AREA OF MANAGERIAL ECONOMICS - B.E,(CS FINAL & IT 3RD YEAR) Dr.K.BARANIDHARAN, SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI

8/12/2019 AREA OF MANAGERIAL ECONOMICS - B.E,(CS FINAL & IT 3RD YEAR) Dr.K.BARANIDHARAN, SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI

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Prepared by :

Dr. K. BARANIDHARAN

PROF.MBASRI SAIRAM INSTITUTE OF TECHNOLOGY

CHENNAI

ENGINEERING ECONOMICS

AND

FINANCIAL ACCOUNTING

Sri Sairam Institute of Technology 2


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EngineeringEconomics& Financial

Accountingment

Eefa

330 July 2014


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MAIN AREA OF M E, 1.DEMAND

DECISION

THe Forecasting Of Demand For A Given

Product And Service Is The First Task Of

The ME.

The behavioral implication such as the

customer response to given changes of

price and supply. The changes of income levels of customer



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2.INPUT-OUTPUT DECISION

The cost of inputs in relation

to output are studied to

optimise profits.

Production and cost function

are estimated to certain

parameters,Sri Sairam Institute of Technology 5


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3.PRICE-OUTPUT DECISION

The Production Is Ready AndThe Task Is Determine The

Price In Different MarketSituation Such As Perfect

And Imperfect Markets

Ranging From Monopoly.



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4.PROFIT - RELATED DECISION

The technique such asBreak Even Analysis, cost

reduction and controland ratio analysis to

ascertain the level ofprofit.



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5.INVESTMENT DECISION

Investment decision are alsocalled capital budgeting

decisions. Involve the large fund

commitment, whichdetermine the fate of the firm.



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6.ECONOMIC FORECASTING AND

FORWARD PLANNING

The economic forecasting leads to the forward

planning.

The firm operate environment which is dominated

by the INTERNAL AND EXTERNAL factors. EXTERNAL: govt policy, competitation, employment,

labour, human resources, finance, marketing..

INTERNAL: policies, procedures relating to thefinance, people, market and products.



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M E related with OTHER

DISCIPLINES Managerial Economics and Traditional

Economics:

Economics and Managerial economics

both are facing identical

problems,i.e., problem of scarcity and

resource allocation.

Since labour and capital are alwayslimited it must find way for effective

utilizing of these resources.



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ITS MAIN CONTRIBUTION TO ME


HELP IN UNDERSTANDING THE MARKETCONDITIONS AND THE GENERAL

ECONOMIC ENVIRONMENTWITHIN

WHICH THE FIRM OPERATES. TO PROVIDE THE PHILOSOPHY FOR

UNDERSTANDING AND ANALYSING THE

RESOURCE ALLOCATION PROBLEMS


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1. M E OPERATIONS RESEARCH

Both operations research and managerial

economics are concerned with taking effectivedecisions,

Decision making is the main focus in OR and ME.

To understand and to analyse the problems ofbusiness decision making while OR is an activitycarried out byfunctional specialist within the firmto help the manager to do his job of solving

decision problems. It refers to both minimisation of costs and

maximisation of revenue



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ITS MAIN CONTRIBUTION TO

MANAGERIAL ECONOMICS OR models like queuing, linear

programming etc.., are widely used

in managerial economics

Model building, economic models

are more general and confined tobroad economic decision making



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2.M ECONOMICS AND MATHEMATICS

Mathematics is closely related to

managerial because managerial

economics ,being conceptual butalso metrical.

Its metrical property is used to

estimate and predict the relevant

economic factors for decision

making and forward planningSri Sairam Institute of Technology 14


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MANAGERIAL ECONOMICS Geometry, algebra and calculus

Logarithms and exponential, vectors

and determinants, input-output

tables etc.,

Even OR can be included as a part ofmathematical exercise



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Statistics is widely used in managerial

economics. It is mainly needed for a

correct judgement and decision making


MANAGERIAL ECONOMICS To handle the unforeseen circumstances

the theory probability is mainly used.Sri Sairam Institute of Technology 16


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4.ME AND THE THEORY OF DECISION

The theory of decision making is

relatively a new subject that has

significance for managerial economics.

Much of economic theory is based on the

single goal MAXIMISATION OF PROFIT,

but theory of decision making recognizesthe multiplicity of goals and the

pervasiveness of uncertainty



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5.ROLE OF ME IN BUSINESS

The task of organizing and

processing information and then

making an intelligent decisionbased upon two general forms

Task of making Specific decisions Task of making General decisions



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Task of making Specific decisions

Production scheduling Demand forecasting

Market research

Economic analysis of the industry

Investment appraisal

Security management appraisal

Advice on trade

Advice on foreign exchange management

Pricing and related decisionsSri Sairam Institute of Technology 19


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Task of making General decisions

Analysing the general

economic condition of the

economyAnalyzing the demand for the

product

Analysing the general marketSri Sairam Institute of Technology 20


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6.ACCOUNTANCY

Accountant provides accounting

information relating to Cost,

Revenues, Receivables,Payables, Profit/Losses. In the

data performance of the firm

result.

Decision making and forward

lannin .Sri Sairam Institute of Technology 21


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7.PSYCHOLOGY

CONSUMER PSYCHOLOGY is the

basis on which a ME acts.

The customer react the changethe price or supply and it is effect

of demand/profits is the mainfocus study of ME.



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8.ORGANISATIONAL BEHAVIOUR

The study develop

behavioural model of firm

integrating the managers

behaviour with that of theowner.



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AREA OF MANAGERIAL ECONOMICS - B.E,(CS FINAL & IT 3RD YEAR) Dr.K.BARANIDHARAN, SRI SAIRAM INSTITUTE OF TECHNOLOGY, CHENNAI

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