Chapter -1 Managerial Economics

Introduction 1 Definition of managerial economics 1 Nature of managerial economics 3 Scope of managerial economics 5 Significance of managerial economics 6 Economic problem 7 Meaning of economic problem 8 Economic problem at family level 9 Economic problem at universal level - universal problem9 Seven questions faced by all economics 10

Chapter -3 Profit
Meaning of profit 63 Accounting vs. economic profit 63 Theories of profit 65 Risk taking theory Uncertainty bearing theory of profit Innovation theory of profit 66 Dynamic theory of profit 67 Profit in static society 68 Measurement of profit 68 Economic and accounting profit 68 Depreciation 70 Inventory valuation 71 Profit policy 73 Reasonable profit target 74 Forms of profit standard 75 Capital attracting standard Plough back standard 75 Normal earnings standard 76

Chapter -2 Types of Business Organization

Introduction 17 Define a firm as a producing unit 17 Firm and industry 19 Firm and plant 20 Types of business organization 21 Private sector Public co operative Joint Sole proprietorship of proprietary firms 22 Partnership firm 26 Joint stock company 30, 37 Diff between private and public limited company 35 Joint Hindu family firms / organization 37 Co operative societies or co operative form of business organization 39 Public enterprises/ public sector undertaking (PSU) 43 Joint sector enterprises 48 Non profit organization 49 Business organization of the new millennium 51 Diff between private and public sector 52 Organization goals /motivation/objectives of firms 53 Maximization of profit /traditional approach 53 Reasonable profit target 54 Sales revenue maximization 55 Maximization of firms growth rate (utility maximization) Satisfying behavior 56 Homeostatic theory 57 Life cycle approach Other goals or objectives of firms 59

Chapter 4 Demand Analysis

Concept of demand 81 Determinants of demand 82 Factors influencing individual demand Factor influencing market demand Demand schedule 85 Individual demand schedule Market demand schedule Demand curve 87 Individual demand curve 87 Law of demand 88 Exceptions to the law of demand or exceptional demand curve Giffon goods 94 Changes in quantity demanded and changes in demand Expansion or extension and contraction of demand (changes in QD) Increase or decrease in demand (changes in demand) 94 Reasons for change (increase or decrease in demand) 95

Elasticity of demand 96 Price elasticity of demand 96 Types of price/degree of elasticity 98 Perfect elastic demand 99 Perfectly inelastic demand 100 Relatively elastic demand 100 Relatively inelastic demand 101 Unitary elastic demand 102 Measurement of elasticity 103 Percentage method 103 Point elasticity method Total Outlay expenditure or revenue method Point geometric method Factors influencing price elasticity of demand 107 Income elasticity of demand 111 Measurement of income elasticity Types of income elasticity of demand 113 Uses of the concept of income elasticity of demand 113 Cross elasticity of demand 114 Uses of Cross elasticity of demand 116 Demand forecasting 117 Meaning Necessity Factors influencing Levels of forecast Techniques or method Methods of Demand forecasting for established goods Interview Opinion polling Collective opinion Sample survey Panel of experts Composite management opinion Projection approach 123 Correlation and regression analysis 123 Time series analysis Methods of Demand forecasting for new products 125 Evolutionary method Substitution method Growth pattern Opinion polling 125 Sample survey

Indirect opinion polling Criteria for a good demand forecast 126 Introduction to index numbers 127 Classification of index number 128 Price indices Quantity indices Special purpose indices Principles and practical steps in price index number 130 Problems of construction of index number 130 Purpose of index number Selection of base period 131 Selection of items Price quotation Problem of weighting Limitation of index number 134

Chapter 5 Productions and Cost

Introduction 139 Production function 139 Impotence 141 Law of diminishing returns or the law of variable proportion 143 Average marginal relationship 145 3 stages of law of variable proposition or diminishing returns Limitation of law of diminishing returns Application of law of diminishing returns Return to scale or laws of return to scale 149 Economies and diseconomies of scale 151 Internal and external diseconomies 153 Supply analysis 154 Determinates of supply 155 Law of supply 156 Exceptions to law of supply Expansion and contraction in supply 159 Increase and decrease in supply 160 Elasticity of supply 161 Measurement Point method 164 Factors determining elasticity of supply 163 Cost concepts 166 Types of cost Accounting cost 166

 Economic cost 167 Opportunity cost Explicit and implicit cost 169 Production cost 170 Fixed and variable cost Avoidable and unavoidable cost Incremental and sunk cost 171 Common and traceable cost 171 Historical and replacement cost Short run and long run cost 172 Marginal cost 174 Determinants of costs 175 Break even point 178

Chapter 6 Pricing and Output determination in Different market

Introduction 183 Market 183 National market 184 Classification of market 185 Pure and perfect competition 185 Perfect competition Demand curve under Perfect competition 187 Dr Alfred Marshalls classification of market on the basis of time 191 Market period 192 Short run 193 Long run 193 Equilibrium of firm and industry under perfect competition 194 Imperfect competition 202 Monopoly Difference between perfect competitions and monopoly 203 Price discrimination under monopoly 208 Dumping 211 Monopolistic competition 213 Monopsony Oligopoly and duopoly ASC increases beyond OS sales 226 Gift articles 228 Crossword contests 228 Wastes of monopolistic competition 229

Pricing methods or pricing practices 230 Full cost or cost plus pricing 231 Pricing of multiple products 233 Policy of adding products 233 Policy of droping products 236 Cost of multiple products 237 Going rate pricing Marginal cost pricing Intuitive pricing Experimental pricing 241 Initiative pricing 241 Guidelines for fixation 241 Single product pricing Product line pricing Factors to be considered in pricing 241 Problems of product line pricing 245 Pricing in public sector undertaking 247 Guidelines on pricing policy 249 Pricing in co operative societies 250

Chapter 7 Cost Benefit Analyses

Introduction 255 Public goods vs. private goods 255 Impure Public goods 259 Steps in cost benefit analysis 259 Justification for the use of cost benefit analysis 261 Cost benefit analysis private and social 270 Policies to reconcile private and public cost benefit 267 Advantages of Cost benefit analysis 273 Limitations of Cost benefit analysis 274 Overall resource allocation (Market Mechanism) 274 Foundation of market system of economy 276

Chapter 8 Macro Economic Analysis

Introduction 283 Impotence of macro economies 284 Keynesian macro economic theory 285 Concept of effective demand 287 Aggregate supply function 287 Equilibrium less than full employment level Aggregate demand function 293 Keynesian to unemployment government intervention 294

 Consumption function Business fluctions 294 Business or trade cycle 297 Phases of business cycles 298 Inflation 302 Causes 303 Factors form supply side 304 Consequences of inflation 305 Macro policies 309 Full employment Economic stabilization 310 Fiscal policy Monetary policy 311

Chapter -9 Govt. and Private Business

Introduction Need for govt. intervention 316 Limitations or defects of market system 316 Price controls in India 319 Causes for rise in prices in India 319 Demand pull factors 320 Cost push factors 321 Other factors 322 Price controls in India 323 Demand management 324 Fiscal management Monetary measures Supply management 324 Administered prices 325 Dual prices Support / procurement prices 326 Public distribution system 327 Protection of consumer interest 329 New Industrial Policy (1991) 331 Industrial Licensing Policy MRTP Act 334 Economic Liberalization 335 Process of Disinvestment 337