Meaning, Nature & Scope,Micro,Macro

7/30/2019 Meaning, Nature & Scope,Micro,Macro

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Managerial Economics

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Let us see what is Economics ?

Economics is the social science that analyzes

the

Production

Distribution

Consumption

of goods and services


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Concept

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Like parent discipline of economics M.E.has to serve as a science of making a choice.

It has to guide Business Executives in:-

1. Making decisions

2. Making certain predictions


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Definition

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M.E. concerns efficient direction of business

orgonisation so as to make, a productive

enterprise out of human & material

resources. Savage & Small

It is the integration of economic theory with

business practice for the purpose of

facilitating decision making & forward


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Nature Of ManagerialEconomics

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With the help ofCharacteristics of M.E.

we can understand the nature of managerial

economics.

1) Fundamental Academic Subject.

2) Economic rationale of Business

Administration

3) Allocation of Resource


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6) Market Conditions

7) Macro Setting

8) Profit & Pricing

9) Basis for Decision-making

10) Pragmatic Approach

11) Normative Science

12) Elements of Macro Economics.

13) Help of Quantitative Techniques

14) Socio-cultural Aspects.


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Scope Of ManagerialEconomics

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1) Basic problem.

2) Theory of firm.

3) Orgonisation of Business.

4) Demand Analysis.

5) Production & Cost Analysis.


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6) Pricing & Output Determination.

7) Cost-Benefit Analysis.

8) Profit Analysis.

9) Capital Management.

10)Government & Business.


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Micro-economic Analysis

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Micro Economics studies the behaviour of small

individual factors in an economy.

It mainly focuses on:-

1. Individual Consumer Satisfaction

2. Market Demand for the product of an

individual producer.

3. It study the equilibrium of firm & Industry


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Micro Economics

Micro

EconomicAnalysis

Theory ofCommodity

Prices

Theory ofFactorPricing

Economics

of Welfare

heory of Demand Theory

f Supply

Rent Wages InterestProfit


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Scope Of Micro-economics

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1. Are the resources in the country fully utilized

or not?

2. What should be produced & in what

quantity? (Theory of Value)

3. The problem of selecting technique of

production. (Theory of Production)

4. How the goods & services produced are

distributed? (Theory of Distribution)


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5. How effectively the resources are allocated ?

(Economics of Welfare)

6. Whether the capacity of the economy to

produce goods & services is growing or is

static ?

( Theories of Economic Growth)


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Importance of Micro-EconomicAnalysis

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1. Allocation of Resources

2. The distribution of national income

3. Consideration of welfare

4. Importance of applied field of

economics


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Limitation of Micro-EconomicAnalysis

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1. It always thinks of individual factors of

production or individual consumer so it may

not be always true on aggregate levels.

2. Its result or conclusions are always on certain

assumption.

3. The aggregate analysis or the overall

approach to any economic problem is beyond

the reach of it.


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Theory of

Income & employ

Theory of Generalprice level

Theory of EconomicGrowth

Theory ofDistribution

Theory of consumption Theory of Investment

Theory of Business

Cycle

Macro-EconomicAnalysis


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Importance Of Macro-economic Analysis

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1. It never neglect the relationship between

demand & supply as in case of micro-

economic analysis.

2. It always gives the complete picture about

the economy as whole.

3. Macro-economic s has increased the utility

of economics.

4. It can be used for the development of micro-


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Meaning, Nature & Scope,Micro,Macro