Eco learnings
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The document provides an overview of key concepts from a managerial economics course. It discusses the objectives of learning basic economic decision making principles and their real-world applications. It also covers microeconomic and macroeconomic principles, theories of the firm, laws of supply and demand, and the concept of elasticity. The equilibrium of supply and demand is explained as the point where the quantity supplied equals quantity demanded at a price that both buyers and sellers find acceptable.
Eco learnings
- 1. Section A DhirajNayak PawanPaliwal 13PGDM039 We started with the course outline and the objectives of the course. The course intends to make us aware of the basic principles of economic decision making and to learn to apply these concepts to solve real life problems. We covered the ten principles of economics in which we studied how people make decisions; how people interact and how the economy works as a whole. The first 7 principles revolve around people therefore come under the purview of microeconomics while the last three principles fall under the macroeconomic principles. In managerial economics we try to get the knowledge of macroeconomic theories and policies by studying the total or aggregate of the parameters like income, output, employment, consumption etc. And using different economic models the manager tries to examine how an organisation can achieve its aim or objective in the most efficient manner. We studied the theory of firm and the position of a firm in the economy. What the firm achieve out of the business in which it is operating. The objective of the firm is the maximisation of profits. How the profit is calculated for a firm, like the business profit, economic profit. In order to achieve the objective of maximizing the value a firm faces many constraints like resource constraint and legal constraints. Some alternate theories of firm like the sales maximisation and saticficing behaviour of the firm explains the real problems faced by the firm but do not provide satisfactory alternative to the original theory of firm. Law of demand states that with other things being same, quantity demanded for a particular product decreases as the price increases. Other factors that influence the demand are: Income level of people, population, future expectations of the people, presence of alternatives and preferences/taste of the people. As a result, the Law of supply states that with other things being same, quantity supplied increases as the price of the product increases. Other factors that influence the supply are: Cost of production, number of sellers, future expectations, technology and unexpected supply interruptions. At equilibrium, quantity supplied equals quantity demanded. The price consumer is willing to pay equals the price seller is willing to sell. The degree to which the quantity demanded changes with respect to the price can be determined by its elasticity. It is said to the elastic if the percentage change in quantity demanded is more than that of percentage change in price. In such cases, revenue of the seller decreases if the price demanded increases (mainly for luxury goods). In case of inelastic demand, percentage change in quantity demanded is less than that of percentage change in price. In such cases, revenue of the seller increases as the price increases, all other things remaining the same (mainly for necessities).