Managerial Economics - I

Managerial Economics - IF.Y.B.M.S. SEM II

Sucheta Pawar

WHAT IS MANAGERIAL ECONOMICS?The application of

economic analysis

to evaluate

Business decisionsSucheta PawarWHAT IS ECONOMICS?

Redefined the scope of economics to be "the science which studies human behaviour as a relationship between ends and scarce means which have alternative uses" (Robbins, 1932).In his Essay on the Nature and Significance of Economic ScienceLionel Charles Robbins, Baron Robbins, (22 November 1898 - 15 May 1984) a British economistEconomics deals with Economic Problem concerned with unlimited wants and scarce resourcesEconomics gives choice and economizing as a solution to economic problem Sucheta PawarA business firm also faces Economic Problem

WHAT TO PRODUCE?

HOW TO PRODUCE ?

HOW MUCH TO PRODUCE ?

WHERE TO PRODUCE ?

FOR WHOM TO PRODUCE ?Sucheta Pawar

APPLICATION OF MANAGERIAL ECONOMICSDominic SalvatoreSucheta PawarPROCESS OF DECISION MAKINGESTABLISH OBJECTIVEDEFINE THE PROBLEMIDENTIFY POSSIBLE SOLUTIONSELECT THE BEST POSSIBLE SOLUTIONIMPLEMENT THE DECISIONCONSIDER INPUT CONSTRAINTSCONSIDER LEGAL & OTHER CONSTRAINTSSucheta PawarMODEL BUILDINGDEFINITION & ASSUMPTIONSTHEORETICAL ANALYSISPREDICTIONSPREDICTIONS TESTED AGAINST DATAACCEPT THE MODELREJECT THE MODELSucheta PawarOBJECTIVES OF FIRM

OBJECTIVES OF FIRMSProfit MaximizationWalras, Jevons & Marshall Sales MaximizationBaumolUtility MaximizationHiggins & WIlliamsonStaff MaximizationBerle & MeansGrowth MaximizationProf. Robin MarrisSatisfying BehaviorProf. Simon