NATURE & SCOPE

Capital Management Profit Management Pricing Decisions, Policies & Practices. Production & Supply Analysis Cost Analysis 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 business planning and occupies a strategic place in managerial Economics. Chief Topics: Demand determinants Demand Distinction & Demand Forecasting.

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.

Narrower in Scope than Cost Analysis. Frequently Proceeds in physical terms whils cost analysis proceeds in monetary terms. 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 IsoCosts Supply Schedule Law of supply and its limitations Elasticity of Supply and Factors influencing it.

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.

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. Chief Topics: Nature and Measurement of Profits. Profit, Policies and techniques of Profit Planning like Break even Analysis.

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.