MANAGERIAL ECONOMICS BY VARSHNEY AND MAHESHWARI EBOOK

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MANAGERIAL ECONOMICS/ R L VARSHNEY AND K L MAHESHWARI. Physical description: ; Author(s): R L VARSHNEY; K L MAHESHWARI;. Managerial Economics, Maheshwari K.L., Varshney bestthing.info husband cheated on me will he do it again

Managerial Economics By Varshney And Maheshwari Ebook

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_managerial economics bestthing.info - MANAGERIAL ECONOMICS Unit-I Varshney RL and Maheshwari KL - Managerial Economics . little bee ebooks download · last child in the woods hana yori dango see ebooks File name: managerial economics varshney and maheshwari pdf download. Read Managerial Economics book reviews & author details and more at Echo & Alexa Fire TV Stick site E-Readers & eBooks site Prime Video .. R.L. Varshney Yogesh Maheshwari, Ph.D., is Associate Professor with the Faculty of.

Micro Economics - T. Jain 7. Macro Economics - T.

01 - Introduction to Managerial Economics

School of Management Course Structure and Syllabi for Jain T R, Khan and Jain, Management Accounting: Cases, Managerial Economics and Financial Analysis, S. Jain and S. Advanced Cost Accounting: S. Baya, Michael R.

Introduction to Managerial Economics: Definition, Craig H. Jain P. First Semester 7. Given that alternative courses of action are available, the manager attempts to produce the most optimal decision, consistent with stated managerial objectives. Thus, an optimisation problem can be stated as maximising an objective called the objective function by mathematicians subject to specified constraints.

In determining the output level consistent with the maximum profit, the firm maximises profits, constrained by cost and capacity considerations. While a manager does not resolve the optimisation problem, he or she may make use of the results of mathematical analysis. In the profit maximisation example, the profit maximising condition requires that the firm select the production level at which marginal revenue equals marginal cost.

The techniques of optimisation employed depend on the problem a manager is trying to solve. Statistical estimation: A number of statistical techniques are used to estimate economic variables of interest to a manager. In some cases, statistical estimation techniques employed are simple. In other cases, they are much more complex and advanced.

Thus, a manager may want to know the average price received by his competitors in the industry, as well as the standard deviation a measure of variation across units of the product price under consideration. In this case, the simple statistical concepts of mean average and standard deviation are used.

Estimating a relationship among variables requires a more advanced statistical technique. For example, a firm may desire to estimate its cost function i. A firm may also wish to the demand function of its product that is the relationship between the demand for its product and factors that influence it. The estimates of costs and demand are usually based on data supplied by the firm.

The statistical estimation technique employed is called regression analysis and is used to engender a mathematical model showing how a set of variables are related. This mathematical relationship can also be used to generate forecasts.

An example from the automobile industry is befitting for illustrating the forecasting method that employs simple regression analysis.

Let us assume that a statistician has data on sales of American-made automobiles in the United States for the last 25 years. He or she has also determined that the sale of automobiles is related to the real disposable income of individuals.

The statistician also has available the time series data for the last 25 years on real disposable income. Assume that the relationship between the time series on sales of American-made automobiles and the real disposable income of consumers is actually linear and it can thus be represented by a straight line.

A rigorous mathematical technique is used to locate the straight line that most accurately represents the relationship between the time series on auto sales and disposable income. It is a method or a technique to predict many future aspects of a business or any other operation. For example, a retailing firm that has been in business for the last 25 years may be interested in forecasting the likely sales volume for the coming year.

Numerous forecasting techniques can be used to accomplish this goal. A forecasting technique, for example, can provide such a projection based on the experience of the firm during the last 25 years; that is, this forecasting technique bases the future forecast on the past data. Managerial Economics 19 While the term 'forecasting' may appear technical, planning for the future is a critical aspect of managing any organisation or a business.

The long-term success of any organisation has close association with the propensity of the management of the organisation to foresee its future and develop appropriate strategies to deal with the likely future scenarios.

Intuition, good judgment and knowledge of economic conditions enables the manager to 'feel' or perhaps anticipate the likelihood in the future.

It is not easy, however, to metamorphose a feeling about the future outcome into concrete data for instance, as a projection for next year's sales volume. Forecasting methods can help predict many future aspects of a business operation, such as forthcoming years' sales volume projections. Suppose a forecast expert has been asked to provide quarterly estimates of the sales volume for a particular product for the next four quarters.

How should he attempt at preparing the quarterly sales volume forecasts? Reviewing the actual sales data for the product in question for past periods will give a good start. Suppose that the forecaster has access to actual sales data for each quarter during the year period the firm has been in business. Employing this historical data, the forecaster can identify the general trend of sales.

