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Adjunct / Visiting
Faculty
B.A (Economics) : Miranda
House
MA (Economics) : Gokhale
Institute, Pune
PhD Aspirant : June15
Thermal Energy: GE
Renewable Energy:
Suzlon
Yoga
Why Do
You
Want To
Study
Economics?
Its a part of the course, thats why
Managers need to know a little bit of economics
Economics is about prices, and demand and supply and you
know all that
It helps me to make sense of the newspaper articles!
Can it be a lot of fun? .. Well find out
I get to learn something new
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But Why?
Steps in Decision
Making
Problem
Follow up to
Improve
Different
Approaches
Implement
Select Best
Who is a Manager?
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11
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????????????????
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Create goods/services
Jobs
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Flipkart reported a loss of281 crore for the FY 2012-13. [42]In July
2013, Flipkart raised USD 160 million from private equity investors
In October 2013, it was reported that Flipkart had raised an
additional $160 million from new investors Dragoneer Investment
Group,Morgan Stanley Wealth Management,SofinaSA and
Vulcan Inc.with participation from existing investor Tiger Global.
[44][45][46]
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Key Takeaways
Managerial Economics is largely the study
of Micro Economics
Within Micro focuses more on the study of
the firm
The firm exists to save on transactional
costs and aims to maximize value
Course will focus on what strategies the
firm/firms take to achieve the above
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Demand Curve
Downward Sloping
YES!
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Substitution
Effect
Income Effect
Since X is now
cheaper demand
more
Demand for X
increases
Demand for X
increases
Inferior Goods
Violates the law of demand
Giffen Good
A special type of inferior good : As Price rises,
demand also rises
http://www.eco
nomist.com/blo
gs/freeexchang
e/2007/07/as_p
rice_goes_up_s
o_does_deman
portion of
your budget
is spent onThus as Price Increased, Demand also increased!
this good!
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Supply Curve
Upward Sloping
Reflects the producers
willingness to sell at a
price
Increase in price leads to
Increase in Supply
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Market Equilibrium
Price
($ per
slice)
Supply
Equilibrium is at Rs. 3
No one is left unsatisfied
demands are met with supply
Demand
1
2
1
6
Quantity
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Excess Demand
Price
($ per
slice)
demand curve
Demand
1
6
Quantity
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Excess Supply
Price
($ per
slice)
Supply
reduces
Ultimately equilibrium is restored
at Rs. 3, by moving along the
supply curve (only we move
downwards!)
Demand
1
2
1
6
Quantity
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Opportunity Cost
A Brief Example
Assuming you have an investible surplus of Rs 1 Lacs. You are
looking at investment options that yield 8% per year. And thus,
looks good and you invest!
BUT : There are so many more investment products in the
market if you diversify your portfolio you may get upto 10%
a year . What is the opportunity cost here?
10% - 8% : 2 %
In effect, you let go of 2% additional benefit that could have
come to you!
Always consider the opportunity cost before
deciding!
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Total
Average
Marginal
100
100
100
180
90
80
210
70
30
220
55
10
230
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10
Example: Cup of tea The first cup in the morning is the most tasty!.
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Marginal Cost
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