Managerial Economics

Scope

1. Mr. V. GURUMOORTHI
ASST. PROFESSOR
DEPARTMENT OF COMMERCE
11.12.15

2. Definition of Economics
Nature and scope of economic theory
Positive and normative economics

3. Economics is derived from two Greek words
Oikos-a house
Nomia-Law/Management
Means “managing an household”
Emphasis Significantcontribution
Wealth Adam Smith
Welfare Alfred Marshall
Scarcity Lionel Robbins
Growth Paul Samuelson

4. Adamsmith(1723-1790),
FatherofEconomics
Book“AnInquiryintoNatureandCausesof
WealthofNations”(1776)
definedeconomicsasthepracticalscienceof
productionanddistributionofwealth.

5. AlfredMarshall(1842-1924)wroteabook
“PrinciplesofEconomics”(1890)
Welfaredefinition
defined“PoliticalEconomy”orEconomicsis
astudyofmankindintheordinarybusiness
oflife;

6. LionelRobbins(Scarcitydefinition)
book“AnEssayontheNatureandSignificanceof
EconomicScience”in1932.
Accordingtohim,“economicsisasciencewhich
studieshumanbehaviourasarelationship
betweenendsandscarcemeanswhichhave
alternativeuses”
Ends–humanwants
Means–resourceswithwhichwantsarefulfilled

7. Prof. Paul Samuelson (Growth definition)
definedeconomicsas“thestudyofhowmenand
societychoose,withorwithouttheuseof
money,toemployscarceproductiveresources
whichcouldhavealternativeuses,toproduce
variouscommoditiesovertime,anddistribute
themforconsumption,nowandinthefuture
amongvariouspeopleandgroupsofsociety”

8. Economics -A Science and an Art
Economics -A Social Science
Economics is both positive and normative
science.

9. ????
It only describes what it is?
Positive science does not indicate what is
good or what is bad to the society.
It will simply provide results of economic
analysis of a problem.
A positive statement is based on facts.

10. Whatoughttobe
Itmakesdistinctionbetweengoodandbad.
Itprescribeswhatshouldbedonetopromote
humanwelfare.
Anormativestatementinvolvesethical
values.
Policymaking

11. Studiesthebehaviourofindividualdecision
makingunitwithregardtofixationofprice
andoutputanditsreactionstothechanges
indemandandsupplyconditions.
Consumerbehavior,productandfactor
pricing
Hence,microeconomicsisalsocalledprice
theory

12. Studiestheeconomicsystemasawhole.
Aggregateseconomic.Suchas,total
employment,savingandinvestment.
Hence,microeconomicsisalsocalled
incometheory