Sie sind auf Seite 1von 10

MANAGERIAL ECONOMICS

Chapter 1

Managerial Decision Dilemmas

What is managerial Economics?

Economic Theory and Principles Demand Analysis Cost analysis Production and supply analysis Consumer behavior Market structure Distribution theories

Managerial Economics
(Application of Economic Principles to address managerial decision dilemmas and solve business problems)

What will be the likely demand for a new product ? How much quantity to be produced? What production technique/technology should be used? what is the best location for a new plant? How much the new product be priced? How to allocate available capital? etc

Characteristics of Managerial Economics

Micro Economic in character Pragmatic and application oriented in nature Normative in approach Takes into account Macro Economic factors

Focus on partial equilibrium

Scope of Managerial Economics

Demand analysis and forecasting

Cost analysis
Consumer behavior

Production and supply analysis


Understanding market structures and pricing decisions Profit an profitability management Capital investment Management

Role of a Managerial Economist


To study and analyze the external business environment To Provide economic intelligence (at Macro and Micro level) To conduct feasibility studies and provide forecast on various key aspects of the business (sales, revenue, cost etc)

To involve in specific business operations like production and capacity planning, product mix determination, ` etc.

Basic Economic Principles applied in Managerial Economics

The Principle of Opportunity cost


It is the benefit foregone due to the alternative not selected Always used in all decisions involving choice Can be implicit or explicit, real or monetary, quantifiable or nonquantifiable

The Concept of marginality and equi-marginality

The concept of marginality deals with a unit increase in cost or revenue or utility. The principle of Equi-marginality deals with allocation of resources among the alternatives. It prescribes that the resources should be so allocated that the value added by the last unit is the same for all alternatives.

Incremental Principle

This principle is an extension to the concept of marginalism. The difference is it consider chunk change and not the Unit Change. This is more suitable to business decision making as decision variable are not subject to unit change but to bulk change.

Basic Economic Principles applied in Managerial Economics Principle of Time Perspective

This principle states that business decisions should take into consideration both short-run and long-run affects on cost (revenue, production etc) to maintain a right balance.

Discounting Principle

This Principle takes into consideration the time value of money. It suggests that if a decision generates outcomes in future dates then it is necessary to discount future value of such outcome to arrive at the present value of the outcome before a valid comparison of alternatives can be drawn.

TOTAL AVERAGE AND MARGINAL PRODUCT OF LABOR SCHEDULES


NO. of Labor 0 1 Total output 0 2 Avg. output 2.0 2 Marginal Output

2
3 4 5 6 7

5
9 14 22 40 57

2.5
3.0 3.5 4.4 6.7 8.1

3
4 5 8 18 17

8
9 10

63
64 63

7.9
7.1 6.3

6
1 -1

TOTAL AVERAGE AND MARGINAL PRODUCT OF LABOR

EXERCISE

A Manufacturer of personal computers has an inventory of 10,000 hard drives that sold for 1000/- per unit last year. The current price is not more than 700/-. By adding one of these drives to their stock of personal computers, the price of each computer is increased by 800/- per unit. Should the drivers be added? What is the opportunity cost of these drivers? Explain?

An pension scheme offers you three payment options against a one time premium paid today.
1. 180000/- each year for the next 12 years 2. 150000/- each year for the next 18 years 3. 110000/- each year for the next 12 years and alum-sum payment of 8,10,000/- at the end of 18th year. Which option will you choose? Explain? what should be the premium to be paid today.

Das könnte Ihnen auch gefallen