1. Define Managerial Economics
By combining the basic definition of the two terms “Manager” and “Economics” you get the definition of “managerial economics” . “Managerial Economics” is the study of directing resources in a way that it most efficiently achieves the managerial goals.
Managerial
Economics is also the application of the tools of economics analysis in
decision making in actual business situations.
2. What is meant by Micro economic analysis ?
Micro
economic analysis deals with the problems of an individual firm, industry or
consumer etc. It helps in dealing with issues which go on within the firm such
as putting the resources available with the firm to its best use, allocating
resources within various activities of the firm to its best use, allocating
resources within various activities of the firm and also deals with being
technically and economically efficient.
3. What is meant by Prescriptive approach ?
Prescriptive or normative approach tells “How things ought to be done”.
4. What is meant by descriptive approach ?
Descriptive
approach tells “how things are done”.
5. Scope of Managerial Economics:
The
following aspects constitute the scope of managerial economics:
1. Objectives
of a business firm
2. Demand
analysis and forecasting
3. Cost
analysis
4. Production
management
5. Supply
analysis
6. Pricing
decisions, policies and practices
7. Profit
management
8. Capital
budgeting and investment decisions
9. Decision
theory under uncertainty
10.Competition
6.Give the Objectives of a business firm
The
objectives of a business firm may be varied. Apart from generating profits a
firm has many other objectives like being a market leader , being a cost
leader, achieving superior efficiency, achieving superior quality, achieving
superior customer responsiveness etc.
7.What is meant by Supply Analysis?
Supply
analysis deals with the various aspects of supply of a commodity. Certain
important aspects of supply analysis are supply schedule, curves and function,
elasticity of supply, law of supply and its limitations and factors influencing
supply.
8.What is meant by Capital Budgeting ?
Capital
budget is the planning of expenditure on assets.
9.Use of Engineering Economics:
Engineering
economics accomplishes several objectives. It presents the aspects of
traditional economics that are relevant for business and engineering decision
making in real life.
10.Define Logistics:
It is the
movement of goods from one place to the other.
11.Define Inbound Logistics:
It is the
movement of raw materials to the factory premises.
12.Define Outbound logistics:
It is the
movement of finished goods to wholesaler or retail outlets and to the final
consumers.
13. Define Statistics:
Statistics
provide the basis for empirical testing of theory. Generalizations or theory
cannot be accepted for practice unless these theories are checked against the
data from the reality. This way, theories become more practical and useful in
real life business situation.
14. Define Economics and define the divisions of
Economics:
Economics
has two divisions namely micro economics and macro economics. Micro economics
is the branch of economics where the unit of study is an individual or a firm
while macro economics is branch of economics where the unit of study is
aggregative in character and considers the entire economy.
15. Define Accounting:
Accounting
can be defined as the recording of financial operations of an organization.
Managerial decisions on profits and sales etc. derive input largely from the
accounting statement of a firm.
16. Define Managerial Economics and Mathematics:
Many of
the theories in mathematics will find use in economics. Concepts such as
calculus, vectors, logarithms and exponentials, determinants and matrix,
algebra etc are some to name a few. Managerial economics is metrical in
character. It estimates various economic relationships prediction relevant
economic quantities and uses them in decision making and planning for the
future. So mathematics becomes an important tool in managerial economics.
17. Define Operations research:
Operations
research was developed as science during the Second World War to solve the
complex operations problems of planning and resource allocation in defence and
in basic industries which specifically supplied military equipments. These
theories find high usage in various field of management to solve problems
pertaining to logistics, both inbound and outbound and also the movement of
material within the factory premises etc.
18. Define a competitor.
The
competitors of the firm are also likely to react or even pro-act to any
decisions made by the firm. Competitors always try to navigate the competitive
advantage gained by the firm. Thus managers will have to make wise investments
in projects that will be hard to be imitated by the competition.
19.Define Decision theory under uncertainty:
Most of
the business decisions taken by the managers are done under uncertainty.
Uncertainties pertaining to demand, cost, price, profit, capital etc prevail
most of the time when decisions are made. This makes the whole decision making
process difficult and complex. The tools used in economic analysis have been
modified and refined so as to take into account the uncertainty and thus help
decisions making in logical and scientific manner.
