Saturday, 2 November 2019

Unit 1: Introduction to Managerial Economics


                          Unit 1: Introduction to Managerial Economics 

Managerial Economics combines economic theory with managerial practice.

The subject offers powerful tools and techniques for managerial policy-making.

A close interrelationship between management and economics has led to the development of managerial economics.

Managerial economics, may be taken as economics applied to "problems of choice" or alternatives and allocation of scarce resources by the firms.

Managerial economics covers the four groups of problem essential in both decision making and forward planning: Resource allocation, Inventory and queuing problem, Pricing problems and Investment problems.

A firm applies principles of economics to answer these questions: What to produce and how much to produce? How to produce? For whom to produce? Every economy faces some problems.

These problems are associated with growth, business cycles, unemployment and inflation.

A recession is defined as a period of two or more successive quarters of decreasing production.

Unemployment occurs when a person is available to work and currently seeking work, but the person is without work.

A rising price level means inflation.

It has many disadvantages: uncertainty, discourage productive activity, inefficient use of resources etc.

Stagnation is a serious problem and a cause of other problems in an economy.

Inflation: It is a rise in the general level of prices of goods and services in an economy over a period of time.

Macroeconomics: It is study to economy as whole.

Managerial Economics   Microeconomics: It is concerned with the study of individuals firm or unit.

Recession: It is defined as a period of two or more successive quarters of decreasing production.

Stagnation: It is a period of many years of slow growth of gross domestic product, in which the growth is, on the average, slower than the potential growth in the economy.

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