Course Name &Code: MANAGERIAL ECONOMICS AND

FINANCIAL ANALYSIS(MEFA) , P23MBT01

Branch: CSE

Year/ Sem: II-II

 Unit – I:
Introduction to Managerial
Economics and demand Analysis
TOPICS)
1. Introduction to Management
2. Introduction to Economics and Managerial economics
3. Nature of managerial Economics
4. Scope of Managerial Economics
5. Relationship with other subjects
6. Concept of Demand and types of demand
7. Factors of demand
8. Law of demand
9. Elasticity of demand and types of elasticity of demand
10. Measures of elasticity of demand
11.Demand forecasting and its methods
12.Managerial economics, financial accounting and
management
Course Outcomes
At the end of this course, you will be able to

• CO1: The Learner is equipped with the knowledge of

estimating the Demand for a product and the relationship
between Price and Demand.
• CO2:One should understand the Cost Concepts for
decision making and to estimate the least cost
combination of inputs.
• CO3:One has to understand the nature of different
markets and Price Output determination under various
market conditions and with the knowledge of different
Business Units.
• CO4:The Learner is able to prepare Financial Statements
and the usage of various Accounting tools for Analysis.
• CO5:The Learner is able to evaluate various investment
project proposals with the help of capital budgeting
techniques for decision making.
Course Objectives
• The Learning objective of this Unit is to understand the concept and
nature of Managerial Economic s and its relationship with other
disciplines, Concept of Demand and Demand forecasting.
• The Learning objective of this Unit is to understand the concept of
Production function, Input Output relationship, different Cost
Concepts and Concept of Cost-Volume-Profit Analysis.
• The Learning Objective of this Unit is to understand the Nature of
Competition, Characteristics of Pricing in the different market
structure and significance of various pricing methods and to know
the different forms of Business organization.
• The Learning objective of this Unit is to understand the different
Accounting Systems preparation of Financial Statements and uses
of different tools for performance evaluation.
• The Learning objective of this Unit is to understand the concept of
Capital, Capitalization, Capital Budgeting and to know the
techniques used to evaluate Capital Budgeting proposals by using
different methods.
Program Outcomes & PSOs
PO1Engineering knowledge: Apply the knowledge of
mathematics, science, engineering fundamentals, and an
engineering specialization to the solution of complex
engineering problems.
PO2Problem analysis: Identify, formulate, review research
literature, and analyses complex engineering problems
reaching substantiated conclusions using first principles of
mathematics, natural sciences, and engineering sciences.
PO3Design/development of solutions: Design solutions
for complex engineering problems and design system
components or processes that meet the specified needs
with appropriate consideration for the public health and
safety, and the cultural, societal, and environmental
considerations.
PO4 Conduct investigations of complex problems: Use
research-based knowledge and research methods
including design of experiments, analysis and
Program Outcomes & PSOs Cont.

• PO5 Modern tool usage: Create, select, and apply appropriate

techniques, resources, and modern engineering and IT tools including
prediction and modeling to complex engineering activities with an
understanding of the limitations.

• PO6 The engineer and society: Apply reasoning informed by the

contextual knowledge to assess societal, health, safety, legal and cultural
issues, and the consequent responsibilities relevant to the professional
engineering practice.

• PO7 Environment and sustainability: Understand the impact of the

professional engineering solutions in societal and environmental
contexts, and demonstrate the knowledge of, and need for sustainable
development.

• PO8 Ethics: Apply ethical principles and commit to professional ethics

and responsibilities and norms of the engineering
Program Outcomes & PSOs Cont.
• PO9 Individual and team work: Function effectively as
an individual, and as a member or leader in diverse teams,
and in multidisciplinary settings.
• PO10 Communication: Communicate effectively on
complex engineering activities with the engineering
community and with society at large, such as, being able
to comprehend and write effective reports and design
documentation, make effective presentations, and give
and receive clear instructions.
• PO11 Project management and finance: Demonstrate
knowledge and understanding of the engineering and
management principles and apply these to one’s own
work, as a member and leader in a team, to manage
projects and in multidisciplinary environments.
• PO12 Life-long learning: Recognize the need for, and
have the preparation and ability to engage in independent
and life-long learning in the broadest context of
Program Outcomes & PSOs Cont.

Program Specific Outcomes:

• PSO1: Ability to adapt to a rapidly changing environment

by learning and employing new programming skills and
technologies.

• PSO2: Ability to use diverse knowledge across the domains

with interpersonal skills to deliver the Industry need.
 SESSION -1
Introduction to Management

Definition:
The art of getting things
done through and with the
people in a formally
organized groups
–Harold Koontz
Key Concepts:

_ Monitoring & controlling the

activities of employees.
– Functions: Planning,
Organizing, Staffing,
Directing, Controlling &
coordinating
Levels of Management
 SESSION-2
Economics
Definition:
According to Adam Smith, the Father of Economics, defined economics
as the study of nature and uses of national wealth’.

Key Concepts:
 The economy is like a country’s financial system that deals
with producing, distributing, and consuming goods and
services. Economics is the study of how this financial system
works and the rules that guide it. It helps us understand how
countries manage their money and make things better for
people
 It is of two types:
 Micro Economics: Studies the behavior of Individual or a firm.
 Macro Economics: Studies the aggregate economic conditions
in a country.
 Managerial economics
Definition:
• According to M. H. Spencer and Louis Siegelman,
“Managerial Economics is the integration of
economic theory with business practice for the
purpose of facilitating decision making and forward
planning by management”.

