MB 0042 Managerial Economics Contents

Unit 1 Meaning and Importance of Managerial Economics Unit 2 Demand Analysis Unit 3 Demand Forecasting Unit 4 Supply & Market Equilibrium Unit 5 Production Analysis Unit 6 Objectives of Firms Unit 7 Revenue Analysis and Pricing Policies Unit 8 Nature of Markets and Pricing of Products I Unit 9 Consumer Surplus & its Operational Significance
Edition: Spring 2010 BKID B1131 30 Dec. 2009
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Unit 10 Macro Economics and Some of its Measures Unit 11 Consumption Function and Investment Function Unit 12 Stabilization Policies Unit 13 Business Cycles Unit 14 Inflation and Deflation Unit 15 Natural Environment and Business Reference

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Dean Directorate of Distance Education Sikkim Manipal University Board of Studies Chairman HOD Management & Commerce SMU DDE Additional Registrar SMU DDE Controller of Examination SMU DDE Dr. T. V. Narasimha Rao Adjunct Faculty & Advisor SMU DDE Prof. K. V. Varambally Director Manipal Institute of Management Manipal Content Preparation Team 1. Prof. M. M Gupta Former Principle & HOD, Economics Sheshadripuram College, Bangalore 2. Prof. G. Krishnaveni Professor of Economics Sheshadripuram College, Bangalore Edition : Spring 2010 This book is a distance education module comprising of collection of learning material for our students. All right reserved. No part of this work may be reproduced in any form by any means Without permission in writing form Sikkim Manipal University of Health. Medical and Technological Sciences, Gangtok, Sikkim. Printed and Published on behalf of Sikkim Manipal University of Health, Medical and Technological Sciences, Gangtok, Sikkim by Mr. Rajkumar Mascreen , GM, Manipal Universal Learning Pvt. Ltd., Manipal 576104. Printed at Manipal Press Limited, Manipal. Edited & Modified by 1. Prof. Shivram Krishnan HOD, Management & Commerce SMUDDE, Bangalore

Mr. Pankaj Khanna Director HR, Fidelity Mutual Fund Mr. Shankar Jagannathan Former Group Treasurer Wipro Technologies Limited Mr. Abraham Mathew Chief Financial Officer Infosys BPO, Bangalore Ms. Sadhna Dash Ex-Senior Manager, HR Microsoft India Corporation (Pvt.) Ltd.

SUBJECT INTRODUCTION
Economics touches the life of all of us. Any business is a part of economy. The main function of a manager is decision making. He needs to make optimal utilization of scarce resources available to him. In doing so, he needs to understand the role that economic environment plays and has an impact on the business activities. Modern economic theory offers considerable support to managers to find a frame work for meeting business challenges. Managerial Economics is the applications of concept of economics in the business management. This text comprises 15 units as mentioned below: Unit 1: Background, meaning, definition, features, scope and importance of managerial economics and basic functions of managerial economist. Unit 2: Demand analysis, concepts of elasticity of demand and their practical applications in business decisions. Unit 3: The concept of demand forecasting, its importance, various methods of demand forecasting for both old and new product. Unit 4: Concept of supply, various aspects of supply, concept of market equilibrium and the forces that bring about changes in market equilibrium. Unit 5: Concept of production function and its importance, different types of production functions, benefits of large scale production, their importance, different types of cost concepts, cost functions and their implications in managerial decision making. Unit 6: Changing objectives of a business firm, various models which highlights business and their implications on a business unit. Unit 7: Revenue concepts which help to make cost benefit analysis, concept of pricing policy with their determinants, different objectives of pricing policy and various pricing methods adopted by business firms. Unit 8: Meaning of market and market structure, kinds of markets, perfect competition, monopoly, monopolistic competition, Monopsony, Duopsony, Oligopsony and industrial analysis.

Unit 9: Consumer surplus, operational significance of consumer surplus, producer surplus, and the application of concepts. Unit 10: Concepts of macro economics, ratios, index numbers, and its significance in modern business management. Unit 11: Consumption and investment functions with their major determinants, importance of multiplier and accelerator in national income multiplication. Unit 12: Economic stability, different instruments that are applied to insure economic stability in a modern economy. Unit 13: Concepts of trait cycle, causes and effects, various theories and measures to control business cycle. Unit 14: Inflation and deflations and causes effects, kinds of inflation, various remedial measures to control inflation, deflation and stagflation. Unit 15: Various kinds of environmental degradation, challenges and importance of understanding environment and its influence on business.