The word Economics is derived from the Greek word “OIKOS NEMEIN” meanging household management.

Area of study which is concerned with how individuals, households, firms industies and government take decision relating to the allocation of limited resources to productive use so as to drive maximum going or satisfaction.

Economics studies the way a society chooses to use its limited resources. Which have alternative uses to produce goods and services and distributon them among different groups of people.

⮞ Study of scarcity

⮞ Study of how people uses resources

⮞ Study of decision making

Evolution in Definition of economics

Definition of Wealth - Adam Smith (1776)

According to “Adam Smith” He is also known as the ‘Father of Economics’.

“ Economics is the science of the study of wealth”. This wealth ctrater definiton deals with the caches (Production, Distribution, Consumption) between the creation of wealth.

Definition of Welfare - Alfred Marshall (1890)

“Economics is the study of man in the ordinary business of life”. It examines how a person gets his income and how he invests it. Those one side it is study of wealth and another side it is study of well-being (welfare)

Definition of Scarcity - Lionel Robbins (1932)

Econoc is the aspect of scarcity in all economics behaviour. According to this definition economics is a science that studies human behaviour as a relationship between end and scarcity menace that may have alternative uses, Ribbins put significance and an efficient use of resources.

⮞ Human are unlimited

⮞ Alternative use of scarce resources

⮞ Efficient use of resources

⮞ Best allocation of resources

Definition of Growth - Paul. A. Samuelson (1948)

“Economics is concerned with determining the pattern of employment of scarce resource to produce commodities overtime”

This difination cleaners to employ scarce productive resources which could have alternative uses to produce various commodities overtime and distribute them for consumption.

Which analysis costs and benefits of informing the pattern of resource allocation.

Nature of economics

⮞ Economics is a Science

⮞ Economics is a Art

⮞ Economics is a Social Science

⮞ Economics is a Science

Economics is a science because it studies the flow of information in a society.

Economics as a science is of two nature.

1. Positive nature:- It is based on cause and effect relationship.Deals with what are the economic problems and how are they actually solved.

2. economics:- Involves value of judgement in this case, economics is not concerned with facts rather it is concerned with how things should be. Deals with what ought to be or how the economic problem should be solved.

⮞ Economics is an Art

The Practical application of theoretical knowledge. Economics has multiple sections such as creation, delivery, consumption, finance, and implementation of standard rules and regulations that are competent in solving complex issues and queries of the society.

⮞ Economics is a Social Science

Economics is a social science because it deals with studying human behaviour and their relationship in society .
Economics is a social science that focuses on the production, distribution, and consumption of goods and services.

Scope of Economics

1. Micro Economics:- it is concerned with one single household, office, industry or market. It deals with production pricing, consumer or firm behaviour and various types of markets. Microeconomics studies how businesses are organised and how individuals approach uncertainty and risk in their decision making.

2. Macro Economics:- it is concerned with national income, GDP, GNP, and monetary policy.macroeconomics deals with aggregate quantities of the economy. It is also called aggregative economics.

Macroeconomics is concerned with the nature, relationships and behaviour of such aggregate quantities and averages as national income, total consumption, savings and investment, total employment, general price level, aggregate expenditure and aggregate supply of goods and services.

Limitation of Economics as Science:

1. Issue of non Replicability- It is impossible to recreate market conditions are predicted and outcome based on how markets have behaved in the past under similar conditions.

2. Issue related to variable studies- As the core science reseacher isolate certain variable to figure out direct relationship. There is no way to completely understand economics.

3. Issue of too much intervention: - “Human intervention” The limitation of economic science is that it is not superstition and hence is not accessible to people.

Limitation of Economics as Art:

As the economy is not able to make concrete recommendations due to multiple reasons like corruption, politica, pressure and difference of opinion. It has become very difficult to accept economics as art.

Relevance of Economics in business management.

1. It helps us to understand the basics of human needs, production, distribution and better use of resources.

2. Provides bases for exchange of goods and services between individuals, organisations and even countries.

3. Generate system technique and public policies to improve social welfare.

4. Help to set target prices

5. Adjust political, financial and even social relevance.

6. Provide knowledge and techniques that prevent crises and help to get out of them.

7. It uses econometric techniques to predict future economic conditions.

Managerial Economics

Manager:- A manager is a person who directs resources to achieve a seated goal and he/she has the responsibility for her/his action and as well as of others. He also has the responsibility of providing transparents information to the investors.