Key Concepts:
 Dealing only micro aspects
 It is only a normative science
( deals with what ought to be)
 Deals with practical aspects.
 Study the problem of a firm.
 It has narrow scope.
 SESSION-3
Nature of Managerial Economics
 SESSION-4
Scope of Managerial Economics
 SESSION-5
Managerial Economics relationship with
other subjects
Managerial economics is closely
linked with many other disciplines
such as

Manager
ial
Economi
cs
 SESSION-6
DEMAND
Definition:
The willingness and ability to buy
constitutes demand for a particular
product or services.

Key Concepts:

A product or services is said to be have

demand when three conditions are
satisfied:
 Desire on the part of the buyer to buy
 Willingness to pay for it
 Ability to pay the specified price for it.

Unless all these conditions are fulfilled, the

product is not said to have any demand.
DEMAND DISTINCTIONS
Consumer goods vs producer
goods-
• Consumer goods give direct
and immediate satisfaction.
• Producer goods are used for
further processing or
production of goods and
services to earn income.

Autonomous demand vs
derived demand-
• Autonomous demand refers to
the demand for products and
services directly.
• In case of a derived demand,
the demand for a product
arises out of the purchase of a
parent product.
DEMAND DISTINCTIONS Cont..
Durable vs perishable goods
• Durable goods are those goods
which give services relatively for a
long period
• The life time of perishable goods is
very less, may be in hours or days.

Firm demand vs industry

demand:

• The quantity of goods

demanded by a single firm is
called firm demand.
• The quantity demanded by the
industry as a whole is called
industry demand.
DEMAND DISTINCTIONS Cont..
Short run vs long run:
• The demand for a particular product or
services in a given region for a
particular day can be viewed as short-
run demand.
• The demand for a longer period for the
same region can be viewed as longer-
run demand.

New demand vs replacement demand:

• New demand refers to the demand
for the new products and it is the
additional to the existing stocks.
• In replacement demand, the item is
purchased to maintain the asset in
good condition.
DEMAND DISTINCTIONS Cont..

Total market vs segmentation

market demand:

• The demand for particular

segment market is segment
market demand.
• The aggregate demand of all
the segmented markets is
called the total market demand.
 SESSION-7
FACTORS DETERMINING DEMAND

Price of the
State of business
Commodity

Income of the
Population
Consumer

Factors of
Government Demand Prices of related
Policy goods

Expectations regarding
the future

climte and Tastes of the

weather Consumers
 SESSION-8
Law of demand:
• Law of demand shows the relation between price and
quantity demanded of a commodity in the market.
Law of demand Exceptions:
Giffen paradox

Ignorance

Speculative effect

Fear of shortage

Necessaries

Goods don’t have substitutes

Insignificant income spent on goods

 SESSION-9
Elasticity of Demand
Definition:
• Elasticity of Demand is the measure
of the degree of change in the
amount demanded of a product in
response to a given change in price
of the commodity, price of some
related goods or change in
consumer income.

Key concepts:
There are four important kinds of
elasticity of demand.
• Price elasticity of demand
• Income elasticity of demand
• Cross elasticity of demand
• Advertising and promotional
elasticity of demand
 SESSION-10
MEASUREMENTS OF ELASTICITY OF
DEMAND
Types of Price Elastic of demand are generally classified into
five categories.
• Perfect Elastic demand
• Perfect inelastic demand
• Relative/Comparative Elasticity of demand
• Relative/ Comparative Inelasticity of demand
• Unit elasticity demand
Perfect Elastic demand (Ep=∞):

• It is one in which a small change in price will cause a large

change in amount demanded.
Perfect inelastic demand (Ep=0)

• This is one which shows that whatever the change in price

may be the amount demanded remains same.
Relative Elastic Demand(E>1):

• The demand is said to be relatively elastic when the change

in demand is more than the change in price.
Relative Inelastic Demand(E<1)

• When the change in demand is less than the change in

price, then the demand is said to be inelastic.
Unity Elasticity of Demand(Ep=1)

• In this type of demand a given percentage change in price

leads to exactly the same percentage change in amount
demanded.
Types of Elasticity of demand

1. Price elasticity of demand:

Price elasticity of demand measures the responsiveness of
demand to changes in price.
2.Income elasticity of demand

• The income elasticity is defined as proportional

change in the quantity demanded to the
percentage change in income.
3.Cross elasticity of demand

• “The proportionate change in the quantity demanded of a

particular product in response to a change in the price of
another related product”.
4. Advertising and promotional elasticity of demand

• Advertising elasticity of demand refers to percentage or

proportionate change in sales in response to percentage
change in advertisement expenditure. It is denoted by EA
 SESSION 11
DEMAND FORECASTING

• Demand forecasting is the process of

estimating how much of a product will be sold
in a given period of time. It's a key tool for
businesses to plan for the future and make
better decisions.
FACTORS GOVERNING DEMAND
FORECATING
 SESSION-12
MANAGERIAL ECONOMICS
FINANCIAL ACCOUNTING
MANAGEMENT
MANAGERIAL ECONOMICS
“the integration of economic theory with business practice
for the purpose of facilitating decision making and forward
planning by management.”
FINANCIAL ACCOUNTING
the process of recording, summarizing, and reporting a
company's business transactions through financial
statements.
MANAGEMENT
the process of organizing, planning, and leading an
organization's resources to achieve its goals.
 Activity

Flipped Classroom: Students learn content at home through materials like videos or readings,
and class time is used for discussion, activities, and application.

Topics:
• Draw some examples for law of demand exceptions
•Draw some examples for distinctions of demand