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Economy

The word economy comes from a Greek word forone manages a household.

Society and Scarce Resources

The management of societysresourcesis important

because resource are scarce.

Scarcity means that society has limited resources

and therefore cannot produce all the goods and

services people wish to have.

Scarcity implies choice and choice implies cost.

Introduction

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scarcity

Unlimited choice Limited resources

What to produce? How to produce? For whom to produce?

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Economics : Science of scarcity Scarce resources for society :

- Land

- Labour (L)

- Capital (K)

- Skill

Scarce resources of a business unit :- Men

- Machine

- Material- Money

- Mineral

Unlimited desires : Profitability ()

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Economics is the study of how society manages itsscarce resources.

Economics as a science is concerned with the

problem of allocation of scarce resources among

competing ends (Desires).

What is Economics

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The Circular Flow of Economic Activity

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What is Managerial Economics

Managerial economics is the branch of economics

which deals with managing the scarce resources of

a firm.

Managerial economics uses the tools and

techniques of economic theory for effective andefficient utilization of economic resources, in order

to optimize the profitability of a business

organization.

Introduction to Managerial Economics

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.

Nature of Managerial Economics

Managerial Economics is the integration of

economic theory with business practice for thepurpose of facilitating decision making and

forward planning by the management.

Spencer & Siegel man

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Managerial Economics

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Managerial Economics is basically micro-economic in

characteristics.

Managerial Economics takes the help of macro-

economics to understand and adjust to the environment

in which firm operates.

Managerial Economics follows normative school ofthought rather than positive school.

Managerial Economics is prescriptive rather than

descriptive, in approach.

It is both conceptual (qualitative) as well as metrical

(quantitative).

The contents of Managerial Economics are based mainly

on the theoryof the firm.

Characteristics of Managerial Economics

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Demand Analysis and Demand Forecasting

Production Analysis

Cost Analysis

Pricing and Output

Profit Management

Scope of Managerial Economics

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