The manager is responsible for managing people in the organisation. A manager is a professional who takes a leadership role in an organisation and manages a team of employees.

Managerial Economics

Managerial economics generally refers to the integrations of economic theory with business practices. Economics provides various conceptual tools like - Demand, Supply, Prices, competition.
Economics provides tools and managerial economics applies these tools in the management of the problem of management.

E.F Brigham and J.L Pappas:

According to E. F Brigham and J. L Pappas - Managerial economics is the application of economic theory and methodology to business administration practice.

According to Joel Dean:

Father of managerial economics Joel Dean. Managerial Economics can be defined as amalgamation of economics theory with business practices so as to ease decision making and future planning by management.

Nature of Managerial Economics:

⮞ It is practical in nature (organic)

⮞ It is problem solving

⮞ It is based on economics concepts in nature

Managerial economics concept that is called by known.

1. Micro Nature:- Managerial economics is a concept with analysing and falling optimal solutions to the business problem at individual form of unit level.

2. Macro Nature:- Managerial economics analysis the problem of the form of economics as a whole.

  • Managerial economics is Pragmatic nature.
  • Managerial economics is Art and Science.
  • Managerial economics has a components Macro economics.
  • Managerial economics has a component Macro economics.
  • Managerial economics is Multidisciplinary approach.
  • Managerial economics is Management oriental
  • Managerial economics is dynamic in nature

Scope of Managerial Economics

1. Demand analysis and forecasting

2. Cost Analysis

3. Pricing Policies

4. Profit Management

5. Capital Management

1. Demand analysis and forecasting :- It is the process of using predictive analysis of present data to estimate and predict customers future demand for a product. This forecast can also serve as a guide to management for maintaining or strengthening market position and enlarging profit. The main topics covered are Demand Determinants, Demand Distinctions and Demand Forecasting.

2. Cost Analysis :- Managerial economics gives us the knowledge of the different factors that cause variation in cost estimates and how they should be given consideration for planning purposes.

3. Pricing Policies:- Managerial economics helps in determining price of goods and services in different market and economic situations.

4. Profit Management :- It helps in achieving the maximum profit & mange of the basis of estimated future situations. The concept of profit maximisation is very useful in selecting the alternatives in making a decision at the firm level.

1. Capital Management:- Capital Management employees planning control of capital expenditure because it involves longer sums and more over the problem in disposing the capital assets.
Planning and control of capital expenditures is the basic executive function. The managerial problem of planning and control of capital is examined from an economic stand point. The capital budgeting process takes different forms in different industries

Managerial Economics relationship with other subject

1. Managerial Economics & Economics

2. Managerial Economics & Operation Research

3. Managerial Economics & Statistics

4. Managerial Economics & Accounting

5. Managerial Economics & Mathematics

1. Managerial Economics & Economics:- Managerial economics is a special branch of economics reaching the gap between economics theory and managerial practices.
The relationship between managerial economics and economics theories is like that of engineering science to physics or of medicine to biology.

2. Managerial Economics & Operation Research:- Operation Research is important to managerial economics for developing scientific models and tools to affect forecasting.
Operation research provides a scientific model of the system and it helps managerial economics in the field of product development, material management and inventory control, quality control, marketing and demand analysis.

3. Managerial Economics & Statistics:- Managerial Economics it is important as it provides the basis empirical testing of theories. Statistical tools such as the theory of probability and forecasting techniques help the firm to predict the future course of events. Managerial economics also makes use of correlation and multiple regressions in related variables like price and demand to estimate the extent of dependence of one variable on the other.

4. Managerial Economics & Accounting:- Managerial Economics is closely related to Accounted. It is recording the financial operation of a business firm which is helpful in analysing profitability.
Managerial Economics requires a proper knowledge of cost and revenue information and their classification. Managerial economics is generation, interpretation and use of accounting data.

5. Managerial Economics & Mathematics:- It is helpful for the derivation and exposition of economics analysis.
Mathematical symbols are more convenient to handle and various concepts like incremental cost, elasticity of demand, Geometry, Algebra and calculus are the major branches of mathematics which are of use in managerial economics.

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