Managerial decision sciences

1. 1

2. 2
Economics is the
study of nature and
uses of national
wealth
Father of Economics
Adam Smith (1723-1790)

3. I. Ceteris Paribus- Other things remaining equal
 It is a Latin word means ‘with other things (being) the
same’
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4. II. Rationality
 Implies that consumers and producers measure
and compare costs and benefits before taking
decisions
 Consumers: Maximising utility and minimising sacrifice
 Producers : Maximising profits and minimising costs
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5. A. Micro(individual consumers and firms)
Macro (Aggregates- Industry, not firm)
B. Positive – The distribution of income in India is
unequal.
Normative – The distribution of income in India should
be equal.
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6. C. Time period
 Short run -A time period not long enough for
consumers and producers to adjust to a new
situation-
 Long run- Planning horizon- A time period long
enough for consumers and producers to adjust to
a new situation- All inputs can be varied-
Whether to change product lines, build
new plant etc.
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7. “Application of economic theory and tools of
analysis of decision science and forward planning
to examine how an organization can achieve its
objectives most efficiently”
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8. 8
Utilization of
minimum
resources
Earn maximum
profit
Resources
Demand
for
Resources

9. 9
Economics –
Theory &
Methodology
Business
Management
– Decision
Problems
Managerial
Economics –
Application of
economics to
solve business
problems

10.  Microeconomics
 Pragmatic
 Macroeconomics
 Aims at helping the management
 A scientific art
 Prescriptive rather than descriptive
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11.  Theory of demand
 Demand Analysis
 Demand Theory
 Theory of production
 Variable factor of
production
 Fixed factor of
production
 Theory of price
 Theory of profit
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 Theory of capital and
investment
 Environmental issues
 Business cycles
 Industrial policy of the
country
 Trade and fiscal policy of the
country
 Taxation policy of the country
 Price and labour policy

12. Define the
problem
Determine
the
objective
Identify
possible
solutions
Select the best
possible
solution
Implement
the
decision
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5 Stage Model of Decision Making Process

13. o Use of Statistical Techniques
o Time Series: For Demand forecasting
o Regression: Two or multiple variables used to study
interrelationships, estimation and prediction
o Measures of central tendency and variation
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14. What is the role of Economics in
Business?
Costs, prices, output, compensation,
strategic behaviour and ethics making.
The Big Picture- Whose job is this?
Economic theory forms management
areas such as accounts, finance,
marketing, systems and operations.
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15. Role Of Managerial Economist: To decide
 What to produce?
 Where?
 How ?
 How much?
 Allocation of resources
 For whom to produce?
 Which price to sell?
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16. Plan and control business
operations-
 Cost minimisation
 Profit maximisation ??
 Managing competition
 Economic intelligence
 Market research
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17.  The principles of managerial economics are integral to the
decision making process within business.
 Managerial economics provides information on consumers,
prices, costs, quantities, competition and business strategy.
 A major contribution of managerial economics is the
estimation of risk.
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18. Thank
you