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´An Application of Economicsµ

 ÷ontents
‡ Economics
‡ Economics Theory
‡ Managerial Economics
‡ ÷haracteristics Of ME
‡ Scope Of ME
‡ Demand Analysis
‡ Law Of Demand
‡ ÷haracteristics Of Law Of Demand
‡ Determinants Of Law Of Demand
 E÷ONOMI÷S
  is the social science that
studies the production, distribution
and consumption of goods and
services. The term economics comes
from the Ancient Greek word
(oikonomia, "management of a
household, administration") hence
"rules of the house(hold)".
.A definition that captures much of
modern economics is that of
Lionel Robbins
"the science which studies
human behaviour as a relationship
between ends and scarce means
which have alternative uses.´
 Scarcity
Scarcity means that available resources are
insufficient to satisfy all wants and needs.
Absent scarcity and alternative uses of
available resources, there is no economic
problem..
Economic analysis is applied throughout
society, in business, finance and
government, but also in crime, education,
the family, health, law, politics, religion,
social institutions, war, and science
 Economics Theory
Micro Economics Macro Economics
´Micro Economics is the ´ Macro Economics deals
study of particular not with individual
firms, particular quantities as such
households , individual but with aggregates
prices, wages, income, of these quantities;
individual industries, not with individual
particular Incomes but with the
commodities.µ national income; not
with individual prices
but with the price
level; not with
individual outputs but
with the national
outputµ
 Managerial Economics
Managerial Economics is that the part
of economic theory which deals with
the application of economics rules
and concepts to the solution of
business problem or the problem of
allocation of resources.
According to ¶Spencer and Siegelman·

´ Managerial Economics is the

integration of economic theory with
business practices for the purpose of
facilitating decision making and
forward planning by management.µ
  
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 ÷haracteristics of
Managerial Economics
‡ Managerial Economics is micro- economics.
‡ Managerial Economics largely uses that
body of economics concepts and principles
which is known as ¶ Theory of Firm·.
‡ Managerial Economics is pragmatic.
‡ Managerial Economics belongs to normative
economics.
 Scope of Managerial
Economics
‡ Demand Analysis and forecasting
‡ ÷ost Analysis
‡ Production and supply analysis
‡ Pricing Decisions, policies and practices
‡ Profit management.
‡ ÷apital Management
 Difference between Micro and Macro Economics

‡ Micro economics is the study of individual economic unit

such as a firm, an industry , a consumer while macro
economics analyses the economy as a whole such as total
income, total employment etc.
‡ Micro economics studies the problem of price
determination, optimization goal of a consumer or a single
firm etc while macro economics studies the problem of
economic growth, employment and income determination etc.
‡ The main determinant of microeconomics is ¶Price·, it is also
called ¶Price Theory· while the main determinant of
macroeconomics is ¶National income, it is also called ¶ Income
theory ·.