1. FEATURES OF BUSINESS
ECONOMICS
• BUSINESS ECONOMICS IS CONCERNED
WITH DECISION – MAKING OF
ECONOMIC NATURE.
• BUSINESS ECONOMICS IS GOAL
ORIENTED AND PRESCRIPTIVE.
• BUSINESS ECONOMICS IS PRAGMATIC.IT
IS CONCERNED WITH THOSE
ANALYTHICAL TOOLS WHICH ARE
USEFUL IN IMPROVING DECISION –
MAKING.
2. FEATURES OF BUSINESS
ECONOMICS
• BUSINESS ECONOMICS BRINGS
FORTH SOLUTIONS OF PROBLEMS,
PROVIDES NECESSARY CONCEPTUAL
TOOLS AND HELPS THE DECISION
MAKER BY PROVIDING
MEASUREMENT OF VARIOUS
ECONOMIC ENTITIES AND THEIR
RELATIONSHIP.
3. DEFINTIONS
• “MANAGERIAL ECONOMICS IS
CONCERNED WITH THE WAYS IN
WHICH MANAGERS SHOULD
MAKE DECISIONS IN ORDER TO
MAXIMISE EFFECTIVENESS OR
PERFORMANCE OF THE
ORGANISATIONS THEY MANGE.”
4. DEFINTIONS
• ECONOMICS IS A
FUNDAMENTAL ACADEMIC
SUBJECT WHICH HELPS TO
UNDERSTAND AND TO
ANALYSE PROBLEMS OF
BUSINESS DECISION
MAKING.”
5. BUSINESS ECONOMICS IS THE
INTEGRATION OF ECONOMIC
THEORY WITH BUSINESS
PRACTICES FOR THE PURPOSE
OF FACILITATING DECISION
MAKING AND FORWARD
PLANNING BY THE
MANAGEMENT.”
7. INTEGRATION OF ECONOMIC
THEORY
AND BUSSINESS PRACTICE
• WITH THE HELP OF ECONOMIC THEORY
WE CAN UNDERSTAND THE ACTUAL
BEHAVIOR OF BUSINESS.
• BUSSINESS ECONOMICS ATTEMPTS TO
ESTIMATE AND PREDICT THE
ECONOMIC QUANTITIES AND
RELATIONSHIPS.
8. INTEGRATION OF ECONOMIC THEORY
AND BUSSINESS
PRACTICE
• DECISION MAKING AND FORWARD
PLANNING IS DONE WITH THE HELP
OF ESTIMATED ECONOMIC
QUANTITIES AND RELATIONSHIPS.
• THE MANAGERS CANOT IGNORE
THE ENVIRONMENT WITHIN WHICH
THEY OPRATE.
9. NATURE OF BUSINESS ECONOMICS
• BUSINES ECONOMICS IS MICRO
ECONOMIC IN NATURE: THE UNIT OF
STUDY IS A FIRM.
• BUSINESS ECONOMICS CONCENTRATES
ON MAKING ECONOMIC THEORY
MORE APPLICATION ORIENTED
• BUSINESS ECONOMICS IS MORE
PRAGMATIC.
10. • BUSINESS ECONOMCS TAKES
THE HELP OF MACRO
ECONOMCS ALSO SO AS TO
UNDERSTAND THE EXTERNAL
CONDITIONS WHICH ARE
RELEVANT TO THE BUSINESS.
11. IN NUTSHELL IT CAN BE
CONCLUDED THAT BUSINESS
ECONOMICS REFERS TO THE
APPLICATION OF ECONOMIC
THEORY AND THE TOOLS OF
ANALYSIS OF DECISION SCIENCE
TO FIND THE OPTIMAL SOLUTION
TO BUSINESS DCISION
PROBLEMS.
12. ECONOMICS
• BE ALL AND END ALL OF THE
HUMAN EFFORTS IS
CONSUMPTION.
• THE WHOLE AND SOLE PURPOSE
OF ECONOMY IS PRODUTION OF
GOODS SERVICES FOR
CONSUMPTION NOW IN FUTURE
13. ECONOMICS
• MACRO ECONOMICS IS THE
STUDY OF THE BEHAVIOUR OF
THE ECONOMY AS A WHOLE
• IT CONTRASTS WITH MICRO ECO
WHICH STUDIES: INDIVIDUAL
PRICES, QUANTITIES, MARKETS
14. BASIC ECONOMIC PROBLEM
• “ECONOMICS IS A SCIENCE WHICH STUDIES
HUMAN BEHAVIOUR AS A RELATIONSHIP
BETWEEN ENDS AND HUMAN RESOURCES
WHICH HAVE ALTERNATIVE USES”
PROF ROBBINS
• WANTS ARE UNLIMITED MEANS TO SATISFY
WANTS ARE LIMITED BUT MEANS OR
RESOURCES CAN BE PUT TO ALTERNATIVE
USES.
