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The branch of science and technology concerned with the design, building, and use of engines, machines, and structures. Engineering is the discipline, art, skill and profession of acquiring and applying scientific, mathematical, economic, social, and practical knowledge, in order to design and build structures, machines, devices, systems, materials and processes that safely realize improvements to the lives of people.

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Technology The application of scientific knowledge for practical purposes, especially for industries and society: "computer technology"; "recycling technologies". Technology is the branch of knowledge that deals with the creation and use of technical means and their interrelation with life, society, and the environment.

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Economics The branch of knowledge concerned with the production, consumption, and transfer of wealth. Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The word "economics" has its origin in the Greek "oikonomiks" (relating to household management), from "oikos" (house) +(nomos, "custom" or "law"), hence "rules of the house(hold)".Current economic models emerged from the broader field of political economy in the late 19th century.social science productiondistributionconsumptiongoods services Economics aims to explain how economies work and how economic agents interact. Economic analysis is applied throughout society, in business, finance and government, education social institutions, war, and science.

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Definitions of Economics Wealth definitions Welfare definitions-economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing. Alfred Marshall Scarcity definition Growth Oriented definition

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Wealth Definition

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Welfare Definition

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Scarcity Definition

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Growth Definition

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Nature & Scope of Economics

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Science refers to a systemized body of knowledge which collects facts and tries to make an association between these facts which are useful for daily life and works on some laws and principles and these rules and principles are universally applicable. The following are the essentials of science A systematic study of facts Certain rules and principles Rules and principles of science are based on cause and effects Rules and principles of science are universally applicable. Art refers to that branch of knowledge which teaches how to do a particular act in a systematic manner or in its best.

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Economics is a Science Systematic study of facts Use of economic laws and principles It establishes relationship between cause and effects Universality of laws and principles

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Economics as an Art Helpful in the solution of economic problem Increasing importance of applied economics Economic aspect of problems Economics as an art does not weaken its scientific aspect Thus an economist works as a scientist when he studies economics and an artist when he practices it. According to Cossa- Science requires art, art requires science, each being complementary to other. Thus economics is a science in its methodology and an art in its application.

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Positive Science

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Normative Science

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Positive VS Normative

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Positive & Normative Positive Economics:- Derives useful theories with testable propositions about WHAT IS? Normative Economics:- Provides the basis for value judgments on economic outcomes. WHAT SHOULD BE?

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Economics Economics can be defined as- Economics is the social science which studies human activities and how society maximizes the satisfaction with the promotion of welfare and economic growth by efficient use of limited or scarce resources which have alternative uses.

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Scope of economics Micro Economics Macro Economics Micro economics can be defined as that branch of economic analysis which studies the economic behavior of the individual unit i.e. a firm, a producer, an industry, a consumer etc. The important areas of study under micro economics are- Theory of consumer behavior and Demand Analysis

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Theory of production and cost Theory of distribution or factor pricing Theory of economic welfare MACRO ECONOMICS- Macro economics the behavior of all the units combined together i.e. total production, total investment, level of employment, national income. The fields covered under macro economics- Theory of Income, Output and Employment Theory of business cycle Theory of general price level Theory of economic growth Theory of money

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Managerial economics Managerial economics constitutes those theories, tools and techniques useful in business decisions having economic or financial implications.

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22 What is Managerial Economics? Douglas - Managerial economics is.. the application of economic principles and methodologies to the decision-making process within the firm or organization. Pappas & Hirschey - Managerial economics applies economic theory and methods to business and administrative decision- making. Salvatore - Managerial economics refers to the application of economic theory and the tools of analysis of decision science to examine how an organisation can achieve its objectives most effectively.

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Nature of Managerial Economics Managerial economics is Science as well as Art It is a micro economics in character It is a normative science. Prescriptive rather than descriptive Pragmatic approach Use of macro economics principles Integration of economics and business management

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Applications of Managerial Economics Demand forecasting Cost and revenue decision Pricing decision Capital and investment decision Study of economic environment Estimating economic relationship Basis of business policy

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Scope Product policy, sales promotion and market strategy Demand analysis and forecasting Cost analysis Production analysis Market and market structure Pricing decisions Profit management Capital and investment management

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Responsibilities and specific functions of a Manager Better management of resources Forecasting- demand and sales Market research Investment analysis Production and inventory control Study of environment Creating competency to work with global world.

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Role of science and technology in economic development Reduction in the human efforts Utilization of natural resources Increased efficiency Solving the problem of scarcity Factor substitution Mechanization of production process Exploration and discovery Infrastructural development Improvement of agriculture Dealing with rural problems Science and technology for national self relience

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Demand Analysis In common usage, demand means a desire or a want but in economics: Desire, want and demand are three different concept. 1. Demand is an effective desire: a desire becomes an effective desire only when it is supported by following three factors;- -Desire for a commodity and the availability of desired commodity -Ability to pay - Willingness to pay A desire can not be a demand unless it is supported by all the factors.

