1 Teaching Innovation - Entrepreneurial - Global The Centre for Technology enabled Teaching & Learning, N Y S S, India DTEL DTEL (Department for Technology Enhanced Learning)

DEPARTMENT OF MECHANICAL ENGINEERING V-SEMESTER INDUSTRIAL ECONOMICS AND ENTREPRENEURSHIP DEVELOPMENT 2 UNIT NO.1 INDUSTRIAL ECONOMICS

UNIT 1:- SYLLABUSDTEL. Economics, Classification Of Economics 1 Basic concepts, Demand, Law of demand 2 Demand analysis, Types of demand, 3 Determinants of demand, 4 3 Methods of demand forecasting, Supply, 5 Law of diminishing marginal utility 6 Elasticity of demand, Types of elasticity of demand 7

UNIT-1 SPECIFIC OBJECTIVE / COURSE OUTCOMEDTEL To create awareness about economics terminology and business organization. 1 4 The student will be able to: To understand basic concept economics, their classification, demand, laws related to demand,elasticity of demand and methods for demand forecasting 2

LECTURE 1:- INDUSTRIAL ECONOMICSDTEL Economics 5 5 What Is Economics Defination: ECONOMICS is a social science which covers the action of individual or a group of individuals in the process of producing, exchanging and consuming of goods and servi ces.

LECTURE 1:- INDUSTRIAL ECONOMICSDTEL Classification Of Economics 6 6 ECONOMICS MACROECONOMICS MICROECONOMICS BEHAVIOUR OF INDIVIDUALSBEHAVIOUR OF AGGREGATS

LECTURE 2:- INDUSTRIAL ECONOMICSDTEL Demand 7 7 What Is Demand Desire + ability to pay + Willing to buy = Demand Quantity demanded is the amount of a good that buyers are willing and able to purchase. + +

LECTURE 2:- INDUSTRIAL ECONOMICSDTEL The Law Of Demand 8 8 The Law of Demand says that a decrease in a good’s own price will result in an increase in the amount demanded, holding constant all the other determinants of demand. The Law of Demand says that demand curves are negatively sloped. The Law Of Demand

LECTURE 3:- INDUSTRIAL ECONOMICSDTEL Types Of Demand 9 9 Producer goods & Consumer goods. Perishable & durable goods. Normal, superior & inferior goods. Necessary comfort & luxury goods. Related goods, substitute & complimentary goods. Autonomous(Direct) and derived (indirect) demand. Individual buyer’s demand and all buyers (aggregates/market) demand. Firm and industry demand. Demand by market segments and by total market.

LECTURE 3:- INDUSTRIAL ECONOMICSDTEL Demand Curve 10 Demand Curve The demand curve is a graph of the relationship between the price of a good and the quantity demanded. The demand curve for any good shows the quantity demanded at each price, holding constant all other determinants of demand. The DEPENDENT variable is the quantity demanded. The INDEPENDENT variable is the good’s own price..

LECTURE 3:- INDUSTRIAL ECONOMICSDTEL Demand Curve A demand curve must look like this, i.e., be negatively sloped 11 Demand Curve DEMAND own price quantity demanded Market for tacos

LECTURE 4:- INDUSTRIAL ECONOMICSDTEL Determinants of Deman d 12 Determinants of Demand For all Demands Consumer IncomeOwn Price Price of Related Goods Substitute Goods Price Complementary Goods Price Consumers Taste & Preference For Durable & /or Expensive Goods Consumer Expectation about Future Incomes Future Prices For aggregate Demands Number of Consumer Distribution of Consumers

LECTURE 5:- INDUSTRIAL ECONOMICSDTEL Methods of demand forecasting 13 Demand forecasting method Survey Method Consumer Intention Consumer Goods Producer Goods Mix Goods Experts Option Simple Delphi Market experiments Test Market Laboratory (Simulation) Statistical Method Extra Polation Graphical Trends Smoothing Auto Regressive ARIMA Leading Indicator Econometric(Casual)

LECTURE 6:- INDUSTRIAL ECONOMICSDTEL Supply 14 Individuals control the factors of production – inputs, or resources, necessary to produce goods. Individuals supply factors of production to intermediaries or firms.

LECTURE 6:- INDUSTRIAL ECONOMICSDTEL The Supply Curve 15 The supply curve is the graphic representation of the law of supply. The supply curve slopes upward to the right. The slope tells us that the quantity supplied varies directly – in the same direction – with the price. S Quantity supplied (per unit of time) 0 Price (per unit) A

LECTURE 6:- INDUSTRIAL ECONOMICSDTEL Law Of Diminishing Marginal Utility 16 A law of economics stating that as a person increases consumption of a product - while keeping consumption of other products constant - there is a decline in the marginal utility that person derives from consuming each additional unit of that product.

LECTURE 7:- INDUSTRIAL ECONOMICSDTEL Elasticity Of Demand 17 Elasticity, roughly, means responsiveness. “The elasticity (or responsiveness) of demand in a market is great or small according as the amount demanded increases much or little for a given fall in price and diminishes much or little for a given rise in price.”

LECTURE 8:- INDUSTRIAL ECONOMICSDTEL Types Of Elasticity Of Demand 18 Price Elasticity Of Demand Income Elasticity Of Demand Cross Elasticity Of Demand Promotional Elasticity Of Demand

LECTURE 8:- INDUSTRIAL ECONOMICSDTEL Price Elasticity Of Demand 19 Price elasticity of demand is a measure of how much the quantity demanded of a good responds to a change in the price of that good. Price elasticity of demand is the percentage change in quantity demanded given a percent change in the price.

LECTURE 8:- INDUSTRIAL ECONOMICSDTEL Price Elasticity Of Demand 20 Perfectly Inelastic Quantity demanded does not respond to price changes. Perfectly Elastic Quantity demanded changes infinitely with any change in price. Unit Elastic Quantity demanded changes by the same percentage as the price.

LECTURE 8:- INDUSTRIAL ECONOMICSDTEL Price Elasticity Of Demand 21 Perfectly Elastic Demand: Elasticity Equals Infinity Quantity 0 Price 4 Demand 1. At any price above 4, quantity demanded is zero. 3. At a price below 4, quantity demanded is infinite. 2. At exactly 4, consumers will buy any quantity.

LECTURE 8:- INDUSTRIAL ECONOMICSDTEL Income elasticity of demand 22 Income elasticity of demand measures how much the quantity demanded of a good responds to a change in consumers’ income. It is computed as the percentage change in the quantity demanded divided by the percentage change in income.

LECTURE 8:- INDUSTRIAL ECONOMICSDTEL Income elasticity of demand 23 Computing Income Elasticity

LECTURE 8:- INDUSTRIAL ECONOMICSDTEL Income elasticity of demand 24 Income Demand Increase in demand Decrease in demand Demand curve,D 3 Demand curve,D 1 Demand curve,D 2 0

LECTURE 8:- INDUSTRIAL ECONOMICSDTEL Cross Elasticity of Demand 25 The responsiveness of demand to a change in the prices of related commodities (substitutes and complementary) is called cross elasticity of demand. It is responsiveness of demand for commodity X to a change in price of commodity Y and is represented as follows: Percentage change in demand of X Percentage change in price of good Y Cross Elasticity of Demand =

LECTURE :- INDUSTRIAL ECONOMICSDTEL 26 THANK YOU