Under this, we generally discuss whether Ecn!ics is science r art r "th and i# it is a science whether it is a $siti%e science r a nr!ati%e science r "th& Ecn!ics - As a science and as an art' O#ten a (uestin arises - whether Ecn!ics is a science r an art r "th& )a* Ecn!ics is a science' A su"+ect is cnsidered science i# It is a syste!atised "dy # ,nwledge which studies the relatinshi$ "etween cause and e-ect& It is ca$a"le # !easure!ent& It has its wn !ethdlgical a$$aratus& It shuld ha%e the a"ility t #recast& I# we analyse Ecn!ics, we .nd that it has all the #eatures # science& /i,e science it studies cause and e-ect relatinshi$ "etween ecn!ic $hen!ena& T understand, let us ta,e the law # de!and& It e0$lains the cause and e-ect relatinshi$ "etween $rice and de!and #r a c!!dity& It says, gi%en ther things cnstant, as $rice rises, the de!and #r a c!!dity #alls and %ice %ersa& 1ere the cause is $rice and the e-ect is #all in (uantity de!anded& Si!ilarly li,e science it is ca$a"le # "eing !easured, the !easure!ent is in ter!s # !ney& It has its wn !ethdlgy # study )inductin and deductin* and it #recasts the #uture !ar,et cnditin with the hel$ # %arius statistical and nn-statistical tls& 2ut it is t "e nted that Ecn!ics is nt a $er#ect science& This is "ecause Ecn!ists d nt ha%e uni#r! $inin a"ut a $articular e%ent& The su"+ect !atter # Ecn!ics is the ecn!ic "eha%iur # !an which is highly un$redicta"le& Mney which is used t !easure utc!es in Ecn!ics is itsel# a de$endent %aria"le& It is nt $ssi"le t !a,e crrect $redictins a"ut the "eha%iur # ecn!ic %aria"les& )"* Ecn!ics is an art' Art is nthing "ut $ractice # ,nwledge& 3hereas science teaches us t ,nw art teaches us t d& Unli,e science which is theretical, art is $ractical& I# we analyse Ecn!ics, we .nd that it has the #eatures # an art als& Its %arius "ranches, cnsu!$tin, $rductin, $u"lic .nance, etc& $r%ide $ractical slutins t %arius ecn!ic $r"le!s& It hel$s in sl%ing %arius ecn!ic $r"le!s which we #ace in ur day-t-day li#e& Thus, Ecn!ics is "th a science and an art& It is science in its !ethdlgy and art in its a$$licatin& Study # une!$ly!ent $r"le! is science "ut #ra!ing suita"le $licies #r reducing the e0tent # une!$ly!ent is an art& SCO4E OF MANA5ERIA/ OR 2USINESS ECONOMICS Managerial ecn!ics is a de%el$ing science which generates the cuntless $r"le!s t deter!ine its sc$e in a clear-cut way& Fr! the #llwing .elds, we can e0a!ine the sc$e # "usiness ecn!ics& 1& 6e!and analysis and #recasting& The #re!st as$ect regarding sc$e is de!and analysis and #recasting& A "usiness .r! is an ecn!ic unit which trans#r!s& $rducti%e resurces int salea"le gds& Since all ut$ut is !eant t "e sld, accurate esti!ates # de!and hel$ a .r! in !ini!ising its csts # $rductin and strage& A .r! !ust decide its ttal ut$ut "e#re $re$aring its $rductin schedule and deciding n the resurces t "e e!$lyed& 6e!and #recasts ser%es as a guide t the !anage!ent #r !aintaining its !ar,et share in c!$etitin with its ri%als, there"y securing its $r.t&
7& Cst and $rductin analysis& A .r!8s $r.ta"ility de$ends !uch n its csts # $rductin& A wise !anager wuld $re$are cst esti!ates # a range # ut$ut, identi#y the #actrs causing %ariatins in csts and chse the cst- !ini!ising ut$ut le%el, ta,ing als int cnsideratin the degree # uncertainty in $rductin and cst calculatins& 4rductin $rcess are under the charge # engineers "ut the "usiness !anager wr,s t carry ut the $rductin #unctin analysis in rder t a%id wastages # !aterials and ti!e& Sund $ricing $licies de$end !uch n cst cntrl& The !ain t$ics discussed under cst and $rductin analysis are' Cst cnce$ts, cst-ut$ut relatinshi$s, Ecn!ies and 6isecn!ies # scale and cst cntrl&
htt$'99www&allnline#ree&c!9 htt$'99www&allnline#ree&c !9 :& 4ricing decisins, $licies and $ractices& Anther tas, "e#re a "usiness !anager is the $ricing # a $rduct& Since a .r!8s inc!e and $r.t de$end !ainly n the $rice decisin, the $ricing $licies and all such decisins are t "e ta,en a#ter care#ul analysis # the nature # the !ar,et in which the .r! $erates& The i!$rtant t$ics c%ered in this .eld # study are ' Mar,et Structure Analysis, 4ricing 4ractices and 4rice Frecasting& ;& 4r.t !anage!ent& Each and e%ery "usiness .r!s are tended #r earning $r.t, it is $r.t which $r%ides the chie# !easure # success # a .r! in the lng $erid& Ecn!ists tells us that $r.ts are the reward #r uncertainity "earing and ris, ta,ing& A success#ul "usiness !anager is ne wh can #r! !re r less crrect esti!ates # csts and re%enues at di-erent le%els # ut$ut& The !re success#ul a !anager is in reducing uncertainity, the higher are the $r.ts earned "y hi!