MANAGERIAL ECONOMICS
                   www.eiilmuniversity.ac.in
       
        
      Subject: MANAGERIAL ECONOMICS                                                Credits: 4 
                                         SYLLABUS 
                                               
      Basics of Managerial Economics  
      Introduction to Economics, Basics of Managerial Economics, Introduction to Economics, Nature and Scope of 
      Managerial Economics, Managerial Economics & Economics Related Disciplines Interrelationship with Other  
      Subjects, Economics Tools  
        
      Demand Theory  
      Demand Analysis, Elasticity Concepts, Demand Forecasting, and Importance of Demand forecasting  
        
      Cost of Production:  
      Cost Analysis, Economic of Scale, Cost Reduction and Cost control, Capital Budgeting  
        
      Production Theory  
       Introduction to Production Concept, Production Analysis, Stage of Production, Return to Scale, Supply  
      Analysis  
        
      Market Analysis  
      Introduction to market Structure, Perfect Competition, Monopoly, Oligopoly and Pricing  
        
      Suggested Readings:  
       
      1. Managerial Economics – Analysis, Problems and Cases, P.L. Mehta, Sultan Chand Sons, New Delhi  
      2. Managerial Economics – Varshney and Maheshwari, Sultan Chand and Sons, New Delhi  
      3. Managerial Economics – D. Salvatore, McGraw Hill, New Delhi  
      4. Managerial Economics – Pearson and Lewis, Prentice Hall, New Delhi  
      5. Managerial Economics – G.S. Gupta, T M H, New Delhi  
        
       
                      
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                      NATURE AND SCOPE OF ECONOMIC ANALYSIS 
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                     Structure 
                      
                     1.1 Introduction to Economics 
                     1.2 Concept of Economics in Decision Making 
                     1.3 Scope of Managerial Economics 
                      
                     1.4 Relationship between Managerial Economics and Other Subjects 
                      
                     1.5Tools and Techniques of Decision Making 
                     1.6 Review Questions 
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                     1.1 INTRODUCTION TO ECONOMICS 
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                     This unit introduces you to the basic concepts of Economics. After going through this 
                     unit you will come to know how Economics is helpful for Managers in their Decision 
                     making process. 
                      
                     Objectives: 
                         •   To analyze the concept of economics- scarcity and efficiency 
                         •   Micro Economics and macro economics 
                         •   Concept of managerial economics 
                         •   How managerial economics differ from economics and its relationship with 
                             management 
                      
                     Good morning students, the basic purpose of our studying of economics are the efficient 
                     utilization of scarce resources. We always have to make choices amongst various 
                     alternatives available for efficient utilization of our scarce resources. The twin theme of 
                     economics is scarcity and efficiency. We will discuss this twin theme in detail before 
                     coming to managerial economics. 
                      
                     Scarcity and Efficiency: The first question which comes here is what is Economics? 
                     Economics is the study of how society chooses to use productive resources that have 
                     alternative uses, to produce commodities of various kinds, and to distribute them among 
                     different groups.  
                     Two key ideas in economics: 
                         •   Scarcity of goods 
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                         •   Efficient use of resources 
                          
                     ™  Scarcity of goods 
                     The word scarce is closely associated with the word limited or economic as opposed to 
                     unlimited or free. Scarcity is the central problem of every society. 
                         •   Concept lies at the problem of resource allocation and problem of a business 
                             enterprise. 
                         •   The essence of any economic problem, micro or macro, is the scarcity of 
                             resources. 
                         •   The managers who decide on behalf of the corporate unit or the national economy 
                             always face the economic problem of Scarcity of good quality of materials or 
                             skilled technicians  
                      
                     As a Marketing Manager:  He may be encountering scarcity of sales force at his 
                     command 
                     As a Finance Manager: He may be facing the scarcity of funds necessary for expansion 
                     or renovate a program 
                     As a Finance Minister of the Country: His basic problem when he prepares the budget 
                     every year is to find out enough revenue resources to finance the necessary expenditure 
                     on plans and programs. Thus, we see that Scarcity is a universal phenomenon. 
                      
                     Let us attempt a technical definition of “Scarcity” 
                         •   In economic terms it can be termed as “ Excess of Demand” 
                         •   Any time for any thing if its demand exceeds its supply, that thing is said to be 
                             scarce. 
                         •   Scarcity is a relative term: Demand in relation to its supply determines the 
                             element of scarcity. 
                      
                     Problem:  
                     Unemployment:  Scarcity of jobs 
                     Unsold stock of inventory: Scarcity of buyers 
                     Under utilized capacity of plan:  Scarcity of   power or other support facilities. 
                      
                     Had there been no scarcities there would not have been any managerial problem. It is 
                     only because of this scarcity a manager has to decide on optimum allocation of scarce 
                     resources of: 
                         •   Man 
                         •   Materials 
                         •   Money 
                         •   Time 
                         •   Energy 
                      
                     Thus we see that every business unit or manager must aim at rational but optimum 
                     allocation of scarce resources. Optimality lies in finding the best use of scarce resources, 
                     given to the constraints. 
                      
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