Managerial Economics School of Distance Education Bharathiar University, Coimbatore - 641 046 Author: Atmanand Copyright © 2007, Bharathiar University All Rights Reserved Produced and Printed by EXCEL BOOKS PRIVATE LIMITED A-45, Naraina, Phase-I, New Delhi-110028 for SCHOOL OF DISTANCE EDUCATION Bharathiar University Coimbatore-641046 CONTENTS Page No. UNIT-I Lesson 1 Lesson 2 Lesson 3 Lesson 4 Lesson 5 Lesson 6 Lesson 7 Managerial Economics: Definition, Nature, Scope Fundamental Concepts of Managerial Economics Demand Analysis Elasticity of DemandUNIT-II Supply Analysis Production Function Theory of Cost UNIT-III Lesson 8 Lesson 9 Lesson 10 Lesson 11 Lesson 12 Lesson 13 Lesson 14 Lesson 15 Lesson 16 Lesson 17 Lesson 18 Lesson 19 Lesson 20 Market Structure & Pricing and Output Decisions Perfect Competition Monopoly Monopolistic Competition Oligopoly Pricing Strategies UNIT-IV Profit Analysis Cost - Volume - Profit (CVP) Analysis Investment Analysis UNIT-V National Income Inflation & Monetary Policy Balance of Payments Fiscal Policy 115 127 134 142 151 164 183 195 208 223 239 262 2697 17 4 34 49 57 84 MANAGERIAL ECONOMICS Number of Credit Hours : 3 Subject Description: This course presents the principles of economics, demand analysis, market structure and macro environment and its application in the decision making.

Goals: To enable the students to learn the basic principles of economics and its application in the decision making in the business. Objectives: On successful completion of the course the students should have: understood the principles economics. learnt the demand analysis and various cost aspects in the business. earnt the market structure and the decision making process for various markets.

learnt the profit, profit policies, cost volumes relationship. learnt the macro environment of the business. UNITI Managerial Economics - meaning, nature and scope - Managerial Economics and business decision making - Role of Managerial Economist - Fundamental concepts of Managerial Economics- Demand Analysis - meaning, determinants and types of demand - Elasticity of demand. UNIT II Supply meaning and determinants - production decisions - production functions - Isoquants, Expansion path - Cobb-Douglas function.

Cost concepts - cost - output relationship - Economies and diseconomies of scale - cost functions. UNITIII Market structure - characteristics - Pricing and output decisions - methods of pricing - differential pricing - Government intervention and pricing. UNIT IV Profit - Meaning and nature - Profit policies - Profit planning and forecasting - Cost volume profit analysis - Investment analysis. UNIT V National Income - Business cycle - inflation and deflation - balance of payments - Monetary and Fiscal Policies.