20.Define Profit Management:
All
business firms are motivated and committed to produce profits. Profits are one
of the tangible yardsticks to measure the performance of the firm and the
managers concerned. It also signifies the health of the firm. Profits are
influenced by various factors such as cost of production, revenues and other
factors both internal and external to the firm. Profits are hard to predict.
21.Define Pricing Decisions
A firm’s
profitability and success greatly depend on the pricing decisions and the
pricing policies of the firm. The patronization of the firm’s products by the
customers, the competition faced by the product along with the profits of the
firm, largely depends on the price of the product. Pricing also depends on the
environment in which the firm operates, competitions, customers etc.
22.Define Production Management:
When a
manager organizes and plans the firm’s production functions i.e. when he tries
to convert the raw materials to finished product, he faces a number of economic
problems. The study of ‘production function’ describes the input output
relationship.
23.Define Cost Analysis:
One way
to earn higher profits is by controlling the cost involved in producing the
product. Study of cost is necessary for making efficient and effective
managerial decisions. If a detailed cost analysis and estimation is done, the
firm can move upon effective profit management and sound pricing practices.
24.What are the Macro economic Conditions:
(a) The
economy in which firms operate is predominantly a free enterprise economy.
(b) The
present day economy is undergoing rapid technological and economic changes and,
(c) The
government intervening in the economic affairs has increased in the recent
times and is likely to go up further.
25. What are the Common points in
Managerial Economics ?
1.Managerial economics deals with the decision
making by managers, executives and engineers of economic nature.
2.Managerial
economics is goal oriented.
3.Managerial
Economics is both conceptual and metrical. 4.Managerial economics is pragmatic.
PART - B
1.
Discuss
the nature & scope of managerial economics.
Nature of managerial economics:
1. Applied
economics theory
Ø Application
of macro µ economics
Ø Decision making
Ø Forward
planning
2. Pragmatic
Ø Making
decisions &actions
Ø Improve
the decision making
3. Multidisciplinary
Ø Statistics
Ø Management
Ø Operational
research mathematics
Ø Accounting
psychology
4. Descriptive
&prescriptive
(Cause
&effect relationship)
Predict the
outcome
5.
Appliedscience
Ø Formulation of theories
Cause
&effect relationship
Scope of managerial economics.
Ø Allocation
of resources
Ø To use
micro economic concepts
Ø Effective
decision making
Ø Fundamental
questions
Ø What to
produce?
Ø How to produce
Ø For when
to produce?
Ø Production
&cost analyst
Ø Market
structure
Ø Profit
& non-profit organization
2.
Briefly
explain about firm& Discuss about the types of firm
Firms:
It is a
unit that produces a goods (or) services for a sale.
Types of firms
Private sector (owned by
private people)
1. Sole
proprietorship (single owner)
2. Partnership
(more than one people)
3. Joint
stock (companies act)
4. Cooperatives.
(Voluntary organization with non-profit motives)
Public sector (owned by
public people)
Ø Corporate
board(government invests in amount)
Ø Corporate
company( govt controls economic activities)
Ø Department(specific
purpose related to social utility)
Joint sector (combination
of private & public sector)
3. Discuss about the disciplines of managerial economics.
Managerial
economics & Economics
Ø Managerial
economics & theory of Decision making
Ø Managerial
economics & Operations research
Ø Managerial
economics& Statistics
Ø Managerial
economics &Accounting
Ø Managerial
economics & Computer science
Ø Managerial
economics & Sociology
4. Discuss
about various subjects involved in managerial economics.
Ø Managerial
economics & Economics
Ø Managerial
economics & theory of Decision-making
Ø Managerial
economics & Operations research
Ø Managerial
economics& Statistics
Ø Managerial
economics &Accounting
Ø Managerial
economics & Computer science
Ø Managerial
economics &Sociology.
5.
Briefly
explain about importance of Managerial Economics
Ø Allocation
of resources
Ø To use
micro economic concepts
Ø Effective
decision making
Ø Fundamental
questions
Ø What to
produce?
Ø How to
produce
Ø For when
to produce?
Ø Production
&cost analyst
Ø Market
structure & Profit & non -profit organization
6.
i.
Briefly explain about the types of decision making.
§ Major&supplementary
decisions
§ Organizational
&personal decisions
§ Basic&routine
decisions
§ Programmed
& non programmed decision
§ Group&individual
decision
§ Policy&operating
decision
ii. List out the steps involved in decision making .
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