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8/12/2019 MANAGERIAL ECONOMICS INTRODUCTION - B.E,(CS FINAL & IT 3RD YEAR) Dr.K.BARANIDHARAN, SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI
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8/12/2019 MANAGERIAL ECONOMICS INTRODUCTION - B.E,(CS FINAL & IT 3RD YEAR) Dr.K.BARANIDHARAN, SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI
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Prepared by :
Dr. K. BARANIDHARAN
PROF.MBA
SRI SAIRAM INSTITUTE OF TECHNOLOGY
CHENNAI
ENGINEERING ECONOMICS
AND
FINANCIAL ACCOUNTING
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8/12/2019 MANAGERIAL ECONOMICS INTRODUCTION - B.E,(CS FINAL & IT 3RD YEAR) Dr.K.BARANIDHARAN, SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI
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EngineeringEconomics& Financial
Accountingment
Eefa
330 July 2014
8/12/2019 MANAGERIAL ECONOMICS INTRODUCTION - B.E,(CS FINAL & IT 3RD YEAR) Dr.K.BARANIDHARAN, SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI
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-MEANING
The study of how to direct scarce resources in the way
that most efficiently achieves a managerial
goal..
Managerial economics: Science of directing scarce
resources to manage more effectively
resources financial, human, physical
management of customers, suppliers, competitors,
internal organization
organizationsbusiness, nonprofit, household
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MANAGERIAL ECONOMICS - MEANING
Managerial economics is a means to an
end to managers in any business,
in terms of finding the most efficient way of
allocating scarce organisational resources and reaching
stated objectives.
It is based on the economic analysis foridentifying problems,organizinginformation and evaluating
alternatives Sri Sairam Institute of Technology 5
8/12/2019 MANAGERIAL ECONOMICS INTRODUCTION - B.E,(CS FINAL & IT 3RD YEAR) Dr.K.BARANIDHARAN, SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI
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DEFINITIONS OF M E
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Managerial economics is the of
economic modes of thought to
analyse business situation
-Mc.Nair and Meriam
Managerial economics is the
integration of economic theorywith
business practice for the purpose offacilitating decision making andforward planning by the
management.
8/12/2019 MANAGERIAL ECONOMICS INTRODUCTION - B.E,(CS FINAL & IT 3RD YEAR) Dr.K.BARANIDHARAN, SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI
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ME applies economic theory and
methods to business and
administrative decision makingPappas and Hirschey
ME is the application of economic
principles and methodologies to the
decision making process within the
firm or organisation
Douhles
8/12/2019 MANAGERIAL ECONOMICS INTRODUCTION - B.E,(CS FINAL & IT 3RD YEAR) Dr.K.BARANIDHARAN, SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI
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ME : Micro as well as Macro Economics
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ME is applied Microeconomics to a significant
extent: though it draws extensively fromMacroeconomic theory as well.
Example. It draws Demand analysis, Cost and
Production analysis, Pricing and output decisionfrom Microeconomics,
whereas it also derives market intelligence from
the knowledge of National Income, Inflationand stages of recession and expansion which
are subject matter of Macroeconomics
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NATURE OF M E
1. It is microeconomic in character as it
concentrate only on the study of the firmnot on the working of the economy
2. It takes help from the macroeconomics
to understand the environment inwhich the firm operates
3. It is normative rather than positive i.e., it gives
answer for the question what ought to be thanwhat is,was.
4. It is both conceptual and metrical.
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Sri Sairam Institute of Technology 10
5. It focuses mainly on the theory
of the firm than ondistribution
6. Knowledge of managerial
economics helps in making wise
choices. i.e., choices among scarcityof resources.
7. It is goal oriented i.e., aims atachievement of objectives
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SIFNIFICANCE OF M E 1. It helps in decision making
2. Decisionmaking means a balance betweensimplification of analysis to be manageable andcomplication of factors in hand
3. Ithelps the manager to become an morecompetent builder
4. It helps in providing most of the concepts that are
needed for the analysis of business problems,
The concepts such as elasticity of demand ,fixed, variable
cost, SR and LR costs, opportunity costs,NPV
etc.,
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5. It helps in making decisions in the
following.
What should be the product mix?
Which is the production technique?
What is the product mix at leastcost?
What should be the level of output and
price?
How to take investment decisions?
How much should the firm advertise
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OBJECTIVES OF M E
To help in understanding themarket condition & general
economic environment with in
which the firm operate.
To provide a philosophy for
understanding & analyzingresource allocation problem
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SCOPE OF M E Objectives of a business firm
Demand analysis and forecasting Cost analysis
Production management
Supply analysis
Pricing decisions, policies and practices
Profit management
Capital budgeting and investment decisions
Decision theory under uncertainty
CompetitionSri Sairam Institute of Technology 14
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