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RobbinsDefinition

Lionel Robbins defined economics as

the science which studies human

behaviour as a relationshipbetween

endsand scarce meanswhich have

alternative uses

(Robbins,1935)

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Meaning of Economics

Economics is the social science that

studies the

behavior of individuals, households and

organizations (agents) when they

manage or use the scarce resources, to

achieve desired results (which have

alternative uses)

agents are assumed to act rationally.

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Rationality

To act rationally is to act objectively, keepingin view the ends and the means, theobjectives and constraints.

In the decision-making context, arational behaviour implies thefollowing:

First, all possible courses of action areknown.

SecondIy, you are able to separate these

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Rationality continues

Third- Divide all such options into two

categories - feasible and infeasible.

Finally assess the consequences.

Thus economic rationality is a preconditionfor attaining optimality in a given decision

environment.

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Why ME for PGDM students

Almost all business decisions, in one way or

the Other, relate to economic variables 'like

demand, price, supply, stock, input, output,

production, utility.

Managerial Economics, provides a tool

box to analyse economic problems and

helps managers to take optimumdecisions.

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A finance manager chooses the sources

and uses of funds. A production manager chooses the

product and input-output.

A personnel manager chooses the humanresource.

A sales manager chooses the market

segments.A purchase manager chooses the quality

of materials.

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Needs Eat, Dress, Move

Wants Cheeseburger, Branded, Car

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This Is Demand

Demand

Need/Want Buying Power Willing to pay

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Economic Activities

Actions that involve the production, distribution andconsumption of goods and services at all levels withina society.

"Human activities which are performed in exchangefor money or money's worth are called economicactivities."

In other words, economic activities are those efforts

which are undertaken by human beings to earnIncome, Money, Wealth for life and to securemaximum satisfaction of wants with limited andscarce means.

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Thanks

Queries??