He or she can also determine whether there is a pattern or trend, such as an increase or decrease in sales volume over time. An in depth review of the data may unearth some type of seasonal pattern, such as, peak sales occurring around the holiday season. Thus, by reviewing historical data, there is a high probability that the forecaster develops a good understanding of the pattern of sales in the past periods. Understanding such patterns can result in better forecasts of future sales of the product.

In addition, if the forecaster is able to identify the factors that influence sales, historical data on these factors variables can also be used to generate forecasts of future sales. There are many forecasting techniques available to the person assisting the business in planning its sales. Take for example a forecasting method in which a statistician forecasting future values of a variable of business interest—sales, for example, examines the cause-and-effect relationships of this variable with other relevant variables.

01 - Introduction to Managerial Economics

The other pertinent variable may be the level of consumer confidence, changes in consumers' disposable incomes, the interest rate at which consumers can finance their excess spending through borrowing and the state of the economy represented by the percentage of the labour force unemployed. This category of forecasting technique utilises time series data on many relevant variables to forecast the volume of sales in the future.

Under this forecasting Study Notes Assessment 1. Explain how Managerial Economics is applied in Marginal Analysis? Explain Optimization. The discipline of managerial economics deals with aspects of economics and tools of analysis, which are employed by business enterprises for decision making.

This demands an Managerial Economics 21 unclouded perception of the technical and environmental conditions, which are integral to decision making. The decision maker must possess a thorough knowledge of aspects of economic theory and its tools of analysis, which are integral to decision making. The basic concepts have been culled from microeconomic theory and have been furnished with new tools of analysis.

Characteristics of Managerial Economics: Following are the characteristics of managerial economics: The scope of managerial economics includes following subjects: Managerial economics uses a wide variety of economic concepts, tools and techniques in the decision-making process.

These concepts can be enlisted as follows: Explain concept and techniques of managerial economics. How is Managerial Economics applied in analysis and decision-making? Why managers need to know economics? Explain the importance of managerial economics. Short Notes a. Meaning and definition of managerial economics b.

Application of managerial economics c. Theories of managerial economics d. Characteristics of managerial economics e. Optimisation and forecasting in managerial economics 1. Managerial Economics, Chopra O P. Managerial Economics, Varshney R L. Managerial Economics, Suma Damodaran, Oxford, How far are these principles followed in present managerial economic scenarios? It is a continuous process Content Map 2. Managerial Economics 27 2. Demand theory is the building block of the demand curve- a curve that establishes a relationship between consumer demand and the amount of goods available.

Demand is shaped by the availability of goods, as the quantity of goods increases in the market the demand and the equilibrium price for those goods decreases as a result. Demand theory is one of the core theories of microeconomics and consumer behaviour.

It attempts at answering questions regarding the magnitude of demand for a product or service based on its importance to human wants. Based on the perceived utility of goods and services to consumers, companies are able to adjust the supply available and the prices charged. In economics, demand has a specific meaning distinct from its ordinary usage.

This is incongruent from its use in economics. In economics, demand refers to effective demand which implies three things: For instance, a person may desire to own a scooter but unless he has the required amount of money with him and the willingness to spend that amount on the download of a scooter, his desire shall not become a demand.

The following should also be noted about demand: For instance, the statement, 'the weekly demand for potatoes in city X is 10, kilograms' has no meaning unless we specify the price at which this quantity is demanded. Therefore, it is vital to specify the For instance, the statement that demand for potatoes in city X at Rs. A complete statement would therefore be as follows: It is necessary to specify the period and the price because demand for a commodity will be different at different prices of that commodity and for different periods of time.

Thus, we can define demand as follows: An Effective Need: Effective need entails that there should be a need supported by the capacity and readiness to shell out. Hence, there are three basics of an effective need: The individual should have a need to acquire a specific product. He should have sufficient funds to pay for that product. He should be willing to part with these resources for that commodity. A Specific Price: A proclamation concerning the demand of a product without mentioning its price is worthless.

For example, to state that the demand of cars is 10, is worthless, unless expressed that the demand of cars is 10, at a price of Rs. A Specific Time: Demand must be assigned specific time. For example, it is an incomplete proclamation to state that the demand of air conditioners is 4, at the price of Rs.

The statement should be altered to say that the demand of air conditioners during summer is 4, at the price of Rs. A Specific Place: The demand must relate to a specific market as well. For example, every year in the town of Dehradun, the demand for school bags is 4, at a price of Rs. Hence, the demand of a product is an effective need, which demonstrates the quantity of a product that will be bought at a specific price in a specific market at some Managerial Economics 29 stage in a specific period.

