SESSION-1

MANAGERIAL ECONOMICS AN INTRODUCTION

INTRODUCTION OF
A. Basic terms & concepts of Economics
1.Economics
2.Branches of Economics 3.Economy & types of economies 4.Main sectors of an economy

B. Basic mathematical tools of economic analysis

1.Concept of variables & functions 2.Types of functions

3.Concept of slope
4.Concept of derivatives 5.Optimisation with calculus

5.Production & factors of production

6.Price mechanism

1. Economics
Simplest definition of Economics Economics is a science which studies about the economic activities of the people. Best definition of Economics (Scarcity definition by Prof. L. Robbins) Economics is a science which studies human behavior as a relationship between ends & scarce means which have alternate uses.

2. Branches of Economics
Deals with economic behavior Deals with the economy as a whole. of individual economic units. Studies the general economic Studies how an individual problems facing the economy. consumer maximizes his satisfaction, how an individual producer maximizes his profit etc. Main exponents are the John Maynard Keynes was classical & the neo-classical the main exponent of economists. macroeconomic theories.

Microeconomics

Macroeconomics

Managerial Economics is considered to be applied microeconomics.

3. ECONOMY & TYPES OF ECONOMIES

Economy- A system which provides people with the means to work & earn a living. Functions of an economy Allocation of resources Types of economies On the basis of ownership of means of production- Capitalist, Socialist, Mixed On the basis of utilization of available resources- Developed, Under-developed ,Developing
Distribution of goods & services

4. Types of sectors
On the basis of economic activities in which people are engagedi. Primary sector (Agricultural sector) ii. Secondary sector (Industrial sector) iii. Tertiary sector (Service sector)

On the basis of ownership of means of production-

i. Private sector ii. Public sector iii. Joint sector

5. Production & Factors of production

Production- Transformation of inputs into output. Inputs
Factor inputs /Factors of production
Basic/Primary inputs required for production. Durable in nature.

Non-Factor inputs
Inputs other than primary inputs known as secondary inputs. Non- durable in nature. Ex- Raw materials , fuel, power etc.

- Land
-Labour -Capital - Enterprise

(Basics of demand, supply & price

determination)
Price mechanism- Automatic mechanism of determination of price of a good through market forces of demand & supply. Demand-Inversely related to price

6. Price Mechanism

Supply- Positively related to price

Equilibrium price is determined at a point where, Demand = Supply
S S P D Q

D Q