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Chapter -1 Managerial Economicsntroduction 1

Definition of managerial economics 1

Nature of managerial economics 3

Scope of managerial economics 5

Significance of managerial economics 6Economic problem 7Meaning of economic problem 8

Economic problem at family level 9

Economic problem at universal level - universalproblem9

Seven questions faced by all economics 10

Chapter -2 Types of BusinessOrganizationntroduction 17

Define a firm as a producing unit 17Firm and industry 19

Firm and plant 20

Types of business organization 21

Private sector

Public co operative

Joint

Sole proprietorship of proprietary firms 22

Partnership firm 26

oint stock company 30, 37Diff between private and public limited company 35

oint Hindu family firms / organization 37Co operative societies or co operative form of businessorganization 39

Public enterprises/ public sector undertaking (PSU) 43

oint sector enterprises 48Non profit organization 49

Business organization of the new millennium 51

Diff between private and public sector 52

Organization goals /motivation/objectives of firms 53

Maximization of profit /traditional approach 53

Reasonable profit target 54

Sales revenue maximization 55 Maximization of firms growth rate (utility

maximization)

Satisfying behavior 56

Homeostatic theory 57

Life cycle approach

Other goals or objectives of firms 59

Chapter -3 ProfitMeaning of profit 63Accounting vs. economic profit 63

Theories of profit 65

Risk taking theory Uncertainty bearing theory of profit

Innovation theory of profit 66

Dynamic theory of profit 67

Profit in static society 68

Measurement of profit 68

Economic and accounting profit 68

Depreciation 70

Inventory valuation 71

Profit policy 73

Reasonable profit target 74Forms of profit standard 75

Capital attracting standard

Plough back standard 75

Normal earnings standard 76

Chapter 4 Demand AnalysisConcept of demand 81Determinants of demand 82

Factors influencing individual demand

Factor influencing market demandDemand schedule 85

Individual demand schedule

Market demand schedule

Demand curve 87

Individual demand curve 87

Law of demand 88

Exceptions to the law of demand or exception

demand curve

Giffon goods 94

Changes in quantity demanded and changes in

demand

Expansion or extension and contraction of

demand (changes in QD)

Increase or decrease in demand (changes in

demand) 94

Reasons for change (increase or decrease in

demand) 95

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Economic cost 167

Opportunity cost

Explicit and implicit cost 169

Production cost 170

Fixed and variable cost

Avoidable and unavoidable cost

Incremental and sunk cost 171

Common and traceable cost 171

Historical and replacement cost

Short run and long run cost 172

Marginal cost 174

Determinants of costs 175

Break even point 178

Chapter 6 Pricing and Output

determination in Different marketntroduction 183

Market 183

National market 184

Classification of market 185

Pure and perfect competition 185

Perfect competition

Demand curve under Perfect competition 187

Dr Alfred Marshalls classification of marketon the basis of time 191

Market period 192Short run 193Long run 193

Equilibrium of firm and industry under perfect

ompetition 194

mperfect competition 202

Monopoly

Difference between perfect competitions and

monopoly 203

Price discrimination under monopoly 208

Dumping 211

Monopolistic competition 213 Monopsony

Oligopoly and duopoly

ASC increases beyond OS sales 226

Gift articles 228Crossword contests 228

Wastes of monopolistic competition 229

Pricing methods or pricing practices 230

Full cost or cost plus pricing 231

Pricing of multiple products 233

Policy of adding products 233

Policy of droping products 236

Cost of multiple products 237

Going rate pricing

Marginal cost pricing

Intuitive pricing

Experimental pricing 241

Initiative pricing 241

Guidelines for fixation 241

Single product pricing

Product line pricing

Factors to be considered in pricing 241

Problems of product line pricing 245Pricing in public sector undertaking 247Guidelines on pricing policy 249

Pricing in co operative societies 250

Chapter 7 Cost Benefit AnalysesIntroduction 255

Public goods vs. private goods 255Impure Public goods 259

Steps in cost benefit analysis 259

Justification for the use of cost benefit analysis 261

Cost benefit analysis private and social 270Policies to reconcile private and public cost benefit

267

Advantages of Cost benefit analysis 273Limitations of Cost benefit analysis 274

Overall resource allocation (Market Mechanism) 274

Foundation of market system of economy 276

Chapter 8 Macro Economic AnalysisIntroduction 283Impotence of macro economies 284

Keynesian macro economic theory 285Concept of effective demand 287

Aggregate supply function 287

Equilibrium less than full employment level

Aggregate demand function 293

Keynesian to unemployment government intervention

294

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Consumption function

Business fluctions 294

Business or trade cycle 297Phases of business cycles 298

nflation 302

Causes 303 Factors form supply side 304

Consequences of inflation 305

Macro policies 309

Full employment

Economic stabilization 310

Fiscal policy

Monetary policy 311

Chapter -9 Govt. and Private Business

ntroductionNeed for govt. intervention 316

Limitations or defects of market system 316

Price controls in India 319Causes for rise in prices in India 319

Demand pull factors 320

Cost push factors 321

Other factors 322

Price controls in India 323

Demand management 324

Fiscal management

Monetary measures

Supply management 324

Administered prices 325

Dual prices

Support / procurement prices 326

Public distribution system 327Protection of consumer interest 329

New Industrial Policy (1991) 331

Industrial Licensing Policy

MRTP Act 334

Economic Liberalization 335Process of Disinvestment 337