natureofbusinesseconomics-210508065808.pptx

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1. TOPIC :INTRODUCTION TO ECONOMICS &BUSINESS ECONOMICS SUBJECT :BUSINESS ECONOMICS COURSE :BBA.., LL.B.(5-YDC) DEPARTMENT OF LAW

2. PAPER – III : BUSINESS ECONOMICS Unit – I: Business Concepts, Precepts and economic rationale of optimization. Nature and scope of Business economics. Basic problems of an economy – basic concepts and precepts Marginalism , equimarginalism opportunity cost, time prespective , discounting, risk and uncertainty, Efficiency, externality, and trade off, Constrained and unconstrained optimization. Unit – II : Theory of demanf . Factors affecting demand. Demand Function. The law of demand. Demand Schedule – Individual demand schedule and demand curve, market demand schedule and market demand curve. Exceptions to the law of demand. Measurement of elasticity. Point elasticity of demand. Price elasticity, income elasticity and cross elasticity of demand. Factors determining elasticity of demand and demand forecasting. Unit – III : Meaning of Supply. Law of supply. Elasticity’ of supply. Measurement of elasticity of supply. The theory of production. Production function. Equal production curves of isoquants . Marginal rate ofr technical substitution. Law of diminishing returns. Law of variable proportions. Returns to scale. Meaning of cost of production. Prime and supplementary costs. Opportunity cost. Total average and marginal costs. Unit-IV: Short run and long run price determination under perfect, monopoly, monopolistic and oligopoly markets ( competition). Criterion of pricing under various market structures. Pricing strategies and practices. Unit-V: Macro economics and business – Nature, concepts and measurements of national income. Determination of national income. Classical and Keynesian approaches. Types of inflation – Demand pull and cost push inflation. Phillips curve, stagflation. Concepts of economic growth and development. Factors determining growth of an economy Obstacles to development. SYLLABUS

3. Meaning of Economics&Business Economics

4. Economics & Business Economics Those activities of mankind are studied which are concerned with earnings and spending of money. For the successful handling of these activities certain laws and rules are formulated which are known as various theories of economics. Use of these rules & tools provided for analysing business conditions and applying them for arriving at various economic decision is known as business economics.

5. Meaning & Definition of Business Economics According to Spencer and Siegelman , “ Business Economics may be defined as the integration of economic theory with business practice for the purpose of facilitating decision making and forward planning by management.” Decision Making : Means selecting one out of a set of two or more alternatives or in other words, making a choice. Planning : Means planning for the business activities to be undertaken for future. ( The problem of selection arises because the supply of factors of production (land, labour , capital and enterprise) is scarce or limited.) Business Economics helps management in making right decisions and planning for the future under the condition of uncertainty.

6. Other Definitions of Business Economics According to McNair and Meriam , “ Business Economics consists of the use of economic modes of thought to analyse business situation.” According to Joel Dean , “The purpose of managerial economics is to show how economic analysis can be used in formulating business policies.” In the words of Joseph L. Messy , “ Business Economics is the use of economic theories by the management in making business decisions.

7. After the study of various definitions it can be concluded that: Business Economics is that branch of knowledge in which theories of economic analysis are used for solving business management problems and determination of business policies. Business Economics serves as a bridge between Economics and Business Management.

8. Business Economics Vs Economics Business Economics Economics It deals with the application of economic principles and theories to the problems of business firms. Economics deals with the body of principles and theories itself. Nature of business economics is Micro economics. Nature of economics is both Micro economics and Macro economics. Business economics is micro in character but it deals with the problems of business firms only and it does not study problems of individuals. Economics has a wider scope. The main focus of study in business economics is profit theory. Under economics all the distribution theories like rent, wages and interest are studied along with the theory of profit.

9. Nature Of Business Economics Business Economics is micro economic in its nature because it deals with matters of a particular business firm only. Business Economics is more concerned with the decision-making situations of individual establishments. Micro Economic Nature

10. Price output relationship of perfectly competitive firm Demand forecasting for a new product Law of returns to scale Law of demand Law of diminishing marginal utility………………….

11. Government policies – Public Finance International Trade Anti-monopoly measures Employment level National Income Uses Macro Concepts

12. Business Economics uses all economic theories relating to the profits, distribution of income etc Uses Theories of Firm

13. Theory of firm states that the primary aim of the firm is to maximize wealth. Decision making in managerial economics generally involves establishment of firm’s objectives, identification of problems involved in achievement of those objectives, development of various alternative solutions, selection of best alternative and finally implementation of the decision.

14. It studies the matters concerning the aims and objectives of a business firm . It determines the methods to be adopted for achieving such objectives . It also makes enquiry into the good and bad in decision making. – Example……. pricing strategy Normative Science

15. The philosophy of pragmatism is based on the notion that an ideology, theory, or proposition is true if it works in achieving the desired outcome It is not interested in mere theoretical discussions but in practical application of the theory. Pragmatic

16. The word "pragmatic" is often used to describe a decision-making theory that is entirely built on empirical data. It examines the outcomes of decisions by digging deep into the details of the decision-making process leading to a logical, successful result

17. Tools of Mathematics, statistics and operational research, Accounts, Finance in decision making and forward planning………… econometrics…- example methods of demand forecasting. Uses Modern Tools/Multi-disciplinary

18. Human and Behavioural factors, Environmental factors( Environmental laws), technological consideration that influences business decisions Gives importance to non economic consideration

19. C ulture , religion , the role of family, class, tradition, role of the individual, social and political dependence , the role of overnment , religion, language as a resource of human capital , corruption, factors that belong to the social pathology. of economic freedom

20. Some other variables also used in modern economic empirical research are democracy, rule of law, the state share of spending in the economy, legal structures……………

21. Conclusion Business economics is useful because: ( i ) It provides tools and techniques for managerial decisions , (ii) It gives answers to the basic problems of business management, ( iii) It supplies data for analysis and forecasting

22. Conclusion (iv) It provides tools for demand forecasting and profit planning , (v) It guides the managerial economist . Thus , Business economics offers a number of benefits to business managers. It is also useful to individuals, society and government( decision making, Profits…).