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2.-Demand is the quantity of a commodity demanded at a particular price- Prof. Mill suggests- Demand of a commodity is the quantity of it that a consumer is ready to purchase at a given price. 3.- Demand is the quantity of a commodity demanded at a particular time. Prof. Bentham has related the demand of commodity with a particular time and also a particular price. In his words- the demand of a commodity at a given price is the quantity of it which bought at a particular time at that price. Thus, demand can be defined as an effective desire of a commodity which is expressed with reference to a particular time and a particular price. Demand is an effective desire that buyers are willing to purchase at alternative prices for a given period.

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Essential Elements of demand There must be some desire for a particular commodity Desired commodity must be available in market The consumer must have sufficient money to purchase the commodity The consumer must be ready to spare the money for the purchase of commodity The demand must be expressed at particular time and at particular price.

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Types of demand Price Demand Income Demand Cross Demand Demand for Consumer Goods Demand for Producer Goods Short run and long-run Demand Joint Demand Derived Demand Collective Demand

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Price demand Price demand shows the inverse relationship between demand and price. Being other things constant if price rises, demand decreases and vice versa.

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Income As income increases, the demand for a normal good or superior good will increase. As income increases, the demand for an inferior good will decrease.

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Cross Demand Cross demand studies effect on the demand of a particular commodity due to changes in the price of other related goods. Prices of Related Goods When a fall in the price of one good reduces the demand for another good, the two goods are called substitutes. When a fall in the price of one good increases the demand for another good, the two goods are called complements.

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Determinants of Demand Products Own Price Consumer Income Prices of Related Goods Tastes Quality Expectations Cost of Repair and maintenance Number of Consumers

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Factors affecting the demand of capital goods Demand of goods and services to be produced Size of population Probability of technical advancement Propensity to consume Government policy

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Law of Demand Law of demand explains the relationship between price and demand of a commodity. It states that, other things equal (ceteris paribus ), the quantity demanded of a good falls when the price of the good rises. Thus law of demand explains inverse relationship between price and quantity demanded.

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Relationship between Price and Demand is Inverse but not necessarily Proportionate- it is very important to note regarding law of demand that it is only a qualitative statement and not a quantitative statement. This law explains that demand of a commodity increases when price decreases and decreases at higher prices but it doesnt tell us how much quantity increase on a certain fall in the price of a commodity and vice- versa. Thus law of demand indicates only the direction of change in the demand but it does not establish any arithmetical relationship between price and demand

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The Demand Schedule and the Demand Curve The demand schedule is a table that shows the relationship between the price of the good and the quantity demanded. The demand curve is a graph of the relationship between the price of a good and the quantity demanded. While Other thing being equal

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Demand Schedule 03.00 22.50 42.00 61.50 81.00 100.50 12 0.20 Quantity of cones Demanded Price of Ice- cream Cone ($)

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Demand Curve Price of Ice- Cream Cone Quantity of Ice-Cream Cones 2 4 6810 12 0 $3.00 2.50 2.00 1.50 1.00 0.50

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Market Demand Schedule Market demand is the sum of all individual demands at each possible price. Graphically, individual demand curves are summed horizontally to obtain the market demand curve. Assume the ice cream market has two buyers as follows

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03.00 100.50 120.00 Catherine Price of Ice- cream Cone ($) Market demand as the Sum of Individual Demands + 1 6 7 N icholas 1 22.50 42.00 61.50 81.00 2 3 4 5 4 7 10 13 16 19 Market =

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Assumptions Income of consumer is constant No change in habits or tastes No change in the price of related goods No new substitute should be developed No expectation of further change in prices Not a prestigious good

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Causes of the application of law of demand Law of diminishing marginal utility Substitution effect Income effect Change in number of consumers Diverse use of a commodity

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Expansion of demand vs. increase in demand Contraction of demand vs. decrease in demand D3D3 D3D3 D3D3 Decrease in demand Increas e in demand

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Price of Ice-Cream Cone Quantity of Ice-Cream Cones D3D3 D1D1 D2D2 Decrease in demand Increas e in demand Shifts in the Demand Curve

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Exceptions to the Law of Demand Conspicuous necessities Giffins Paradox Commodities of prestige High priced commodities Expectation of further change in price Ignorance of consumers Emergencies

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Normal Good demand rises as income rises and vice versa Inferior Good demand falls as income rises and vice versa A positive sign denotes a normal good A negative sign denotes an inferior good

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Goods which are complements: Cross Elasticity will have negative sign (inverse relationship between the two) Goods which are substitutes: Cross Elasticity will have a positive sign (positive relationship between the two)

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