Economics assignment for B.Com students
This is an economics assignment which I did in college. This is suitable for all b.com students studying in colleges that follow the credit and semester system. The topics discussed here are covered by major universities. I hope that each and every person who refers this finds it informative and useful. I have covered 5 topics in this assignment.
Scope of Managerial Economics
The scope of managerial economics is quite wide. It covers all the economics theories that are helpful to find out solutions to business problems. The following aspects generally fall under managerial economics.Demand analysis and forecasting
Goods are produced to be sold in the market. The volume of production is based on demand. Thus the management analysis takes decision on this regard. The demand is decided by applying the theory of consumer behavior. It's helpful in forecasting the future demand too. Cost and production analysis
The resources or means to produce goods are safe. But they can be put to alternative uses. The limited resources must be utilized to obtain maximum output or to reduce costs. For taking such decisions theory of cost and production are useful.Pricing policies
Once a product is ready for sale the company must fix a price for it. It must be fixed according to the conditions of the market. It is a very important aspect of managerial economics. Firm's revenue earnings largely depend upon its pricing policy. The success or failure of a firm largely depends on the pricing policy that is devised by them. Study of the market
After pricing the next step is to introduce the product into the market, but the market condition always changes. The manager should introduce the products in those markets that offer maximum sales. Therefore he should have a clear-cut knowledge of the market.Profit management
The pricing motive of a business enterprise is to earn profit. But profit is always uncertain because future costs and revenues are uncertain. Thus profit planning and management becomes difficult. Capital management
Capital is the foundation of any business. This is also scarce and expensive. It should be efficiently allocated and managed. The managers should select efficient and profitable investment projects.Inventory management
A firm should always keep an ideal quantity of stock. It should not be too much or too little. Thus a firm should always opt for optimum amount of
stocks. Environmental issues
There are certain issues of macro environment that also forms a part of managerial economics. These issues relate to general business, social and political environment in which the business operate.Business cucles
Business cycles effect business decisions. They refer to regular fluctuations in the economic activity of the country. The different phases of business cycles are: depression, prosperity, boom and recession.Demand Forecasting
Meaning of demand forecasting
orecasting simply refers to estimating or anticipating future events. It is an attempt to foresee the future by examining the past. Simply put forecasting means the prediction of future events on the basis of historic data, opinions, trends or known future variables.Methods of demand forecasting for new products
1. Evolutionary approch
This method is based on the assumption that the new product is the upgraded version of the old one. So the demand is forecasted on the basis of the old one. This is true in the condition of televisions.
2. Substitute approch
In this case the new product is treated as the substitute of the existing product. Thus the demand for the new product is analyzed as a subordinate.
3. Growth curve approch
In this case the growth rate of the new product is estimated on the base of demand of existing product. For example if a soap say "pears" is in use and a new cosmetic is to be introduced in the market, the average sale of "pears" will decide the sales of the new product.
4. Opinion poll approch
In this method the demand of a new product is decided by the basis of information collect from the direct interviews (surveys) with consumers.
5. Sales experience approch
Under this method, the new product is offered for sale, in the sample market i.e. by multiple shops or departmental stores. Thus the total demand is determined.
6. Vicarious approch
This method consists of surviving consumer's reaction through the specialized dealers who are in touch with the consumers. Thus the dealers know how the consumers are going to accept the product.ISOQUANTS
The term Isoquant is derived from the Greek word 'iso' (means equal) and Latin word 'quantus' (means quantity). Thus Isoquant means equal quantity or equal production. They are the curves that represent the different kinds of input producing a particular quantity of output. Any point on the Isoquant represents or yields the same amount of income. Properties of isoquants
1. Isoquant is downward sloping to the right. This means that if more of one factor is used the less of the other is needed for producing the same output.
2. A higher Isoquant represents larger output.
3. No Isoquant can intersect or touch each other. Because if it does so then there will be a common point between the two lines. And this kind of curve simply cannot exist.
4. They need not be parallel to each other. It happens to become parallel because the rate of substitution in different Isoquant schedules need not necessarily be equal. Usually they are found different.
5. Isoquant are convex to the origin. This implies that the slope of the Isoquant diminishes from left to right along the curve. This is due to the principle of MRTS.
6. Isoquant have negative slop. This is so because when the quantity of one factor is increased the quantity of the other must be reduced. DIFFERENCE BETWEEN ACCOUNTING AND ECONOMIC COST
Accounting cost
This cost represents all such expenditures that the firm incurred in factors of production. Thus they are also known as explicit costs. Economic cost
These costs are in the view that in the estimation of the cost of production not only the payment of the factors of production, but also the payment for self owned factors. Thus they refer to the total of explicit and implicit cost. DIFFERENCE BETWEEN ACCOUNTING AND ECONOMIC COSTS
These costs are those that are incurred by the firm in production and sales of goods and services. They are paid by the firm to the outsiders. E.g. payment of wages. Wages is indeed paid when the firm employs workers in contractual basis.
On the other hand economic costs include both implicit and explicit costs. They are not included in accounting costs.
Accounting costs are used for financial reporting while the latter in decision making. CONCLUSION
As we can see managerial economics has got a wide scope. We discussed many points in here. Indeed its reach is far too wider than this. But covering all that is beyond the scope of this assignment.