Premium Essay

Economics: Micro and Macro Theory and Application

In: Business and Management

Submitted By tomekmis1
Words 1247
Pages 5
Economics: Micro and Macro Theory and Application
Outcome1

1.
In economics, and cost accounting, total cost (TC) describes the total economic cost of production and is made up of variable costs, which vary according to the quantity of a good produced and include inputs such as labor and raw materials, plus fixed costs, which are independent of the quantity of a good produced and include inputs (capital) that cannot be varied in the short term, such as buildings and machinery.

TC = FC + VC

Average cost equals to total cost divided by the number of goods produced (output). It is also a sum of average variable costs plus average fixed costs. Average costs may dependent on the time period considered. Average costs are a fundamental component of supply and demand.

AC = TC / Output

Marginal Costs are the costs for producing one more unit of a good. It is calculated by looking at the difference between levels of Total Costs. In general terms, marginal cost at each level of production includes any additional costs required to produce the next unit. For example, if producing additional vehicles requires building a new factory, the marginal cost of the extra vehicles includes the cost of the new factory.

2.

Oligopoly is a form of market structure different from perfect competition, where there is a significant number of small competitors, and from a pure monopoly, where there is only one giant company. The dominant form of oligopoly in developed countries when there is only few large producers of the good or service providers. Good example is the gaming market where there are 3 big gaming system producers: Sony, Microsoft and Nintendo sharing almost the whole market among each other.

A characteristic feature of oligopoly is the lack of price competition between the participants in that market. The competition is held in other areas (quality,…...

Similar Documents

Premium Essay

Economics and Economic Theory

...F.Y.B.A. Paper – I Economic Theory (Micro Economics-I) SECTION – I Module 1 : Introduction Meaning, nature, scope, significance and limitations of micro economics. Ceteris Paribus – use and significance. Concept and types of equilibrium : stable, unstable, static and dynamic equilibrium – partial equilibrium and general equilibrium, positive economics and normative economics, managerial economics. Basic concepts – wealth, welfare and scarcity. Basic tools of economics analysis (equations and functions, graphs and diagrams, slope and intercepts) Module 2 : Consumers Behaviour and Demand Marishallian Approach : Equi-marginal utility, Law of demand – Determinants of demand. Elasticity of demand and its measurement. Price – Income – Cross and Promotional elasticity of demand. Consumer’s Surplus. Hicksian Approach : Indifference curves – properties of Indifference Curve, Consumer’s Equilibrium, Price effect, Income effect and substitution effect – Derivation of demand from Price Consumption Curve (PCC) – Giffen’s paradox. Samuelson Approach : Revealed Preference Theory. Module 3 : Production and Cost Analysis Concept of production function : short run and long run – Cobb – Douglass production function. isoquants – iso-cost line – producer’s equilibrium. Law of variable proportion and Law of returns to scale – Economies of scale – Economies of scope. Concepts of costs : Money and real cost, Opportunity cost, Social cost, Private cost – Derivation of short run and long run cost......

Words: 9971 - Pages: 40

Premium Essay

Managerial Economics

...Managerial economics refers to the application of economic theory and the tools of analysis of decision science to examine how an organization can achieve it aims or objectives most efficiently. Importance of managerial economics Managerial Decision Problems Economic theory Microeconomics Macroeconomics Decision Sciences Mathematical Economics Econometrics MANAGERIAL ECONOMICS Application of economic theory and decision science tools to solve managerial decision problems OPTIMAL SOLUTIONS TO MANAGERIAL DECISION PROBLEMS Managerial Decision Problems Economic theory Microeconomics Macroeconomics Decision Sciences Mathematical Economics Econometrics MANAGERIAL ECONOMICS Application of economic theory and decision science tools to solve managerial decision problems OPTIMAL SOLUTIONS TO MANAGERIAL DECISION PROBLEMS Managerial enables the use of economic logic and principles to aid management decision-making. Managers are decision-makers and economics should be relevant to give practical guidance in arriving at right decisions. Every manager has to take important decisions about using his limited resources like land, capital, labour, finance etc. to get the maximum returns, therefore, managerial economics, concentrates on those practical aspects of micro-economics which help in decision-making. Managerial economics focuses on the most profitable use of scarce resources rather than on the achievement of equilibrium prices and quantities as pure theory......

