Managerial Economics syllabus for Mcom Delhi University
Course 4102: MANAGERIAL ECONOMICS
Marks: 100 (Theory = 70, Internal Assessment = 30)
Managerial Economics syllabus for Mcom Delhi University: Objective: The objective of the course is to acquaint students with the basic principles of micro and macroeconomics for developing the understanding of theory of the firm, markets and the macro environment,which would help them in managerial decision making processes.
Part A: Firm and Market
Unit I: Demand and The Firm: Consumer Behaviour: Cardinal and ordinal approaches to the derivation
of the demand function. Revealed preference approach. Theory of attributes – Demand for consumer
durables. Firm Theory: Objectives of the firm; Theory of the growth of the firm: Marris and Penrose.
Unit II: Production and Cost: Production: Law of variable proportion. Returns to scale. Production
function: Concept of productivity and technology. Producer’s Equilibrium. Isoquants ridge lines, Isoclines,
Cost function: Classification of costs, Short run cost functions, Relationship between return to scale and
return to a factor, Long run cost functions.
Unit III: Market and Pricing: Market forms: AR-MR. Price taker; Monopoly power. Oligopolistic
behavior: Cournot and Stackelberg models. Factor Pricing: Demand and supply of factors of production.
Part B: Macroeconomic environment
Unit IV: Product and Asset Market Equilibrium: Product Market: Derivation of IS function. Demand
for real cash balances: Tobin’s Portfolio theory. Endogenous money supply and Asset market equilibrium. Derivation of real LM function. Real IS-LM framework.
Unit V: Aggregate Demand and Aggregate Supply: Modern aggregate demand function. Demand
Management. Philips Curve. Aggregate supply and the price level.
Unit VI: Trade Cycles and The Open Economy: Real Business Cycles. Exchange rate, trade balance, net
saving, Macroeconomic movements in an open economy
Managerial Economics syllabus for Mcom Delhi University
Suggested Reading: Reference Books
1. Koutsyiannis, A., Modern Microeconomics, Macmillan Press Ltd.
2. Varian, Micro-Economic Analysis , Norton.
3. Pindyck Robert S., Daniel L. Rubinfeld and Prem L. Mehta, Micro Economics, Pearson Education Asia,
4. Branson William H., Macro Economics Theory and Policy, First East – West Press.
5. Dornbusch, R. and S. Fischer Macro Economics , Publisher Tata McGraw Hill.
6. Oliver Blanchard Macro Economics, Pearson Education, LPE.
7. Mankiw, N. Gregory, Macro Economics, Macmillan.
Note: Latest edition of the readings may be used.
A close interrelationship between management and economics had led to the development of managerial economics. Economic analysis is required for various concepts such as demand, profit, cost, and competition. In this way, managerial economics is considered as economics applied to “problems of choice’’ or alternatives and allocation of scarce resources by the firms. Managerial Economics syllabus for Mcom Delhi University.
Managerial economics is a discipline that combines economic theory with managerial practice. It helps in covering the gap between the problems of logic and the problems of policy. The subject offers powerful tools and techniques for managerial policy making.
Managerial Economics − Definition
To quote Mansfield, “Managerial economics is concerned with the application of economic concepts and economic analysis to the problems of formulating rational managerial decisions.
Spencer and Siegelman have defined the subject as “the integration of economic theory with business practice for the purpose of facilitating decision making and forward planning by management.” Managerial Economics syllabus for Mcom Delhi University.
Micro, Macro, and Managerial Economics Relationship
Microeconomics studies the actions of individual consumers and firms;managerial economics is an applied specialty of this branch. Macroeconomics deals with the performance, structure, and behavior of an economy as a whole. Managerial economics applies microeconomics theories and techniques to management decisions. It is more limited in scope as compared to microeconomics. Macro economists study aggregate indicators such as GDP, unemployment rates to understand the functions of the whole economy. Managerial Economics syllabus for Mcom Delhi University.
Microeconomics and managerial economics both encourage the use of quantitative methods to analyze economic data. Businesses have finite human and financial resources; managerial economic principles can aid management decisions in allocating these resources efficiently. Macroeconomics models and their estimates are used by the government to assist in the development of economic policy. Managerial Economics syllabus for Mcom Delhi University.
Nature and Scope of Managerial Economics
The most important function in managerial economics is decision-making. It involves the complete course of selecting the most suitable action from two or more alternatives. The primary function is to make the most profitable use of resources which are limited such as labor, capital, land etc. A manager is very careful while taking decisions as the future is uncertain; he ensures that the best possible plans are made in the most effective manner to achieve the desired objective which is profit maximization.
- Economic theory and economic analysis are used to solve the problems of managerial economics.
- Economics basically comprises of two main divisions namely Micro economics and Macro economics.
- Managerial economics covers both macroeconomics as well as microeconomics, as both are equally important for decision making and business analysis.
- Macroeconomics deals with the study of entire economy. It considers all the factors such as government policies, business cycles, national income, etc.
- Microeconomics includes the analysis of small individual units of economy such as individual firms, individual industry, or a single individual consumer.
All the economic theories, tools, and concepts are covered under the scope of managerial economics to analyze the business environment. The scope of managerial economics is a continual process, as it is a developing science. Demand analysis and forecasting, profit management, and capital management are also considered under the scope of managerial economics. Managerial Economics syllabus for Mcom Delhi University.
Demand Analysis and Forecasting
Demand analysis and forecasting involves huge amount of decision-making! Demand estimation is an integral part of decision making, an assessment of future sales helps in strengthening the market position and maximizing profit. In managerial economics, demand analysis and forecasting holds a very important place. Managerial Economics syllabus for Mcom Delhi University.
Success of a firm depends on its primary measure and that is profit. Firms are operated to earn long term profit which is generally the reward for risk taking. Appropriate planning and measuring profit is the most important and challenging area of managerial economics. Managerial Economics syllabus for Mcom Delhi University.
Capital management involves planning and controlling of expenses. There are many problems related to capital investments which involve considerable amount of time and labor. Cost of capital and rate of return are important factors of capital management.
Demand for Managerial Economics
The demand for this subject has increased post liberalization and globalization period primarily because of increasing use of economic logic, concepts, tools and theories in the decision making process of large multinationals. Managerial Economics syllabus for Mcom Delhi University.
Also, this can be attributed to increasing demand for professionally trained management personnel, who can leverage limited resources available to them and maximize returns with efficiency and effectiveness.
Role in Managerial Decision Making
Managerial economics leverages economic concepts and decision science techniques to solve managerial problems. It provides optimal solutions to managerial decision making issues.
Business firms are a combination of manpower, financial, and physical resources which help in making managerial decisions. Societies can be classified into two main categories − production and consumption. Firms are the economic entities and are on the production side, whereas consumers are on the consumption side.
The performances of firms get analyzed in the framework of an economic model. The economic model of a firm is called the theory of the firm. Business decisions include many vital decisions like whether a firm should undertake research and development program, should a company launch a new product, etc.
Business decisions made by the managers are very important for the success and failure of a firm. Complexity in the business world continuously grows making the role of a manager or a decision maker of an organisation more challenging! The impact of goods production, marketing, and technological changes highly contribute to the complexity of the business environment.
Study Material that you should use to prepare M.COM
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