Managerial Economics

OBJECTIVES:

‍To introduce the concepts of scarcity and efficiency; to explain principles of micro economics relevant to managing an organization; to describe principles of macroeconomics to have the understanding of economic environment of business.

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UNIT I INTRODUCTION

‍The themes of economics – scarcity and efficiency – three fundamental economic problems – society’s capability – Production possibility frontiers (PPF) – Productive efficiency Vs economic efficiency – economic growth & stability – Micro economies and Macro economies – the role of markets and government – Positive Vs negative externalities.

UNIT II CONSUMER AND PRODUCER BEHAVIOUR

‍Market – Demand and Supply – Determinants – Market equilibrium – elasticity of demand and supply consumer behaviour – consumer equilibrium –Approaches to consumer behaviour –Production –Shortrun and long-run Production Function – Returns to scale – economies Vs diseconomies of scale – Analysis of cost – Short-run and long-run cost function – Relation between Production and cost function.

UNIT III PRODUCT AND FACTOR MARKET

‍Product market – perfect and imperfect market – different market structures – Firm’s equilibrium and supply – Market efficiency – Economic costs of imperfect competition – factor market – Land, Labour and capital – Demand and supply – determination of factor price – Interaction of product and factor market – General equilibrium and efficiency of competitive markets.

UNIT IV PERFORMANCE OF AN ECONOMY – MACRO ECONOMICS

‍Macro-economic aggregates – circular flow of macroeconomic activity – National income determination – Aggregate demand and supply – Macroeconomic equilibrium – Components of aggregate demand and national income – multiplier effect – Demand side management – Fiscal policy in theory.

UNIT V AGGREGATE SUPPLY AND THE ROLE OF MONEY

‍Short-run and Long-run supply curve – Unemployment and its impact – Okun’s law – Inflation and the impact – reasons for inflation – Demand Vs Supply factors –Inflation Vs Unemployement tradeoff – Phillips curve –short- run and long-run –Supply side Policy and management- Money market- Demand and supply of money – money-market equilibrium and national income – the role of monetary policy.