Words: 3719 - Pages: 15

Premium Essay

Microrconomics

...Microeconomics different from macro economics? Discuss also the subject matter of Microeconomics in detail. Answer: MICROECONOMICS "Micro Economics is the study of particular firm, particular household, individual prices, wages, incomes, individual industries and particular commodities." ( K. E. Boulding) In micro economics, we study the small segments of an economy or, in other words, we take up the individual decision – making units of an economy in microeconomics e.g., we analyze the demand of a product or often individual and the equilibrium price of a product rather than discussing the aggregate demand of the economy and the general price level in a country. Similarly in microeconomics, we study the determination of price/reward of a factor of production, analysis of an individual firm or industry, the consumption pattern of a person, choice of technique and different market situations etc. Microeconomics is generally called the “Price Theory”. • Production. In this part of microeconomics we study the meaning of the production of wealth, the cost of production and how it is minimized factor of production and their relative importance in the production process, the production function, the analysis of supply etc. • Exchange. This part covers the market mechanism or the exchange of wealth through the forces of demand and supply, perfect and imperfect market at the behavior of the competitors etc. • Distribution. This part starts with the theory of distribution of......

Words: 1180 - Pages: 5

Premium Essay

Sohail

... |Micro Economics |5% | |10. |Macro Economics |5% | | |Total |100% | |Management Sciences (Detailed) | |Sr. No. |Core Areas |Percentage | |1. | |10% | | |FINANCE: | | | | | | | |1.1 Financial Management: | | | |Accounting concepts, principles, procedures and systems for preparation of financial statements, | | | |computer-based accounting application,......

Words: 825 - Pages: 4

Premium Essay

Strategic Management

...ranked number one car manufacturer. However, the company of the Toyota had a bad year in 2010. They had plenty of manufacturing problems in different countries around the world. So the company needs to recall lots of cars. The incident brought to Toyota big losses. Porter’s Five Forces Perspective and PEST analysis are from different area. Porter’s Five Forces Perspective is used for the analysis of competitive strategy, and can effectively analysis customs of the competitive environment. PEST analysis is a macro-environment analysis. Its’ macro-forces is refers to the impact on all industries and enterprises. Its’ macro-environment can be focus on various situations. The first part is focusing on these two theories that using I chosen the company of Toyota as an example to overview and critique these two theories. Then compare and contrast these two theories. At last, conclusion this report and given some advises for these two theories. 2. Overview and Critique of theory 1 2.1 Overview the Porter Five Forces Perspective Porter five forces perspective has also known as Porter’s five competitive model. This model was first used by Michael Porter (Porter) made. This model was published in 1979 on the "Harvard Business Review" entitled "How to build competitive strategy” and the same mean is “How Competitive Forces Shape Strategy”. Then later in his published "Competitive Strategy" has in the further development and refinement of this model. He recognized that there is......

Words: 2696 - Pages: 11

Premium Essay

Micro Quiz 1

...Introduction: What Is Economics? 1.1 What Is Economics? 1) Economics is best defined as the study of: A) financial decision-making. B) how consumers make purchasing decisions. C) the choices made by people faced with scarcity. D) inflation, unemployment, and economic growth. Answer: C Diff: 1 Topic: What Is Economics? Skill: Definition AACSB: Reflective Thinking Learning Outcome: Micro-1 2) Economics is the study of: A) how to invest in the stock market. B) how society uses limited resources. C) the role of money in markets. D) how government officials decide which goods and services are produced. Answer: B Diff: 1 Topic: What Is Economics? Skill: Conceptual AACSB: Reflective Thinking Learning Outcome: Micro-1 3) Scarcity can best be defined as a situation in which: A) there are no buyers willing to purchase what sellers have produced. B) there are not enough goods to satisfy all of the buyers' demand. C) the resources we use to produce goods and services are limited. D) there is more than enough money to satisfy consumers' wants. Answer: C Diff: 1 Topic: What Is Economics? Skill: Definition AACSB: Reflective Thinking Learning Outcome: Micro-1 4) An arrangement that allows buyers and sellers to exchange things is called: A) a contract. B) a market. C) money. D) efficient. Answer: B Diff: 1 Topic: What Is Economics? Skill: Definition AACSB: Reflective Thinking Learning Outcome: Micro-1 5) Because......

