Economics Business Management
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Economics
Business Management
Management
Management is the process of reaching organizational goals efficiently and effectively by working with and through people and other organizational resources.
Economics
Economic is the science of choice in the face of unlimited ends and scare resources that have alternative uses.
Managerial Economics
Managerial economics is the discipline that deals with the application of economic concepts, theories and methodologies to the practical problem of businesses/firms in order to formulate rational managerial decisions for solving those problems.
Business Management• The subject of business and management
is an important and exciting one. • You will learn about the workings of
business organizations, how they function, and how they interact with the environment and economy.
• The subject also includes how these business organizations are managed, including the strategies used to guide them and the decisions involved in the role of the manager.
Micro Economics
How Price Theory Engage with the Business
Any incident where a transaction take place between buyer and seller.
Market
Market
Factor market
Commodity market
Need
Hungry Demand
SupplyDemand
• Tastes and preferences• Income• Price of related products• Future expectation• Number of buyers
• Cost and technology• Price of other goods• Future expectations• Number of sellers• Government polices
Market Equilibrium
Elasticity Concept
Market structure
• There are 4 market structures can be identified according their characteristics
o Perfect competitiono Monopolyo Monopolistic competitiono Oligopoly
Perfect competition Monopolistic Competition
Oligopoly Monopoly
Large number of sellers
Large number of sellers
Small number of sellers
Single seller
Identical product Differentiate Product Identical & Differentiate Product
Unique Product
Easy Entry/ Exist Easy Entry/ Exist Difficult Entry Impossible Entry
No market power Small amount of Market power
Small amount of Market power
Complete Market power
Comparison of Market Structure
Profit Maximization
P
Q0
P
0Q
MC
AC
P=D=MR
S
D TCTR
Profit
Consumer Behavior
Consumer’s Equilibrium and Optimal Combination
a
c
b
Economic Man
The man is entirely rational and self interested in making decisions based upon the ability to maximize utility whilst expending the minimum effort.
How consumer behavior influences an Organization
• Marketing• Product Development• Influence Consumers Emotionally• Encourage Customers to Look for
Value• Change Behavior with Excellent
Service
Macro Economics
InflationInflation is a sustained increase in the general price level of goods and services in an economy over a period of time.
How Inflation Is Measured?
• The rate of inflation is measured by the annual percentage change in the level of prices as measured by the consumer price index.
• A sustained fall in the general price level is called deflation in this situation, the rate of inflation becomes negative.
Two main causes of inflation
When there is excess
demand
When cost rise
Demand pull Cost push
How Inflation Effect for Business Management
• Impact on inventory planning.• Impact on capital planning.• Impact of inflation on wages.• Impact on international operations.• Impact on price controls on
management.
Unemployment
People are able, available and willing to work and actively seeking work but not employed.
Types of unemploymentSeasonal unemployment– Regular seasonal changes in employmentFrictional unemployment– Transitional unemployment due to the people moving between jobs.Structural unemployment– Arise from mismatch of skills and job opportunities as the pattern of labour demand in the economy.
Types of unemploymentCyclical unemployment– There is a cyclical relationship between demand, output, employment and unemployment.Real wage unemployment– Created when real wages are maintained above their market clearing level leading to an excess supply of labour at the prevailing wage rate.
How Are Businesses Affected by High Unemployment ? Low consumer spending – Low demand for income elastic products and services.Falling demand for business further down the supply chain. Increase the demand for inferior goods.Unemployment creates insecurity in the work force ; potentially a cause of lower moral and de-motivation. Recruitment become easier. Lower staff turnover. Less pressure to pay higher wages. Less risk for industrial strike action
How business affected by low UnemploymentIncrease the demand for income elastic good and services.Harder to recruit or expand without offering better work packages.Increased upward pressure on wages.Greater sense for job security.
Fiscal Policy
Fiscal policy involves the decisions that a government makes regarding collection of revenue through taxation and about spending the revenue.
Monitory Policy
A policy employing central bank’s control of the supply of money as an instrument for achieving the objectives of general economic policy.
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