& It is there#re, $r.t-$lanning and $r.t !easure!ent cnstitute the !st challenging area # "usiness ecn!ics& <& Ca$ital !anage!ent& Still anther !st challenging $r"le! #r a !dern "usiness !anager is # $lanning ca$ital in%est!ent& In%est!ents are !ade in the $lant and !achinery and "uildings which are %ery high& There#re, ca$ital !anage!ent re(uire t$- le%el decisins& It !eans ca$ital !anage!ent i&e&, $lanning and cntrl # ca$ital e0$enditure& It deals with Cst # ca$ital, Rate # Return and Selectin # $r+ects& =& In%entry !anage!ent' A .r! shuld always ,ee$ an ideal(uantity # stc,& I# the stc, is t !uch, the ca$ital isunnecessarily lc,ed u$ in in%entries At the sa!e ti!e i# thele%el # in%entry is lw, $rductin will "e interru$ted due t nn-a%aila"ility # !aterials& 1ence, a .r! always $re#ers t ha%e an$ti!u! (uantity # stc,& There#re, !anagerial ecn!ics willuse s!e !ethds such as A2C analysis, in%entry !dels witha %iew t !ini!ising the in%entry cst
http://www.allonlinefree.com/ http://www.allonlinef ree.com/ This law can "e e0$lained "y ta,ing a %ery si!$lee0a!$le& Su$$se, a !an is %ery thirsty& 1e ges t the!ar,et and "uys ne glass # sweet water& The glass #water gi%es hi! i!!ense $leasure r we say the .rstglass # water has great utility #r hi!& I# he ta,es secndglass # water a#ter that, the utility will "e less than that #the .rst ne& It is "ecause the edge # his thirst has "een"lunted t a great e0tent& I# he drin,s third glass # water,the utility # the third glass will "e less than that # secndand s n&The utility ges n di!inishing with the cnsu!$tin #e%ery successi%e glass water till it dr$s dwn t >er& This is the point of satiety. It is the position of consumers e(uili"riu! r !a0i!u! satis#actin& I# the cnsu!er is#rced #urther t ta,e a glass # water, it leads t disutilitycausing ttal utility t decline& The !arginal utility will"ec!e negati%e& Schedule # /aw # 6i!inishing Marginal Utility'
Units Ttal Utility Marginal Utility1st glass 7? 7?7nd glass :7 17:rd glass ;? @;th glass ;7 7<th glass ;7 ?=th glass :A -:Fr! the a"%e ta"le, it is clear that in a gi%en s$an #ti!e, the .rst glass # water t a thirsty !an gi%es 7? units# utility& 3hen he ta,es secnd glass # water, the http://www.allonlinefree.com/ http://www.allonlinef ree.com/ !arginal utility ges n dwn t 17 unitsB 3hen hecnsu!es .#th glass # water, the !arginal utility dr$sdwn t >er and i# the cnsu!$tin # water is #rced#urther #r! this $int, the utility changes int disutility )-:*&Cur%e96iagra! # /aw # 6i!inishing Marginal Utility'The law # di!inishing !arginal utility can als "ere$resented "y a diagra!& Assu!$tins # /aw # 6i!inishing Marginal Utility'The law # di!inishing !arginal utility is true under certainassu!$tins& These assu!$tins are as under')i* Ratinality' In the cardinal utility analysis , it is assu!edthat the cnsu!er is ratinal& 1e ai!s at !a0i!i>atin #utility su"+ect t a%aila"ility # his inc!e&)ii* Cnstant !arginal utility # !ney' It is assu!ed in thethery that the !arginal utility # !ney "ased #r
http://www.allonlinefree.com/ http://www.allonlinef ree.com/ $urchasing gds re!ains cnstant& I# the !arginal utility# !ney changes with the increase r decrease ininc!e, it then cannt yield crrect !easure!ent # the!arginal utility # the gd&)iii* 6i!inishing !arginal utility' Anther i!$rtantassu!$tin # utility analysis is that the utility gained #r!the successi%e units # a c!!dity di!inishes in a gi%enti!e $erid&)i%* Utility is additi%e' In the early %ersins # the thery #cnsu!er "eha%ir, it was assu!ed that the utilities #di-erent c!!dities are inde$endent& The ttal utility #each c!!dity is additi%e&U C U 1 )D 1 * E U 7 )D 7 * E U : )D : ). U n )D n *)%* Cnsu!$tin t "e cntinuus' It is assu!ed in thislaw that the cnsu!$tin # a c!!dity shuld "ecntinuus& I# there is inter%al "etween the cnsu!$tin #the sa!e units # the c!!dity, the law !ay nt hldgd& Fr instance, i# yu ta,e ne glass # water in the!rning and the 7nd at nn, the !arginal utility # the7nd glass # water !ay increase&)%i* Suita"le (uantity' It is als assu!ed that thec!!dity cnsu!ed is ta,en in suita"le and reasna"leunits& I# the units are t s!all, then the !arginal utilityinstead # #alling !ay increase u$ t a #ew units&)%ii* Character # the cnsu!er des nt change' The lawhlds true i# there is n change in the character # thecnsu!er& Fr e0a!$le, i# a cnsu!er de%el$s a taste