Words: 6707 - Pages: 27

Premium Essay

Economics

...Differentiate between Economics and Managerial Economics Tasmim Bintey Ekram Strayer University Eco 550 Prof. Emmanuel Chebe July 6, 2013 Differentiate between Economics and Managerial Economics Economics is the branch of knowledge concerned with the production, consumption and transfer of wealth. It is about making choices. We make all kinds of choices every day. How much should we spend on gas? What is the best route to work? Which roommate should take care of washing the dishes? Etc. Economics is not just about money; it is about weighing different choices or alternatives. For example: - our decisions about whether it should be us or our roommate who should be the one to clean up or do the dishes, whether we should spend an hour a week volunteering for a worthy charity or send them a little money via our cell phone, or whether we should take a job so we can help support our siblings or parents or save for our future are all economic decisions. In many cases, money is merely a helpful tool or just a veil, standing in for a partial way to evaluate some of the goals we really care about and how we make choices about those goals. Managerial Economics can be defined as amalgamation of economic theory with business practices so as to ease decision-making and future planning by management. Managerial Economics assists the managers of a firm in a rational solution of obstacles faced in the firm’s activities. It makes use of economic theory and concepts. It helps in......

Words: 530 - Pages: 3

Premium Essay

Macro System

...Macro System Paper Mike Jones June 7, 2015 BSHS 325 The macro system is the culture of an individual and relates to a person surroundings. In this paper will discuss the concepts of personal, interpersonal, and political empowerment, the way individuals are involved in multiple social systems. I will also discussing the macro systems response to child maltreatment sexual abuse and delinquency and compare and contrast the application of functionalism and interactionist theory to poverty. Lastly, I will discuss the role and responsibility of the human service worker in the macro environment. Personal empowerment can be defined as the power within a person. It consequences in self-confidence, which means an individual is assuming his or her responsibilities; you have enough confidence to make decisions, and you realizes that you are in a position to change. The change could be anything, it could be to seek career advancement, work on a failing relationship or to become a better parent. Personal empowerment gives a person a better sense of responsibility and holds ourselves more accountable for the things we do. It is meant to make us better individuals. Interpersonal empowerment is when a organization or a person work together to meet their targets. The combined power of the group will help all of the members to achieve their goals. Each member will contribute, understand, and support their other group members to increase their collective empowerment. Empowerment......

Words: 1120 - Pages: 5

Premium Essay

Business Ethics

...CHRIST UNIVERSITY Mid SEMESTER EXAMINATION JAN 2014 ( II Sem UG and VIII BHM) : Time: 9:30 to 11:30am Day & Date | 16/01/2014Thursday | 17/01/2014Friday | 18/01/2014Saturday | 20/01/2014Monday | 21/01/2014Tuesday | 22/01/2014Wednesday | II Sem -B.A Programmes HEPEPS | English | Languages/Ad. English | | Political Science | Principles of Macro Economics | Contemporary IndiaSociology | PSEngPSEcoJPEng | English | Languages/Ad .English | | BasicPsychologicalProcesses -II | Principles of Macro Economics British Literature | Foundations of SociologyJournalism | CEP | English | Languages/Ad .English | | BasicPsychologicalProcesses -II | British Literature | Software applicationFor print media & the web | TCE(Theatre Studies) | | | | Introduction toMusic & Dance –II | | | PEP | English | Languages/Add.English | | Basic PsychologicalProcess –II | British Literature | Dynamics of DanceMusic & Theatre | II Sem -B.Sc Programmes CME | English-- | 9:30 to 11:30 amLang/Ad .English | | Computer Science Data Structures & operating system | Electronics | Differential Calculus | | | 2:30 to 4:30 pmIntegral Calculus | | | | | EMSCMS | English | 9:30 to 11:30 amLang/Ad .English | Statistics ( 9:30 to 11:30 am)(Examination will be held in separate room for Stats; check the notice board) | Computer......

