1-topic Introduction_to_Managerial_Economics.pptx

1-topic Introduction_to_Managerial_Economics

1. Introduction to Managerial Economics Presented by: Davron Bekchanov

2. What we are going to learn? Introduction to Managerial Economics Economic Decision Making Demand Analysis and Optimal Pricing Estimating and Forecasting Demand Production and Cost Analysis Innovation and Technological Change

3. What we are going to learn? Perfect Competition Monopoly and Oligopoly Economic Impact of Government Policies Game Theory and Competitive Strategy Decision Making under Uncertainty Asymmetric Information and Organizational Design

4. What is economics? Economics is the study of how individuals, businesses, governments, and societies make choices about allocating scarce resources to satisfy unlimited wants and needs . Microeconomics: Focuses on the behavior of individuals and firms, analyzing supply and demand, pricing, competition, and decision-making at the small scale . Macroeconomics : Deals with the overall economy, including national income, inflation, unemployment, and economic growth, studying aggregate outcomes of individual decisions.

5. What is management? Management is the process of planning, organizing, leading, and controlling resources—including human, financial, and physical assets—within an organization to achieve its goals effectively and efficiently. It involves coordinating activities to ensure that tasks are completed in a way that optimizes resources and meets the organization’s objectives.

6. What is management? Key Functions of Management: Planning : Setting goals and determining the best course of action to achieve them. Organizing : Arranging resources and tasks to accomplish the objectives. Leading : Motivating and guiding individuals and teams to work towards the organization’s goals. Controlling : Monitoring performance and making adjustments to ensure that goals are met.

7. What is Managerial Economics? • Managerial Economics is the application of economic theory and quantitative methods to the managerial decision-making process. • Combines concepts from microeconomics with business practices to facilitate decision-making and strategy formulation within organizations. • Helps in solving problems related to pricing, production, cost management, and resource allocation.

8. Definitions of “Managerial economics” 1. Joel Dean Definition : "Managerial Economics is the use of economic concepts and economic analysis for identifying and solving managerial problems." 2 . E.F. Brigham Definition : "Managerial Economics is the application of economic theory and quantitative methods (mathematics and statistics) to the managerial decision-making process." 3 . Hague Definition : "Managerial Economics is concerned with the application of economic concepts and principles to business decision-making."

9. Definitions of “Managerial economics” 4. Mansfield Definition : "Managerial Economics is concerned with how economic analysis is used to make decisions and solve problems in everyday management." 5 . Christopher Thomas and S. Charles Maurice Definition : "Managerial Economics is the science of directing scarce resources to manage cost effectively."

10. Why managerial economy is important?

11. Importance of Managerial Economics • Decision-Making: Provides a systematic framework for analyzing business decisions. • Optimizing Resources: Helps in making efficient use of limited resources. • Strategic Planning: Assists managers in formulating strategies that maximize profitability and competitive advantage. • Forecasting: Enables prediction of future market trends and demand, aiding in better planning.

12. The Relationship Between Economics and Managerial Economics • Microeconomics: Focuses on individual markets and the behavior of consumers and firms. • Macroeconomics: Deals with the economy as a whole, influencing factors like inflation, unemployment, and economic growth. • Operations Research and Statistics: Quantitative methods used in Managerial Economics for problem-solving and decision-making.

13. Key Concepts in Managerial Economics • Demand Analysis and Forecasting: Understanding consumer behavior and predicting future demand. • Cost Analysis: Analyzing cost structures to identify areas for cost reduction and efficiency improvement. • Pricing Strategies: Setting optimal prices based on market conditions and cost structures. • Profit Management: Ensuring profitability through effective cost control and revenue management. • Capital Budgeting: Making investment decisions to maximize long-term returns.

14. Managerial Economics and Business Decision-Making • Marginal Analysis: Evaluating the additional benefits and costs of decisions. • Break-Even Analysis: Determining the level of output where total revenue equals total cost. • Risk Analysis: Assessing uncertainty and risk to make informed decisions. • Game Theory: Analyzing competitive behavior and strategies in markets where actions of competitors are interdependent.

15. Role of Managerial Economists • Advisory Function: Provide insights and recommendations to management based on economic analysis. • Data Analysis: Utilize data to forecast market trends, demand, and economic conditions. • Strategic Planning: Assist in long-term planning by providing economic scenarios and risk assessments. • Policy Formulation: Help in creating policies related to pricing, production, and investment decisions.

16. Real-World Applications of Managerial Economics • Case Study 1: How a company used demand forecasting to optimize inventory management. • Case Study 2: The role of cost analysis in reducing production costs in a manufacturing firm. • Case Study 3: Application of pricing strategies to increase market share in a competitive industry.

17. Challenges in Managerial Economics • Data Availability: Incomplete or inaccurate data can hinder decision-making. • Market Dynamics: Rapid changes in market conditions can affect the applicability of economic models. • Globalization: Managing decisions in a global context with varying economic environments. • Ethical Considerations: Balancing profit maximization with social responsibility and ethical practices.

18. Conclusion • Recap: Managerial Economics is crucial for effective decision-making in businesses. • Future Learning: In the subsequent lessons, we will dive deeper into specific concepts. • Questions: Invite the audience to ask any questions or seek clarification.

19. References • Samuelson, W.F., & Marks, S.G. (2012). Managerial Economics. Wiley. • Petersen, H.C., Lewis, W.C., & Jain, S.K. (2006). Managerial Economics. Pearson Education. • MIT OpenCourseWare: Managerial Economics - https://ocw.mit.edu/