- Economics by Dr. Shradha
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Transcript - Economics by Dr. Shradha
Managerial Economics
-by
Dr. Shradha Malhotra Banga
Web blog: drshradhabanga.jimdo.com
Mail id: [email protected]
About the Instructor
Shradha M Banga
Academic Qualification
Ph.D.: Rajasthan University, Jaipur
M.B.A. (Investments) : ICFAI University
M.A. Economics: Rani Durgawati University, Jabalpur
Mastery in :
Innovation and Commercialization, Entrepreneurship:
Massachusetts Institute of Technology, Cambridge, U.S.
Globalization: University of Georgetown, U.S.
Statistics Inference: University of California, Berkeley, U.S.
About the Course
6 units covering:
Nature, Scope and Methods of Managerial
Economics (Chapter 1) theories,
Theory of the Firm (Chapter 2)
Demand Theory (Chapter 3)
Production and Cost Theory (Chapters 5 & 6)
Market Structure and Pricing (Chapter 8)
Pricing Strategy (Chapter 10)
Book
Nick Wilkinson: Managerial Economics: A Problem
Solving Approach: Cambridge University Press: 2005
(available for free download
at
http://www.railassociation.ir/Download/Article/Book
s/Managerial%20Economics%20A%20Problem%20Solving%20Approach.pdf )
A few brain activators..
Why is there discount after every season..
Can u apply some economic theory here…
Are a refrigerator seller what will u do in september
increase or decrease the price????
How much would be the increase or decrease???
The decisions to be made by
managers..
What to produce
How to produce and
For whom to produce..
Activity:
In Greater NOIDA you want to construct Water Park..
How would you make the strategy..
Managerial Economics
A means to an end by managers,
in terms of finding the most efficient way of allocating
their scarce resources and
reaching their objectives
Managerial Economics is related
to:
Economic theory
Decision Sciences
Business Functions
Economic theory
The main branch of economic theory with which
managerial economics is
related is microeconomics, which deals essentially
with how markets work
and interactions between the various components of
the economy
Micro Economics and Managerial
Economics
There is one main difference between the emphasis of
microeconomics and that of managerial economics
the former tends to be descriptive, explaining how
markets work and what firms do in practice,
while the latter is often prescriptive, stating what
firms should do, in order to reach certain objectives.
At this point it is necessary to make another very
important distinction: that between positive and
normative economics
Decision Sciences
The decision sciences provide the tools and techniques
of analysis used in managerial economics.
The most important aspects are as follows:
* numerical and algebraic analysis
* optimization
* statistical estimation and forecasting
* analysis of risk and uncertainty
* discounting and time-value-of-money techniques
Business Functions
Relationship with business functions..All firms consist
of organizations that are divided structurally into
different departments or units, even if this is not
necessarily performed on a formal basis.
Typically the units involved are:
1 production and operations
2 marketing
3 finance and accounting
4 human resources
Global Warming: A Problem
Can Managerial Economics Solve this issue
Solution: Kyoto Protocol
https://www.youtube.com/watch?v=yXRGwHZxi6A
Elements/Areas of Managerial
Economics
Starting point Obj of Business
Pricing: Demand and Cost theory
Consumer theory and Production theory
Theory of firm & Competition theory
Government policy for above
Methods to make Decisions
Make objective
Study theories:
scientific theories are positive and normative
Empirical observation: real world observation
Empirical study can be Experimental/controllable or
Observational
Example : Lab experiment and market experiment
Econometrics
Managerial Economics
Thus as a manager the main task is to firstly
understand the objective clearly,
Then to make a study of prevalent theories: their
features and relationships with own conditions.
These primary steps enables a manager to assume a
particular result (hypothesis) and then to create a
model for action.
Research Study through Model
The model clarifies the expected relationship between
variables under a respective study.
The foolproof analysis of data based on strong
assumptions gives way to acceptance or rejection of
theory for solving management problem.
This complete process of testing economic theory is
referred to as Econometrics by Economists.
A manager undertakes this process in each and every
decision of his professional life.
The take aways
Economic theory: describes the relationship betweens
between phenomenon that we observe
Good Theory makes testable predictions
Positive and Normative Study
Empirical Study
Experimental Study and observational study
Study of data
Econometrics