Documentos de Académico
Documentos de Profesional
Documentos de Cultura
Managerial
Economics
Presented By
Prof. S P Das
M.Phil. (Economics), M.B.A. (Finance), M.A. (Economics),
PGDM, PGDFM, DHMCT, MCCP, B.Com.
Meaning Of Economics
Economics can be called as social science dealing
with economics problem and man’s economic
behavior.
It deals with economic behavior of man in society in
respect of consumption, production; distribution etc.
economics can be called as an unending science.
Economic behavior is related to choice by individuals
and others.
Individuals and others have to decide “how to
allocate scarce resources in the most effective
ways.
Economics provide optimum utilization of scarce
resources to achieve the desired result. It provides
the basis for decision making.
Micro Economics
It has been defined as that branch where the unit
of study is an individual, firm or household.
It studies how individual make their choices
about,
– what to produce?
– How to produce?
– For whom to produce?, and
– What price to charge?
It is also known as the price theory.
It is the main source of concepts and analytical
tools for managerial decision making
Macro Economics
It studies the economics as a whole.
It is aggregative in character and takes the entire
economic as a unit of study.
Macro economics helps in the area of forecasting.
It includes National Income, aggregate
consumption, investments, employment etc.
It facilitates government in taking policy decisions
such as,
– How much to spend on health?
– How much to spend on services?
– How much should go in to providing social security benefits?
Economic Concept for Decision Making
Price elasticity of demand
Income elasticity of demand
Cost and output relationship
Opportunity cost
Multiplier
Propensity to consume
Marginal revenue product
Production function
Demand theory
Theory of firm—price, output and investment decisions
Money and banking
Public finance and fiscal and monetary policy
National income
Theory of international trade
What is Managerial Economics?
Managerial economic is concerned with decision
making at the level of firm.
It is viewed as a special branch of economics
bridging the gap between pure economic theory
and managerial practices.
It is defined as application of economic theory
and methodology to decision making process by
the management of the business firms.
The basic purpose of managerial economic is to
show how economic analysis can be used in
formulating business plans.
ME = Management + Economics
Management deals with principles which helps in
decision making under uncertainty and improves
effectiveness of the organization.
On the other hand economics provide a set of
preposition for optimum allocation of scarce
resources to achieve a desired result.
ME deals with the integration of economic theory
with business practices for the purpose of
facilitating decision making and forward planning
by management.
In other words it is concerned with using of logic of
economics, mathematics, and statistics to provide
effective ways of thinking about business decision
problems.
Diagrammatic Presentation
Managerial Economics:
Application of Economics
to solving business
Optimal solution to
business problems
Decision Making
Mathematics
Statistics
Operations Research
Management Theory
Accounting
Computers
Scope of ME
Demand analysis,
Forecasting,
Production function,
Cost analysis,
Inventory Management,
Advertising,
Pricing System,
Resource allocation etc
Nature of ME
Concepts of Micro-Economics
– Elasticity of demand
– Marginal cost
– Marginal revenue
– Market structures and their significance in pricing
policies.
Concepts of Macro-Economics
– The magnitude of investment and the level of
national income,
– The level of national income and the level of
employment,
– The level of consumption and the level of national
income
In ME emphasis is laid on those prepositions which
are likely to be useful to management
Factors Influencing Managerial Decision
Making
Besides economic variables
managerial decision making is also
influenced by other significant
variables, such as
– Human and Behavioral Considerations
– Technological Forces
– Environmental Forces
Steps in Decision Making
Establish objectives
Specify the decision problem
Identify the alternatives
Evaluate alternatives
Select the best alternatives
Implement the decision
Monitor the performance
Tools of Decision Making
Opportunity cost
Incremental principle (Cost &
Revenue)
Principle of the time perspective
Discounting principle
Equi-marginal principle
Reference Books
Managerial Economics – M L Jhingan
Managerial Economics – Varshney & Maheshwari
Managerial Economics – P L Mehta
Managerial Economics – Atmanand
Managerial Economics – Craig Peterson & Cris
Lewis
Managerial Economics – Salvatore
Managerial Economics – Joel Dean
Managerial Economics – Mithani
Activity