITIONFIRM HAS SOME CONTROL OVER THE
PRICEHIGH SELLING COSTPRICE LASTICITY IS VERY HIGHREAL MARKET
INDIFFERENCE CURVE
THE INDIFFERENCE CURVE ANALYSIS MEASURES UTILITY ORDINALLY
IT EXPLAINS CONSUMER BEHAVIOUR IN TERMS OF HIS PREFERENCE
IT IS A LOCUS OF POINTS REPRESENTING PAIRS OF QUANTITIES BETWEEN WHICH THE INDIVIDUAL IS INDIFFERENT
INDIFFERENCE CURVE
A SINGLE INDIFFERENCE CURVE CONCERNS ONLY ONE LEVEL OF SATISFACTION
IT IS A LIST OF COMBINATION OF TWO COMMODITIES EACH COMBINATION PROVIDE SAME LEVEL OF SATISFACTION
SO THE CUSTOMER IS INDIFFERENT WHILE MAKING ANY CHOICE
INDIFFERENCE SCHEDULE
COMBINATIONS X Y 1 1 18 2 2 13 3 3 9 4 4 6 5 5
4 6 6 3
PROPERTIES OF INDIFFERNCE CURVE 1 A HIGHER INDIFFERENCE CURVE TO
THE RIGHT OF ANOTHER REPRESENTS A HIGHER LEVEL OF SATISFACTION
THE SLOPE OF INDIFFERNCE CURVE IS NEGATIVE
INDIFFERENCE CURVES CAN NEITHER TOUCH NOR INTERSECT EACH OTHER
AN INDIFFERECE CURVE IS CONVEX TO THE ORIGIN
Price qty demand 2 20 10 19
Demand is highly in elastic