Managerial economics

Production Function   is the relationship between physical inputs (land, labour, capital, etc.) and physical outputs (quantity produced). It is a technical relationship (not an economic relationship) that studies material inputs on one hand and material outputs on the other hand. Material inputs include variable and fixed factors of production. In the words of   Watson , “Production Function is the relationship between a firm’s production (output) and the material factors of production (input).” Algebraic and Graphical Representation of Production Function In a standard equation, the Production function is represented by Q, Labour (Variable element) is represented by L, and Capital (Fixed element) is represented by K. For example,  When there are 4 units of labour and 5 units of capital, the equation for the production function is Q = f(4,5).   In the above graph, X-axis represents inputs that are being used in the production process and Y-axis represents outputs tha...

 SCOPE OF ECONOMICS Microeconomics : The part of economics whose subject matter of study is  individual units , i.e. a consumer, a household, a firm, an industry, etc. It analyses the way in which the decisions are taken by the economic agents, concerning the allocation of the resources that are limited in nature. It studies  consumer behaviour , product pricing, firm’s behaviour. Factor pricing, etc. Macro Economics : It is that branch of economics which studies the entire economy, instead of individual units, i.e. level of output, total investment, total savings, total consumption, etc. Basically, it is the study of  aggregates and averages . It analyses the economic environment as a whole, wherein the firms, consumers, households, and governments make decisions. It covers areas like national income, general price level, the balance of trade and balance of payment, level of employment, level of savings and investment. The  fundamental difference between micro ...

The term Microeconomics is derived from the Greek word Mikros, which means "small" and "oikonomia", which means management of a household (administration). Microeconomics is that branch of economics which studies economic decisions made by individual economic units like an individual consumer, an individual firm etc. in detail. Microeconomics can be regarded as the microscopic study of the economy which focuses on behaviour of individual economic agents in an economy. The principal problem of any economy is the problem of efficient allocation of its scarce resources and equitable distribution of generated income. Significance of Microeconomics:- 1) Microeconomics has both theoretical as well as practical importance. It is highly helpful in the formulation of economic policies of an economy to promote overall welfare of its population. 2) Microeconomics tells us how  goods and services produced are distributed among the various people for consumption through price or...

Knowledge has many branches and economics is an important and useful branch of knowledge.The science of economics in the form in which we have it today is just 200 years old. It was Adam Smith who first defined Economics which was earlier known as political economy . What is economics and what should be the subject matter of Economics has been the questions of long debates. There have been many definitions of Economics given by different economists. Economics is that branch of social science which is concerned with the study of how individuals, households, firms, industries and government take decision relating to the allocation of limited resources to productive uses, so as to derive maximum gain or satisfaction .

Various definitions of Economics can be grouped under mainly Three heads:-  1) Wealth definition :- Wealth definition explained economics as a science of wealth. This definition was first given by Scottish philosopher Adam Smith in his famous book "An enquiry into the nature and causes of the wealth of the Nations". Sometimes in short known as "Wealth of nations".  He said economics enquires into the factors that determine wealth of the country and its growth. 2) Welfare definition :- It was given by professor Alfred Marshall ,who explained economics as a science of welfare (material welfare). Marshall said that, wealth is only the secondary object of study of Economics, it is man and his ordinary behaviour in life which is the primary object of economic study. 3) Scarcity definition :-  Robbins not only criticize Marshall definition and other welfare definition of economics, but also provided a new definition ,which he considered to be more scientific and correct...

Macroeconomics is the branch of economics that studies the behavior and performance of an economy as a whole. It focuses on the aggregate changes in the economy such as unemployment, growth rate, gross domestic product and inflation. Macroeconomics analyzes all aggregate indicators and the microeconomic factors that influence the economy. Government and corporations use macroeconomic models to help in formulating of economic policies and strategies. Importance of Macroeconomics : 1. It helps to understand the functioning of a complicated modern economic system. It describes how the economy as a whole functions and how the level of national income and employment is determined on the basis of aggregate demand and aggregate supply. 2. It helps to achieve the goal of economic growth, higher level of GDP and higher level of employment. It analyses the forces which determine economic growth of a country and explains how to reach the highest state of economic growth and sustain it. 3. It hel...