Words: 2645 - Pages: 11

Premium Essay

Bajaj Research

...AMITY INTERNATIONAL BUSINESS SCHOOL MBA (International Business) Course Title: Economic Analysis Programme Name: MBA (IB)/3C MBA Course Code: MIB 106 Semester: I Classroom contact hours: 40 hours Faculty: Prof. Ajit K Pandey Prof. Kshamta Chauhan Credit Units: 04 Prof. Harendra K Pandey Self Study hours: 80 hours Course Objective This course aims to integrate various principles and concepts from different fields of economics with typical problems of managerial decision-making and policy formulation in business organizations whether in a local or global context. Understanding the application of economic principles to key management decisions will provide guidance to increase value creation within organizations, and allows a better understanding of the external business environment in which organizations operate. Learning Outcomes At the end of this course the student will be able to • − Use the theory of the firm to model business organizations • − Apply demand theory to establish the elasticity of demand • − Use demand estimation to forecast demand trends and change • − Apply production theory to manage production • − Use cost theory to establish short and long run behavior • − Describe market structures to establish market equilibrium • − Use pricing strategies to enable organizational coherence • − Use macroeconomic principles to address......

Words: 1568 - Pages: 7

Free Essay

Backlog Time Table Sse

...SYMBIOSIS SCHOOL OF ECONOMICS CONSTITUENT OF SYMBIOSIS INTERNATIONAL UNIVERSITY (Established under Section 3 of the UGC act 1956, by notification No F9-12/2001-U.3 of Government of India) 3rd Floor, SCHC Building, Senapati Bapat Road, Pune – 411004. Tel: 020-25672520, 25675406, 25652444 Ext. 249 Accredited by NAAC with ‘A’ grade SYMBIOSIS SCHOOL OF ECONOMICS CONSTITUENT OF SYMBIOSIS INTERNATIONAL UNIVERSITY (Established under Section 3 of the UGC act 1956, by notification No F9-12/2001-U.3 of Government of India) 3rd Floor, SCHC Building, Senapati Bapat Road, Pune – 411004. Tel: 020-25672520, 25675406, 25652444 Ext. 249 Accredited by NAAC with ‘A’ grade NOTICE Internal Backlog Examination for BSc (Economics) Batch 2011-14 (Sem I-VI) is scheduled as follows: Assignment Collection date | Course Title &Course Code Batch 2011-14 | | Assignment Submission | 2011-14 | | 10-Sep-1411:00 a.m. to 12:30 p.m. | 11-Sep-1411:00 a.m. to 12:30 p.m. | Macro-Economic Theory I......

Words: 518 - Pages: 3

Premium Essay

Ijrm-Info

...areas of Computer Science & Applications; Commerce; Business; Finance; Marketing; Human Resource Management; General Management; Banking; Economics; Tourism Administration & Management; Education; Law; Library & Information Science; Defence & Strategic Studies; Electronic Science; Corporate Governance; Industrial Relations; and emerging paradigms in allied subjects like Accounting; Accounting Information Systems; Accounting Theory & Practice; Auditing; Behavioral Accounting; Behavioral Economics; Corporate Finance; Cost Accounting; Econometrics; Economic Development; Economic History; Financial Institutions & Markets; Financial Services; Fiscal Policy; Government & Non Profit Accounting; Industrial Organization; International Economics & Trade; International Finance; Macro Economics; Micro Economics; Rural Economics; Co-operation; Demography: Development Planning; Development Studies; Applied Economics; Development Economics; Business Economics; Monetary Policy; Public Policy Economics; Real Estate; Regional Economics; Political Science; Continuing Education; Labour Welfare; Philosophy; Psychology; Sociology; Tax Accounting; Advertising & Promotion Management; Management Information Systems (MIS); Business Law; Public Responsibility & Ethics; Communication; Direct Marketing; E-Commerce; Global Business; Health Care Administration; Labour Relations & Human Resource Management; Marketing Research; Marketing Theory & Applications; Non-Profit Organizations;......