15. BASIC PROBLUMS OF AN
ECONOMY
• WHAT TO PRODUCE.
• HOW TO PRODUCE.
• FOR WHOM TO PRODUCE.
• WHAT PROVISION BE MADE
FOR ECONOMIC GROWTH.
16. “HE WHO CAN NOT SEE
BEYOND THE DAWN WILL
HAVE MUCH GOOD WINE TO
DRINK AT NOON, MUCH
GREEN WINE TO CURE HIS
HEADACHE AT DUSK AND
ONLY RAIN WATER TO DRINK
FOR THE REST OF THE DAYS”
17. “ECONOMICS IS THE STUDY OF HOW MAN
AND SOCIETY CHOOSE, WITH OR WITHOUT
THE USE OF MONEY, TO EMPOY SCARCE
PRODUCTIVE RESOURCES WHICH COULD
HAVE ALTERNATIVE USES, TO PRODUCE
VARIOUS COMMODITIES OVER TIME ,AND
DISTRIBUTE THEM FOR CONSUMPTION
NOW AND IN THE FUTURE AMONG
VARIOUS PEOPLE AND GROUPS”
PROF SAMUELSON
18. MICRO ECONOMICS
• STUDIES THE BEHAVIOUR OF
INDIVIDUAL WHICH AND SMALL
GRUPS – INDIVIDUAL CONSUMAR
PRADUCER FIRM
• HOW MUCH TO CONSUME
• WHAT TO PRODUCE –PRODUCTION
STRUCTURE
20. • HOW THE MARCKET
FUNCTIONS
• WORKING OF A FREE
MARCKET ECONOMY
• ROLE OF PRICE MECHANISM
IN ALLOCATIONS PRODUCTIVE
RESOURCES-INVISIBLE HAND
21. • HOW A COMPLETELY
PLANNED ECONOMY WORKS
• SOCIETY AND EFFICIENCEY
ECONOMIC BENEFIT COMES
FROM SELF INTRESTED
ACTIONS OF INDIVIDUALS.
22. BASIC ISSUES OF MICRO ECONOMICS
STUDIES THE ECONOMIC ACTIONS AND
BEHAVIOURS OF INDIVIDUAL UNITS SUCH
AS
• INDIVIDUAL CONSUMER.
• INDIVIDUAL PRODUCER(FIRM).
• THEROY OF PRODUCT PRICES.
• STUDY OF DIFFERENT TYPE OF MARCKETS.
• DISTRIBUTIONAL THEORIES.
• ECONOMIC EFFICIENCEY.
23. IMPORTANCE AND USES OF MICRO
ECONOMICS
• EXPLAINS HOW A FREE MARKET
ECONOMY FUNCTIONS
• HOW THE GOODS AND SERVICES
PRODUCED ARE DISTRIBUTED AMONG
VARIOUS PEOPLE FOR CONSUMPTION.
• HOW FACTORS OF PRODUCTION ARE
PAID
• WHAT ARE THE GAINS FROM
INTERNATIONAL TRADE?
24. FREE MARKET ECONOMY OR CAPITALIST
ECONOMY CHIEF FEATURES
• RIGHT OF PRIVATE PROPERTY
• FREEDOM OF ENTERPRISE
• FREEDOM OF CHOICE BY CONSUMERS
(CONSUMER SOVERIGNITY)
• PROFIT MOTIVE
• COMPETITION
• ROLE OF PRICE MECHANISM
• (IMPERSONAL FORCES SOLVE PROBLEM
OF ECONOMY)
25. • MARKETS STAND FOR THE FORCES OF
DEMAND AND SUPPLY.
• EACH INDIVIDUAL KNOWS WHERE HIS
SELF INTREST LIES.
• DECIDING WHAT TO PRODUCE.
• DECIDING HOW TO PRODUCE.
• DECIDING FOR WHOM TO PRODUCE.
• DECIDING ABOUT RATE OF GROWTH.
