Unit 1

Economics: Nature and scope of managerial economics. Economic theory and managerial economics Cost Concepts: Types of costs – Cost functions. Cost controls: reduction – Tools & Areas. Pricing policies- methods. Capital budgeting – cost of capital. Appraising project profitability

Unit 2

The essentials of demand and supply : The law of demand. Market demand curve. Other determinants of market demand. The law of supply. Determinants of market supply. The market mechanism. Price elasticity of demand. Profit and revenue maximization: Optimal input combination. Total revenue maximization.

Unit 3

Market structure: Perfect competition and monopoly. Characteristics of monopolistic competition. Oligopoly Operations Research techniques in managerial economics: Inventory models. Theory of games. Decision theory, Risk and Uncertainty, Measuring risk, Consumer behavior and risk aversion, Decision making under uncertainty with complete ignorance

Course Objectives

• Familiarize business impact of economic environment on business decisions

Course Outcomes

• CO1: Understand and evaluate the economic theories, cost concepts and pricing policies and draw inferences for the investment decisions for appraisal and profitability
• CO2: Appraise the dynamics of the market and market structures and portray implication for profit and revenue maximization
• CO3: Employ operations research and allied techniques in managerial economics for an enhanced analysis and decision making

CO – PO Mapping

Textbook(s)

• Webster, T.J., ‘Managerial Economics- Theory and Practice’, Elsevier 2004.

Reference(s)

• Panneerselvam, R., ‘Engineering Economics’ Second edition, PHI, 2013.
• R L Varshney& K L. Maheshwari, ‘Managerial Economics’, S Chand & Sons, 22e, 2014.
• Harrison.B, Smith.C., and Davis.B., ‘Introductory Economics’, 2e Pr Macmillan, 2013.

Evaluation Pattern