Words: 303 - Pages: 2

Premium Essay

Dr Basanta Adhikari

... Journal of Knowledge Management, Economics and Information Technology The Influence of Micro and Macro Environment Components on Trade Companies in Romania Authors: Elena Pîndiche, The Christian University Dimitrie Cantemir of Bucharest, Romania; Roxana Ionita, Lecturer, The Christian University Dimitrie Cantemir of Bucharest, Romania This paper deals with the impact of micro and macro environment components on trade companies in Romania. Trade companies organize and operate under specific environmental conditions impact or both. In the activity of any companies the environment plays a key role in defining its strategies in seizing and using opportunities of development, being practically the support in achieving the objectives of growth, profitability or just survival. Trade companies should have the best possible perception of the components on each macro, because some of them are heavily dependent than others. Dealing with environmental factors allow detection trading company strengths and weaknesses, and to measure responsiveness and anticipation. Keywords: micro environment; macro environment; company Introduction Trading company designs and operates under specific environmental conditions impact or both. The external environment of the firm identifies two major components: the microenvironment - the firm has direct links, reciprocal often imposed by the need to achieve its object and macro environment - the firm has......

Words: 2921 - Pages: 12

Free Essay

Human Behavior

...OVERVIEW OF THEORIES OF HUMAN BEHAVIOR & THE SOCIAL ENVIRONMENT APPLICATIONS TO SOCIAL WORK GENERALIST PRACTICE The following is a very general outline summarizing the theories covered in the NCSSS foundation classes of SSS 571: Human Behavior & the Social Environment. Theory application & integration with practice are demonstrated. This outline is only a summary of highlights; all theorists, ideas, and concepts are not included. Because human behavior is complex and the social work profession is broad, numerous theories are utilized for social work practice at the micro-meso-macro levels. These theories focus on human growth and development, psychological and social functioning, and social service delivery. Some theories emphasize social and economic justice. All theories are value-laden and come out of a socio-historical context. Thus, all theories should be critiqued with attention paid to their cross-cultural applicability. DEFINITIONS: Theory—interrelated sets of concepts and propositions, organized into a deductive system to explain relationships about certain aspects of the world (e.g., the theories listed below). Perspective—an emphasis or point of view; concepts at an earlier level of development (e.g., a “strengths perspective”) or at a broader and higher level of abstraction (ex: a “humanistic perspective” or a “developmental perspective”) Paradigm—an archetype or mode of thought; a general way of seeing the world (e.g., “modernism” or “post-modernism”)......

Words: 1796 - Pages: 8

Free Essay

Garbage Bull

...article marks some potentially fruitful dimensions of economic research based on principles of economic theory but using more analogies with physics. Molecular structure of society with its different states, principles generating spontaneous order different from “invisible hand”, social analogies of the concepts of temperature and pressure in physics are investigated. Some analogies between phase transitions in physics and transition between different social regimes can reveal the areas of stability of liberal regimes as well as possibility of spontaneous emergence of different social orders. A possibility to expand neoclassical economics to capture Marxism and nationalism in a formal mathematical framework is also discussed. Keywords: economic structures, origin of order, econo-physics, socio-physics. 1. Introduction This article is methodological. It focuses on economic and social questions that are rarely touched by economic theorists despite their obvious importance for our understanding of economic processes in the world. No fully formalized model will be proposed here. Instead, the focus will be on interaction between economic elements and emergence of structures. These ideas have been successfully elaborated in natural science by physicists. That is why it makes sense to look for some analogies between physical and economic concepts, and then to find ways of employing principles of modelling from physcis into economic science. The term “econophysics” is already......

Words: 11187 - Pages: 45