EIC-Unit-1.pptx
- 1. Unit 1: Managerial Economics Basic
- 2. Economy • An entire network of producers, distributors, and consumers of goods and services in a local, regional, or national community.
- 3. Defining Moments of Economics • Events that change some manners in areas of our life like society, lifestyle, business, attitude, civilization, economy, governance and so on. • Industrial revolution – Includes radical changes in • Power consumption sources • Locomotives • Communication
- 4. Industrial Revolution • First IR (1760 – 1840) • Second IR (1850s – 1930s) • Third IR ( 1940s – onwards)
- 5. First Industrial Revolution • Manual labor to Mechanized Production • Birth of factory based production • Power Source – Water, Coal and Steam • Inventions – Machine based production of textiles – Steam engines – Railways • Urban cities were born – Cities where factories resided
- 6. Second Industrial Revolution • Faster machines with automation introduced • Assembly line in factories made mass production easy for other products, like steel • Power Source – Hydro Electricity and Fossil Fuel • Inventions – Combustion engine – Automobiles – Roadways – Communication media (telephone, radio) • Labour unions started to emerge
- 7. Third Industrial Revolution • The Information Revolution • New Energy sources: – Renewable energy, Green energy • Shift from mechanical and analog to Digital approach • Electronics and Computing based systems with digital technology • Internet as a working platform • Powerful ICTs • “Smart” of almost everything • Computer technology replacing human beings’ work • Loss of jobs due to computers fast capabilities
- 8. Bonus Material: Fourth Industrial Revolution • Fusion of digital, cognitive, physical and biological technology • Reliant on Artificial Intelligence • Very less human intervention required on regular tasks – Extreme Automation • Better accuracy of tasks • Based on cyber-physical systems
- 9. Technological Change in Global Economy
- 10. Technological change • Technological change may involve new products, improvements or cost reductions for existing products, or better ways of managing the operations of a business. • Technological change is the process of invention, innovation and diffusion in technologies and processes • May be simple or brilliant. • Technological change can be thought of as altering the firm’s production function.
- 11. • Alvin Toffler, 1970s, “Future Shock” – The average person is emotionally and intellectually left behind by the rapid pace of technical and cultural change. • Many firms have found it difficult to keep pace. • Complicating the situation is the need for firms to stay close of new developments within their own industry.
- 12. • Electronics companies – use the new digital technologies for their audio and video equipment • Automobile manufacturers – Using advanced robotics for assembly • Computer suppliers – Include state-of-the-art chips, display terminals, and storage devices.
- 13. The Impact of Technological Change • Reduction in Cost of Production • Increase speed of Production • Increase production Quality • Loss of Jobs otherwise performed by Humans • Need for firms to adapt frequently to new technology • Rapid fluctuations in product price • Shorter product life cycles
- 14. Market: • Collection of buyers and sellers that through their actual or potential interactions, determine the price of the product or set of products
- 15. Market Failure • Allocation of goods is not efficient • Rational behavior doesn’t result in rational output • Despite having sufficient supply , the demand doesn’t exist for a particular product or an industry