MANAGERIAL ECONOMICS
Course Objectives:
1. To illustrate the application of economic theory and methodology as an alternative in
managerial decisions.
2. To provide students with a basic foundation of economic concepts and tools having direct
managerial applications.
3. The course will sharpen analytical skills of students through integrating knowledge of
economic theory with decision making techniques.
4. To help students gain a rigorous understanding of competitive markets as well alternative
market structures.
5. The course will help students become more adept at designing and developing business
strategy at firm level.
Pre Requisites:
1. Students should know the materials covered in a regular Business Economics course.
2. They are also expected to have knowledge of basic mathematics and statistics.
Course Description:
Business Decision Making has become extremely complex task due to ever growing complexity of
business world and business environment in present situation. The basic function of business
managers is to take appropriate decision on business matters, to manage and organise resources, and
to make optimum use of available resources with the objective of achieving the business goals.
Business Economics helps in equipping prospective and present managers with economic concepts,
economic theories, tools and techniques of economic analysis applied to business decision making.
UNIT-I: Introduction to Business Economics (10.5 Hours)
(a) Scarcity and Efficiency: The three problems of economic organization, Market,
Command, and Mixed Economies, The Market Mechanism, How Markets solve the
three Economic problems? The economic role of government, PPF, Nature and scope of
Managerial Economics. (1.5 Hours)
(b) Demand and Supply Analysis (9 Hours)
(i) Determinants of Demand, Demand function, Law of Demand, Demand
Schedule and curve, Movement along and shift of Demand Curve, Exceptions to the
law of demand. (1.5 Hours)
(ii) Elasticity of demand, Price Elasticity in detail, Methods to measure
elasticity and factors influencing elasticity of demand, Income & cross elasticity.
(1.5 Hours)
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(iii) Supply Function, Determinants of Supply. (1.5 Hours)
(iv) Law of supply, Schedule, Supply Curve and Shift of Supply Curve
(1.5 Hours)
(v) Market equilibrium (1.5 Hours)
(vi) Consumer & producer surplus and govt. intervention in the market
(1.5 Hours)
UNIT- II: Production and Cost Analysis (5 Hours)
(a) Production Analysis : Production analysis: Basic concepts, Production Function,
Total, Average, and Marginal product, The Law of Diminishing Returns, Production with
two variable inputs. (3 Hours)
(b) Cost Analysis and Break Even Analysis: Cost concepts, the link between
production and costs curves, Short run and long run cost, cost curves. (2 Hours)
QUIZ: It covers from Unit no 1 & 2 of the syllabus.
UNIT- III: Equilibrium in Different Market Structures (6 Hours)
(a) Types of market, Perfect Competition – Characteristics, Short-run & Long-run
Equilibrium, Shut-down condition. (1.5 Hours)
(b) Monopoly-short run and long run equilibrium, Price Discrimination, Types of Price
Discrimination. (1.5 Hours)
(c) Imperfect Competition, Demand Curve, Equilibrium under Monopolistic
Competition, Product Differentiation - Types of Product Differentiation (1.5 Hours)
(d) Oligopoly: Features, Kinked Demand Curve, Cartel Formation, Market-Sharing
Cartels, Price Leadership. (1.5 Hours)
CLASS TEST: It covers from Unit no 1 to 3 of the syllabus.
UNIT- IV: Macro Economics (4 Hours)
(a) Introduction Macro Economic: Microeconomics Vs. Macroeconomics, Goals of
Macroeconomic policy, Objectives and Instruments of Macroeconomics (2 Hours)
(b) Measuring National output / Income: Circular flow in income – two, three and four
sector, Concept of national income and its components, Methods of measuring national
(2.5 Hours)
CASE STUDY PRESENTATION / QUIZ: It covers from Unit no 1 to 4 of the syllabus.
UNIT- V: Money and its types (5.5 Hours)
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(a) Money and its types, Measures of money stock, Credit creation and Money
multiplier, Inflation and its types - demand pull and cost push inflation, Concepts of CPI
/WPI, RBI and Instruments of monetary policy, Fiscal policy - instruments for stabilization
END-TERM EXAMINATIONS: It covers from Unit no 1 to 5 of the syllabus.
Total (31 Hours)
Text Book
1. Business Economics: Micro and Macro Analysis by Dr. H L AHUJA, S Chand and Co Pvt
Ltd
References Books:
1. Managerial Economics by Dr. H L AHUJA, S Chand and Co Pvt Ltd
2. Managerial Economic, Principle and Worldwide Applications Dominick Salvatore and
Ravikesh Srivastava, Oxford Higher Education, 2015.
3. Economics Lipsey and Chrystal,Oxford Higher Education, 2015.
4. Managerial Economics C R Thomas and S C Maurice, TMH, 2015.
5. Microeconomics R Pindyck and D Rubinfeld, Pearson, 2013.
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