Nevertheless, the significance of a specific market or place is not as significant as the price and time period for which demand is being measured. As explained the first and the most important factor that determines the demand of a commodity is its price.

If allother factors noted above remain constant, it may be said that as the price of a commodity increases, its demand decreases and as the price of a commodity decreases its demand increases.

This is a general behaviour observed in a market. This gives us the law of demand: The law of demand thus merely states that the price and demand of a commodity are inversely related, provided all other things remain unchanged or as economists put it ceteris paribus.

managerial economics by t r jain - Free PDF Download

These are then the assumptions of the law of demand. We can state the assumptions of the law of demand as follows: Income level should remain constant: The law of demand operates only when the income level of the downloader remains constant. If the income rises while the price of the commodity does not fall, it is quite likely that the demand may increase.

Therefore, stability in income is an essential condition for the operation of the law of demand. Tastes of the downloader should not alter: Any alteration that takes place in the taste of the consumers will in all probability thwart the working of the law of demand. It often happens that when tastes or fashions change people revise their preferences. As a consequence, the demand for the commodity which goes down the preference scale of the consumers declines even though its price does not change.

Prices of other goods should remain constant: Changes in the prices of other goods often impinge on the demand for a particular commodity. If prices of commodities for which demand is inelastic rise, the demand for a commodity other than these in all probability will decline even though there may not be any change in its price. Therefore, for the law of demand to operate it is imperative that prices of other goods do not change.

No new substitutes for the commodity: If some new substitutes for a commodity appear in the market, its demand generally declines. This is quite natural, because with the availability of new substitutes some downloaders will be attracted towards new products and the demand for the older product will fall even though price remains unchanged.

Hence, the law of demand operates only when the market for a commodity is not threatened by new substitutes. Price rise in future should not be expected: If the downloaders of a commodity expect that its price will rise in future they raise its demand in response to an initial price rise. This behaviour of downloaders violates the law of demand.

Therefore, for the operation of the law of demand it is necessary that there must not be any expectations of price rise in the future. Advertising expenditure should remain the same: If the advertising expenditure of a firm increases, the consumers may be tempted to download more of its product. Therefore, the advertising expenditure on the good under consideration is taken to be constant. Desire of a person to download a commodity is not his demand.

He must possess adequate resources and must be willing to spend his resources to download the commodity. There may be some problems in applying this flow concept to the demand for durable consumer goods like house, car, refrigerators, etc. However, this apparent difficulty may be resolved by considering the total service of a durable good is not consumed at one point of time and its utility is not exhausted in a single use.

The service of a durable good is consumed over time. At a time, only a part of its service is consumed. Therefore, the demand for the services of durable consumer goods may also be visualised as a demand per unit of time. However, this problem does not arise when the concept of demand is applied to total demand for a consumer durable. Thus, the demand for consumer goods also is a flow concept.

A demand schedule is a series of quantities, which consumers would like to download per unit of time at different prices. To illustrate the law of demand, an imaginary demand schedule for tea is given in Table 2.

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It shows seven alternative prices and the corresponding quantities number of cups of tea demand per day. Each price has a unique quantity demanded, associated with it. As the price per cup of tea decreases, daily demand for tea increases, in accordance with the law of demand. Managerial Economics 31 Table 2. Demand curve is a locus of points showing various alterative price-quantity combinations. It shows the quantities of a commodity that consumers or users would download at difference prices per unit of time under the assumptions of the law of demand.

An individual demand curve for tea as given in Fig. The combinations read in alphabetical order should decreasing price of tea and increasing number of cups of tea demanded per day. Price quantity combinations in reverse order of alphabets illustrate increasing price of tea per cup and decreasing number of cups of tea per day consumed by an individual.

The whole demand curve shows a functional relationship between the alternative price of a commodity and its corresponding quantities, which a consumer would like to download during a specific period of item—per day, per week, per month, per season, or per year. The demand curve shows an inverse relationship between price and quantity demanded. This inverse relationship between price and quantity demanded results in the demand curve sloping downward to the right.

The downward slope of the demand curve reads the law of demand i. The reasons behind the law of demand i. Substitution Effect: When the price of a commodity falls it becomes relatively cheaper if price of all other related goods, particularly of substitutes, remain constant. In other words, substitute goods become relatively costlier. Since consumers substitute cheaper goods for costlier ones, demand for the relatively cheaper commodity increases.

