04/10/23Sameer Gunjal – Business

Economics (MGBEN 10101)

Business Economics – Introduction

Sameer Gunjal

04/10/23Sameer Gunjal – Business

Economics (MGBEN 10101)

What is Economics?

•Economics is the branch of social science that studies the production, distribution, and consumption of goods and services.

•An important concept that underlies all economic theories and studies is that of scarcity.

•The scarcity of goods and services is due to factors such as the limitations of:▫Resources (water, land, manpower) ▫Capabilities of technology or skill ▫Poor planning and execution – artificial scarcity

04/10/23Sameer Gunjal – Business

Economics (MGBEN 10101)

Sub Divisions of Economics

•Microeconomics: Deals with concepts of supply and demand, production and costs, types of competition, etc. more to do with the micro perspective. In other language the analysis is bottom up in nature.

•Macroeconomics: Deals with concepts like economic growth, monetary and fiscal policies, central banks, concepts of money supply, etc. more to do with the macro perspective. In other words the analysis is more of top down nature.

04/10/23Sameer Gunjal – Business

Economics (MGBEN 10101)

Basis of Classification

04/10/23Sameer Gunjal – Business

Economics (MGBEN 10101)

Economic Rationality

•Rationality implies acting objectively, keeping in view:▫Ends and means▫Objectives and constraints

•The objectives of a firm : Maximize revenues and thus profits

•Decision making for the same happens under various constraints

04/10/23Sameer Gunjal – Business

Economics (MGBEN 10101)

Steps in Decision Making

1. All possible courses of action are known to you2. You are able to separate all such courses of action

into two categories feasible and infeasible 3. Based on the available information assess the

consequences of any course of action4. Rank the alternatives in terms of priority5. Choose that course of action which occupies the

highest order of priority

04/10/23Sameer Gunjal – Business

Economics (MGBEN 10101)

Economic System - Circular Flow

04/10/23Sameer Gunjal – Business

Economics (MGBEN 10101)

Economic Balance - Government

04/10/23Sameer Gunjal – Business

Economics (MGBEN 10101)

Next Session

•Basic Concepts – Microeconomics▫Concept of Economic Profit, Opportunity Cost and

Accounting Profit▫Functional Relationship – Total, Average and

Marginal▫Equi-Marginalism▫Time Perspective in Decision Making

04/10/23Sameer Gunjal – Business

Economics (MGBEN 10101)

Thank You