Managerial Economics - Nature Scope 2c571i

Managerial Economics Click to edit Master subtitle style NATURE & SCOPE

By: Malik Abrar Altaf Lecturer Management Dr. SM Iqbal Business School

By: Malik Abrar Altaf Lecturer Management. Dr. SM Iqbal Business School.

4/14/12

Nature of Managerial Economics Microeconomic in Nature: Unit of Study is a Firm. Managerial Economics largely uses that body of Economic concepts and principles which is known as ‘Theory of Firm’. Also Seeks to apply Profit Theory concepts ( Distribution Economics). Pragmatic : avoids difficult abstract issues of economic theory but involves complications ignored in economic theory to face the overall situation in which decisions are made. Managerial Economics Belongs to Normative ( What Ought to be?) Economics rather than Positive 4/14/12than Descriptive MalikIs?). AbrarItAltaf Lecturer ( By: What is Prescriptive rather

Scope of Managerial Economics

By: Malik Abrar Altaf Lecturer

4/14/12

Demand Analysis & Forecasting Business Firm is an Economic Organism which transforms productive resources into goods that are to be sold in market. Major Part of the Managerial Decision making depends on accurate estimates of Demand. Before Production schedules can be prepared & resources employed, a forecast of future sales is essential. Forecast serves as a guide to management for maintaining or strengthening market position and enlarging profits. Demand Analysis & Forecasting is essential for 4/14/12 By: Malik Abrar Altaf Lecturer business planning and occupies a strategic place in

Cost Analysis Cost Estimates are important for Management Decisions. Necessary for More Effective Profit Planning, Cost Control, and often for sound practices. Chief Topics: •Cost Concepts & Classification •Cost output Relationships •Economies & Diseconomies of Scale •Cost Control & Cost reduction. By: Malik Abrar Altaf Lecturer

4/14/12

Production & Supply Analysis Narrower in Scope than Cost Analysis. Frequently Proceeds in physical whils cost analysis proceeds in monetary . Mainly Deals with Various aspects of Production function and their managerial Uses. Supply Analysis deals with various aspects of supply of a commodity. Chief Topics: •Production Function. •Isoquants By: Malik Abrar Altaf Lecturer •IsoCosts

4/14/12

Pricing Decisions , Policies & Practices Price is the genesis of the revenue of the firm . The success of a business firm largely depends on the correctness of the pricing decisions taken by it. Chief Topics: •Price Determination in various market forms. •Pricing methods. •Differential pricing •Product-Line Pricing. •Price Forecasting. By: Malik Abrar Altaf Lecturer

4/14/12

Profit Management The ultimate goal of very business is to make profits. In the long run profits provide the chief measure of success. Factors as internal and external affect the costs and revenues which in turn affect the rate of profits. Knowledge of Future is not perfect , thus profit planning and measurement constitute the difficult area of Managerial Economics. By: MalikTopics: Abrar Altaf Lecturer Chief

4/14/12

Capital Management Most Complex and troublesome for the business manager are those relating to the firm’s Capital Investments. Matter of Top Level Consideration. Capital Management Implies Planning and Control of Capital Expenditure. Chief Topics: • Cost of Capital. • Rate of Return. •Selection of Projects.

By: Malik Abrar Altaf Lecturer

4/14/12