The increase in demand on account of this factor is known as substitution effect. Income Effect: As a result of fall in the price of a commodity, the real income of its consumer increase at least in terms of this commodity. The increase in real income or downloading power encourages demand for the commodity with reduced price.

The increase in demand on account of increase in real income is known as income effect.

It should however be noted that the income effect is negative in case of inferior goods. Consequently, they substitute the superior good for the inferior ones, i.

Thus, the income effect on the demand for inferior goods becomes negative. Managerial Economics 33 Diminishing Marginal Utility: Diminishing marginal utility as well is to be held responsible for the rise in demand for a product when its price declines. When an individual downloads a product, he swaps his money revenue with the product in order to increase his satisfaction.

He continues to download goods and services as long as the marginal utility of money MUm is lesser than the marginal utility of the commodity MUC.

This plan works well under both Marshallian assumption of constant MUm as well as Hicksian assumption of diminishing MUm. Thus, equilibrium state is upset. To get back his equilibrium state, i. For this reason, demand for a product rises when its price falls.

Apprehensions about the future price: When consumers anticipate a constant rise in the price of a long-lasting commodity, they download more of it despite the price rise. They do so with the intention of avoiding the blow of still higher prices in the future.

Likewise, when consumers expect a substantial fall in the price in the future, they delay their downloads and hold on for the price to decrease to the anticipated level instead of downloading the commodity as soon as its price decreases. These kinds of choices made by the consumers are in contradiction of the law of demand. Status goods: Rich people mostly download such goods as they are very costly.

Giffen goods: An exception to this law is the typical case of Giffen goods named after Sir Robert Giffen It could be any low-grade commodity which is cheap as compared to its superior alternatives, consumed generally by the lower income group families as an important consumer good.

If price of such goods rises price of its alternative remaining stable , its demand escalates instead of falling. They have a fixed expenditure of Rs.

However, if the price of No doubt, the family's demand for bajra rises from 20 to 25 kgs when its price rises. The total quantity which all the consumers of a commodity are willing to download at a given price per time unit, other things remaining the same, is known as market demand for the commodity. In other words, the market demand for a commodity is the sum of individual demands by all the consumers or downloaders of the commodity, per time unit and at a given price, other factors remaining the same.

For instance, suppose there are three consumers viz. The last column presents the market demand i. Table 2. Price and Quantity Demanded Price of Commodity X Price per unit Quantity of X demanded by Market Demand A B C 10 4 2 0 6 8 8 4 0 12 6 12 6 2 20 4 16 8 4 28 2 20 10 6 36 0 24 12 8 44 Graphically, market demand curve is the horizontal summation of individual demand curves.

The individual demand schedules plotted graphically and summed up horizontally gives the market demand curve as shown in Fig. The horizontal summation of these individual demand curves results into the market demand curve DM for the commodity X.

The curve DM represents the market demand curve for commodity X when there are only three consumers of the commodity. Derivation of market demand Study Notes Assessment 1. What are the essentials of a Demand? Explain Law of Demand, in detail. The above-stated demand function is a complicated one.

Again, factors like tastes and unknown influences are not quantifiable. Economists, therefore, adopt a very simple statement of demand function, assuming all other variables, except price, to be constant. Thus, an over-simplified and the most commonly stated demand function is: Micro Economics - T.

Jain 7. Macro Economics - T. School of Management Course Structure and Syllabi for Jain T R, Khan and Jain, Management Accounting: Cases, Managerial Economics and Financial Analysis, S.

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Jain and S. Advanced Cost Accounting: S. Baya, Michael R. Introduction to Managerial Economics: Definition, Craig H. Jain P. First Semester 7.Chapter 1 Introduction to Managerial Economics solution. However, in the absence of unlimited resources, it is the responsibility of the management to optimise the use of these resources. Therefore, it should fashion the plans, policies and programmes of the firm according to these factors in order to offset their adverse effects on the firm.

It could be any low-grade commodity which is cheap as compared to its superior alternatives, consumed generally by the lower income group families as an important consumer good. Analysis of demand is undertaken to forecast demand, which is a fundamental component in managerial decision-making.

Those who hear these Eastern teachings for the first time may want proof. Price and Quantity Demanded Price of Commodity X Price per unit Quantity of X demanded by Market Demand A B C 10 4 2 0 6 8 8 4 0 12 6 12 6 2 20 4 16 8 4 28 2 20 10 6 36 0 24 12 8 44 Graphically, market demand curve is the horizontal summation of individual demand curves. For example, to state that the demand of cars is 10, is worthless, unless expressed that the demand of cars is 10, at a price of Rs.

The inputs employed for producing these goods and services are called factors of production.

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