MICROECONOMICS – I
UNIT 1 Introduction to Microeconomics UNIT 2 Theory of Demand and Supply UNIT 3 Consumer Behavior UNIT 4 Production Function 46-62 30-45 12-29 1-11
UNIT 5 Analysis of Costs
Dr. J. Mahender Reddy Vice Chancellor IFHE (Deemed to be University) Hyderabad Prof. Y. K. Bhushan Vice Chancellor IU, Meghalaya Prof. Loveraj Takru Director, IBS Dehradun IU, Dehradun Prof. S S George Director, ICMR IFHE (Deemed to be University) Hyderabad Dr. O. P. Gupta Vice Chancellor IU, Nagaland Prof. D. S. Rao Director, IBS, Hyderabad IFHE (Deemed to be University) Hyderabad
Course Preparation Team
Prof. Ramalingam Meenakshisundaram IFHE (Deemed to be University) Hyderabad Ms. Pushpanjali Mikkilineni IFHE (Deemed to be University) Hyderabad Mr. Pijus Kanti Bhuin IU, Sikkim Ms. Preetaq Dutta Rai IU, Jharkhand Ranchi Ms. Hadiya Faheem IFHE (Deemed to be University) Hyderabad Mr. Mrinmoy Bhattacharjee IU, Mizoram Aizawal Prof. Tarak Nath Shah IU, Dehradun Mr. Manoj Kumar De IU, Tripura Agartala
© The ICFAI University Press, All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, used in a spreadsheet, or transmitted in any form or by any means – electronic, mechanical, photocopying or otherwise – without prior permission in writing from The ICFAI University Press, Hyderabad. Ref. No. Eco Mgrs SLM – 09 2K11R 30 B1
For any clarification regarding this book, the students may please write to The ICFAI University Press specifying the unit and page number. While every possible care has been taken in type-setting and printing this book, The ICFAI University Press welcomes suggestions from students for improvement in future editions.
The ICFAI University Press, Hyderabad
Economics for Managers Course Introduction The course Economics for Managers provides an introduction to microeconomics and macroeconomics. The course introduces students to basic concepts, theory, and application in economics. It provides an introduction to the understanding of a number of major current economic issues and problems. Microeconomics involves the analysis of how consumers make decisions about what to consume, how firms decide what and how much to produce, and how the interactions of consumers and firms determine how much of a good will be sold, and at what price. The Microeconomics section of the course introduces the students to basic economic concepts such as demand and supply, elasticity, economic profit and marginal analysis. The course will equip the student to demonstrate an understanding of modern economic theories of factor pricing, consumer and producer behaviour and cost analysis through their application to personal and business decision making. The course also provides to the student an understanding of different types of market structures. Macroeconomics is the analysis of important economic aggregates such as: the inflation rate, the unemployment rate, interest rates, GDP and GDP growth, and the exchange rate. The Macroeconomics section of the course considers concepts of the macro economy, measuring the economy’s performance, economic growth, classical and Keynesian macro analysis, consumption, income and the multiplier effect, the theory of money and banking, factors influencing demand and supply of money, and analysis of policy issues. It also deals with issues of economic growth, inflation, unemployment and business cycles. On successful completion of the course, the student will be able to discern when these concepts are legitimate concerns and when they are of little importance.
Block I Microeconomics – I
The first block to the course on Economics for Managers deals with the fundamental concepts relevant to microeconomics. The block contains five units. The first unit talks about elementary concepts of microeconomics. The second and third units focus on the relationship of demand and supply of a product...