0MANAGERIAL ECONOMICS
Application of Economics in Managerial Decision Making to optimize resources of the firm and maximize the value of the firm
What is economics?
- The best product, wealth, or service you can get through the resources within constraints we have.
- Economics talks about Rational Human beings.
| Rational human beings: Rational behaviour refers to a decision-making process that is based on making choices that result in the optimal level of benefit or utility for an individual. It means when humans are presented with various options under the conditions of scarcity, they will choose the option that maximizes their satisfaction. |
Demand in economics refers to a consumer's desire to purchase goods, or services, and willingness to pay the price for specific products or services.
DEMAND is an essential concept in Economics. The three most critical components of need are :
- Utility
- Affordability
- Accessibility
A Consumer may have elastic or inelastic demand for a good or service.
ELASTIC DEMAND: In simple words, If the selling price of a product decreases, there will be an increase in the number of units. Demand elastic when with a small change in price, there is a notable change in quantity demanded eg.: clothing brands when buying online, Shampoo, Soap etc.
INELASTIC DEMAND: DEMAND is rigid or less elastic when even a significant change in price induces only a slight shift in demand. For eg.: Petrol, Indian railways etc.
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