Professional Documents
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Vaishali Padake
Types of Economic
Analysis
Micro and Macro Economics
Positive and Normative
Short-run and Long Run
Partial and General Equilibrium
Kinds of Economic
Decision
Economic Problems
What
to produce?
Where to produce?
How to produce?
How much to produce?
For whom to produce?
Are resources used economically?
Are resources fully employed?
Is the economy growing?
Ten Principles of
Economics
How people make decision
Principle 1: People face Trade-offs
Principle 2: The Cost and benefit analysis
Principle 3: Rational People Think at the
margin
Principle 4: People respond to incentives
Ten Principles of
Economics
How people interact
Principle 5: Trade can make everyone better
off
Principle 6: Markets are usually a good way to
organize economic activity
Principle 7: Govt can sometimes improve
market outcomes
Ten Principles of
Economics
How the economy as a whole works
Principle 8: A countrys standard of living
Managerial Economics
Managerial economics is a means to an end to
Concept of scarcity
Human wants are unlimited, but human
Concept of Opportunity
Cost
Opportunity cost is the benefit forgone from
the next best alternative that is not selected.
Accounting Profit
Amount
Sales
Less: Cost of Goods
9,00,000
4,00,000
Gross Profit
5,00,000
Less: Advertising
1,00,000
Depreciation
1,00,000
Utilities
30,000
Misc Expenses
50,000
Net Profit
2,20,000
Economic Profit
Amount
Sales
Less: Cost of Goods
9,00,000
4,00,000
Gross Profit
5,00,000
Less: Advertising
1,00,000
Depreciation
1,00,000
Utilities
30,000
Misc Expenses
50,000
Net Profit
2,20,000
1,00,000
Foregone Wages
6,00,000
(-)4,80,000
Concept of Margin
Marginal analysis is one of the cornerstone of
economic theory
It deals with unit increase in cost or revenue
due to change in output.
Number of Firms?
Many
firms
Type of Products?
One
firm
Monopoly
Tap water
Cable TV
Few
firms
Oligopoly
Tennis balls
Crude oil
Differentiated
products
Monopolistic
Competition
Novels
Movies
Identical
products
Perfect
Competition
Wheat
Milk
Managerial Economics
The principles of managerial economics helps
Economic
Theory
Quantitativ
e Analysis
Managerial
Economic
Solution to Managerial
Decision
Quantity and Quality of
Product
Price of the Product
Marketing Management
Financial Management
Human Resource
Management
Research and Development