Business economics - NMIMS

1 Business economics COURSE DESIGN COMMITTEE. Chief Academic Officer Dr. Sanjeev Chaturvedi NMIMS Global Access School for Continuing Education. Stream Leader TOC Reviewer Ms. Dimple Pandey Dr. Sreejith Narayanan Assistant Professor, NMIMS Global Specialization: economics . Access - School of Continuing Education. Specialization: Finance. Content Reviewer Content Reviewer Prof. Pooja Grover Mr. Kali Charan Sabat Visiting Faculty, NMIMS Global Assistant Professor, NMIMS Global Access - School for Continuing Education. Access - School for Continuing Education. Specialization: economics , Finance. Specialization: Operations Author : Ms. Pratibha Bagga Reviewed By: Prof.

2 Pooja Grover & Mr. Kali Charan Sabat Copyright: 2016 Publisher ISBN: 978-93-5119-459-0. Address: 4435/7, Ansari Road, Daryaganj, New Delhi 110002. Only for NMIMS Global Access - School for Continuing Education School Address V. L. Mehta Road, Vile Parle (W), Mumbai 400 056, India. NMIMS Global Access - School for Continuing Education CON T EN T S. CHAPTER NO. CHAPTER NAME PAGE NO. 1 Introduction To Business economics 1. 2 demand Analysis 33. 3 Supply Analysis 63. 4 Consumer demand Analysis 87. 5 elasticity of demand and Supply 121. 6 demand Forecasting 173. 7 Production Theory 197. 8 Cost and Revenue Analysis 233. 9 Market Structure 265. 10 Market Failure 295.

3 11 Case Studies 311. NMIMS Global Access - School for Continuing Education Business economics c u rr i c u l u m Introduction to Business economics : economics and Business Decision Making; economics : Scope of economics ; economics as a tool for decision making; Business economics : Definition and scope;. distinction between economics and Business economics ; Economic Indicators and Business Cycles demand and Supply Analysis: demand , Generalized demand Function, The law of demand , Shift and movement along demand curve, elasticity of demand : Price, Income and cross Price elasticity of demand , demand Estimation: Basic concepts , Supply, Generalized supply function, Supply functions, Shifts and movement in the supply curve, Supply elasticity , Market equilibri- um, Changes in the market equilibrium, Changes in demand (supply constant), Changes in sup- ply ( demand constant).

4 Cost & Production Analysis: Production in the short run, Total product, Average and marginal products, Law of diminishing marginal product, Production in the long run, Production isoquants, Characteristics of isoquants, Marginal rate of technical substitution, Isocost curves, Finding the op- timal combination of inputs, Short run costs of production, Fixed and variable cost, Short run total costs, Average and marginal cost, Marginal cost curves, Long run costs, Derivation of cost schedule from a production function, Economies and diseconomies of scale, Economies of scope Managerial Decisions in Competitive Markets: Features of perfect competition, Profit maximiza- tion in the short run, Profit maximization in the long run, Managerial decisions for firms with mar- ket power, Measurement of market power: The Lerner Index, Determinants of the market power: Economies of scale, Barriers created by government, Profit maximization under monopoly: output and pricing decisions, Monopolistic competition: short run and long run equilibrium, Pricing deci- sion in an oligopoly: The Kinked demand curve model Market Failures and Price Regulations.

5 Market failures and need for regulation, Regulations and market structure, Firm behavior, Price regulation NMIMS Global Access - School for Continuing Education Chapt 1 e r INTRODUCTION TO Business economics . CONTENTS. Introduction Meaning of economics Scope of economics Nature of economics Assumptions in economics Self Assessment Questions Activity Defining Business economics Scope of Business economics Significance of Business economics Self Assessment Questions Activity Distinction between economics and Business economics Self Assessment Questions Activity Microeconomics and Macroeconomics Self Assessment Questions Activity Laws of economics Nature of Economic Laws Application of Economic Laws Self Assessment Questions Activity Economic Statics and Dynamics Self Assessment Questions Activity economics and Business Decision Making Self Assessment Questions

6 Activity NMIMS Global Access - School for Continuing Education 2 Business economics CONTENTS. Social Accounting Self Assessment Questions Activity Gross National Product-Concept and components Self Assessment Questions Activity Business Cycles Nature of Business Cycles Self Assessment Questions Activity Definition of Inflation Characteristics and Types of Inflation Concept of Money Supply Interest Rate Self Assessment Questions Activity Summary Descriptive Questions Answers and Hints Suggested Reading for Reference NMIMS Global Access - School for Continuing Education INTRODUCTION TO Business economics 3. Introductory Caselet n o t e s RECOVERY OF INDIA'S ECONOMY.

7 In 2013, India was facing an economic crisis due to slow economic growth and high levels of inflation. There was a current account deficit in the country as the rupee was at its all-time low. On Au- gust 28, 2013, the value of the Indian rupee against the US dollar was recorded ` , which was the lowest till date. During the first quarter (April-June) of the fiscal year 2013-14, the economy of India experienced a slow growth rate of , the low- est in the previous four years. The revised forecast of economic growth rate of India by the World Bank for the year 2014 was against the earlier estimate of In the opinion of economic experts, Indian economy was going through the worst economic crisis since 1991.

8 India's financial condition was going down as a result of the crisis. On September 04, 2013, Raghuram Rajan was appointed as the 23rd governor of the RBI for a period of three years. His major challenge was to help the Indian economy rise above the econom- ic crisis and bring it back on the path of growth. After his appointment as the RBI governor, the value of rupee strengthened in the international market. Raghuram Rajan was appreciated by economists and analysts who continued to keep a strict watch on economic strategies adopted by Rajan. NMIMS Global Access - School for Continuing Education 4 Business economics n o t e s learning objectives After completing this chapter, you will be able to: > Define the meaning of economics > Discuss the concept of Business economics > Identify the differences between economics and Business economics > Describe microeconomics and macroeconomics > Explain the laws of economics > Discuss economic static and dynamics > Describe the role of economics in decision making > Define the concept of social accounting > Estimate GNP.

9 > Describe Business cycles > Explain inflation INTRODUCTION. In simple terms, economics can be defined as a discipline that studies the behaviour patterns of human beings. The main aim of economics is to analyse how individuals, households, organisations, and nations use their scarce resources to achieve maximum profit. economics is broadly classified into two parts, namely microeconomics and macro- economics . Microeconomics is a branch of economics that studies the behaviour of individual consumers and organisations in the market. It focuses on the demand and supply, pricing, and output of individ- ual organisations. On the other hand, macroeconomics examines the economy as a whole and deals with issues related to national income, employment pattern, inflation, recession, and economic growth.

10 With the advent of globalisation and rise in competition, it is of para- mount importance for managers to make rational decisions. For this, managers should have a clear understanding of different economic concepts, theories, and tools. Business economics or managerial economics is a specialised discipline of economics that undertakes a study of various economic theories, logics, and tools used in Business decision making. It applies various economic concepts, such as de- mand and supply, competition, allocation of resources, and economic trade-offs, to help managers in making better decisions. In this unit, you will study the concept of economics , its nature, and scope.