MODULE 1 ME BBA1.pptxWith the college dresss

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1. Managerial economics introduction DD/MM/YYYY Ugmgmt 605 Richa Goswami

2. BOOKS Text Book * Managerial Economics, (Fourth edition) H.Craig Petersen, W. Cris Le Reference books * Managerial economics in a global economy, Dominick Salvatore * Managerial economics, Damodaran , Suma* Managerial economics, Dwivedi , D.N. * Managerial economics, H.L.Ahuja * Managerial economics, Truett Lila J. * Managerial economics, Hirschey , Mark* Modern Economic Theory, K.K.Dewitt & Navalkur * S.K. Misra & V. K. Puri , Indian Economy, Himalaya Publishing House 2011.

3. Concept Meaning And Definitions

4. Definition S Wealth Definition by Adam Smith  • a science which studies the nature, causes and growth of the wealth of nations • Adam Smith – Father of economics Welfare Definition by Alfred Marshall  • 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 use of the material requisites of well being. Thus it is, on the one side, a study of wealth; and on the other, and more important side the study of man. Scarcity Definition by Lionel Robbins  • is the science which studies human behavior as a relationship between ends and scarce means which have alternative uses. • Four characteristics • Man has unlimited wants or ends. • The means or resources to satisfy them are limited. • These resources are not specific & have alternate uses. • Man has therefore to choose between wants. • Criticism • Aggregates of the entire economy (national income, total output etc.) and the problem of unemployment and instability are not covered • The causes and growth patterns of national income and per capita income are left untouched. Growth Definition by Paul A. Samuelson  • is a study of how man and society choose, with or without the use of money, to employ scarce productive resources which could have alternate uses, to produce various commodities over time and distribute them for consumption now and the future among various people and groups of society. Concerns of Modern Economics  • Allocation of society’s resources among alternative uses • Efficiencies and inefficiencies of economic system • Distribution of the society’s output among individuals and groups • Ways in which production and distribution change over time

5. Difference between economics and managerial economics

6. Managerial Economics   Managerial Economics  • Managerial economics consists of the use of economic modes of thought to analyze business situations. McNair and Meriam • The purpose of Managerial Economics is to show how economic analysis can be used in formulating business policies by • Identifying possible courses of action • Evaluating the revenues and costs associated with each course of action • Choosing the one course that best meets the goal or objective of a firm Managerial Economics Defined  • The application of economic theory and the tools of decision science to examine how an organization can achieve its aims or objectives most efficiently.

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8. Scope

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11. Importance of MEA Consumers: Optimal Decision-Making: Managerial economics helps consumers make informed decisions by understanding how prices, income, and other factors influence their purchasing power. This knowledge allows consumers to make optimal choices based on their preferences and budget constraints. Consumer Welfare: The discipline assists in analyzing market structures and competition, ensuring that consumers have access to a variety of goods and services at competitive prices. This contributes to consumer welfare by promoting efficiency and preventing monopolistic practices. Producers: Cost Management: Managerial economics aids producers in optimizing production processes and minimizing costs. This includes decisions related to input costs, production techniques, and resource allocation, which directly impact a firm's profitability. Pricing Strategies: Understanding demand and supply dynamics enables producers to set prices that maximize profits while remaining competitive in the market. Managerial economics guides producers in finding the right balance between revenue generation and cost efficiency. Administrators: Resource Allocation: Managers use managerial economics to allocate resources efficiently, whether it's capital, labor, or raw materials. This helps in achieving organizational goals and improving overall performance. Policy Formulation: Managerial economics provides a framework for administrators to formulate effective business policies. It assists in decision-making regarding expansion, diversification, and other strategic choices.

12. Planners: Long-Term Planning: Managerial economics aids planners in making long-term strategic plans for organizations. It involves forecasting market trends, analyzing risks, and developing strategies to adapt to changing economic conditions. Investment Decision-Making: Planners use managerial economics to evaluate investment opportunities. This includes analyzing the expected returns, risks, and overall feasibility of various projects before committing resources. Academicians: Research and Teaching: Managerial economics serves as a foundation for academic research and teaching in economics and business schools. It provides a theoretical and practical framework for understanding economic principles and applying them to real-world business situations. Contributions to Economic Theory: Academicians contribute to the development of economic theories by conducting research in managerial economics. This research often leads to advancements in understanding market behavior, firm strategies, and economic decision-making.

13. Micro Economics AND Macro Economics    Micro Economics  Studies individual units like individual household, pricing of a firm, wages of a worker, profits of an entrepreneur, and so on. • Theory of Demand • Theory of Production • Price determination in Commodity market • Price determination in Factor market Microeconomic issues  • choices: what, how and for whom • the concept of opportunity cost • rational economic decision making: marginal costs and marginal benefits • microeconomic objectives • efficiency • equity Macro Economics  Deals with the average and aggregates of the system rather than the particular items in it, and attempts to define these aggregates in a useful manner and examines their relationship. • Theory of National Income • GDP/GNP/NDP • Theory of Employment • Unemployment, its types and rate • Theory of Money • Commodity money (barter), modern money (paper), banking and insurance, interest rates. • Three purpose – transaction, saving and speculative Macro Economics  • Theory of General Price Level • Wholesale Price index, consumer price index • Theory of International Trade • Balance of payment, foreign exchange rate and purchasing power parity theory • Economics of Growth • Four factors – human resource, natural resource, capital formation and technological changes and innovation • Business cycles, investment and savings Macroeconomic issues  • growth • unemployment • inflation • balance of payments problems • cyclical fluctuations

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