• SOLVING ALL PROBLEMS AT THE SAME
TIME
26. CONSUMER SOVEREIGNITY
• IN A FREE MARKET ECONOMY CONSUMER IS
SOVERPIGN.
• CONSUMER PLACES THE ORDER, DECIDES WHAT
SHOULD BE PRODUCED.
• CONSUMERS AUTHORITY ARISES FROM HIS
INCOME HIS ABLITTY TO PAY IS LIMITED.
• HIGH PRESSURE SALESMANSHIP PUTS A CHECK
ON CONSUMAR SOVEREIGNITY –RADIO,
TELEVISION, NEWS PAPERS, HOARDING AT
RAILWAY STATION AIRPORT, COLONIES,
MARKET PLACE –ALL THESE BOMBORD
CONSUMERS
• CONSUMERS SOVEREIGNITY IS INDEED A MYTH
27. PROBLEMS OF FREE MARKT ECONOMY
• DOES NOT ENSURE MAXIMUM SOCIAL
SATISFACTION.
• PRINCIPLE OF CONSUMER SOVERIGNEITY
NOT VALID.
• ECONOMIC INSTABLITY AND
UNEMPLOYEMENT.
• DOES NOT ENSURE HIGH RATE OF ECO.
GROWTH.
• DECLINE OF COMPETITION AND ITS
ADUERSE EFFECTS.
• CONCENTRATION OF WEALTH AND INCOME
28. ROLE OF COUNTERVAILING
POWER IN CORRECTING THE
WEAKNESSES OF FREE MARKET
ECONOMY
• TO DAY POWERFUL CORPORATE SELLERS
OFTEN FACE EQUALLY POWERFUL
CORPORATE BUYERS. THE GIANT STEEL MILL
TO THE GIANT AUTO FIRM, THE GIANT
PRODUCERS TO THE GIANT SUPERMARKET
CHAIN. LARGE FIRMS NO LONGER BARGAINS
WITH THE INDIVIDUAL EMPLOYEES, BUT
WITH LARGE AND POWERFULL UNIONS.
29. ISSUES IN MCRO ECONOMICS
• WHY A COUNTRY IS POOR OR RICH.
HOW A COUNTRY CAN BECOME RICH?
• ROAD TO ECONOMIC PROGRESS AND
HIGH RATE OF GROWTH.
• WAHT IS INFLATION; WHY IT TAKES
PLACE.
• HOW CAN WE ACHIVE FULL
EMPLOYEMENT
• SOCIAL RESPONSIBILITY OF BUSINESS
33. MACROECONOMIC AGGREGATES
• AGGREGATION INVOLVES ADDING APPLES TWO
ORANGES SOLUTION
• GROSS DOMESTIC PRODUCT (GIDP)- A MEASURE
OF ECONOMIC ACTIVITY.
• AGGREGATE CONSUMPTION- VOLUME OF GOODS
AND SERVICES DEVOTED TO CURRENT-
CONSUMPTION DURING A PERIOD.
AGGREGATE INVESTMENT-VOLUME OF GOODS
AND SERVICES DEVOTED TO CAPITAL FORMATION
DURING A PERIOD
• WHOLE SALE PRICE INDEX.
• CONSUMER PRICE INDEX.
• TOTAL MONEY SUPPLY, BANK CREDIT, FOREIGN
EXCHANGE RESERVS ETC.
34. GOVERNMENT IN MACRO ECONOMY
CLASSICAL VIEW
• LEAVE THE ECONOMY TO MARKETS.
• ECONOMY IS ALWAYS IN FULL
EMPLOYEMENT.
• SUPPLY CREATES ITS OWN DEMAND
• OVER PRODUCTION&UNEMPLOYEMENT ARE
SHORT RUN PHENOMENON
• PRICE &WAGE FLEXIBLITY BRING ABOUT FULL
EMPLOYMENT.
• NO GOVT. INTERFERECE OR LEAST
INTERFERECE
35. KEY NESIAN VIEW
• 1.INVESTMENT IS HIGHLY VOLATILE.
• 2.GOVT TO ACTIVELY PARTCIPATE IN
ECONOMIC LIFE TO CORRECT THE
FLUCTUATIONS IN INVESTMENT,
CONSUMPHION, SAVINGS, OUTPUT,
EMPLOYMENT,INCOMES,HROUGH PRO-
ACHIVE MOUETRY AND FISCAL POLICY.
