Introduction to Managerial Economics Economics Notes | EduRev

Created by: Ayushi Verma

Economics : Introduction to Managerial Economics Economics Notes | EduRev

 Page 1


1 
2: Introduction to Managerial Economics 
Page 2


1 
2: Introduction to Managerial Economics 
2 
Prof. Trupti Mishra, School of Management, IIT Bombay 
Session Outline 
1. Opportunity Cost 
2. Measuring and Maximizing Profit 
3. Understanding Incentive 
4. Marginal and Incremental analysis 
5. Model of an economy 
 
Page 3


1 
2: Introduction to Managerial Economics 
2 
Prof. Trupti Mishra, School of Management, IIT Bombay 
Session Outline 
1. Opportunity Cost 
2. Measuring and Maximizing Profit 
3. Understanding Incentive 
4. Marginal and Incremental analysis 
5. Model of an economy 
 
3 
Prof. Trupti Mishra, School of Management, IIT Bombay 
1. Opportunity Cost 
?Economic agents has to make rational choices in all aspects of 
business, since resources are scarce and wants are unlimited.  
 
? It is necessary to choose one alternative among various 
alternatives. 
 
?Rank all the alternatives on priority basis, and then choose the 
alternative which is on the top of priority list. 
Page 4


1 
2: Introduction to Managerial Economics 
2 
Prof. Trupti Mishra, School of Management, IIT Bombay 
Session Outline 
1. Opportunity Cost 
2. Measuring and Maximizing Profit 
3. Understanding Incentive 
4. Marginal and Incremental analysis 
5. Model of an economy 
 
3 
Prof. Trupti Mishra, School of Management, IIT Bombay 
1. Opportunity Cost 
?Economic agents has to make rational choices in all aspects of 
business, since resources are scarce and wants are unlimited.  
 
? It is necessary to choose one alternative among various 
alternatives. 
 
?Rank all the alternatives on priority basis, and then choose the 
alternative which is on the top of priority list. 
4 
Prof. Trupti Mishra, School of Management, IIT Bombay 
1. Opportunity Cost 
?The cost of this choice is the benefit of the next best alternative 
foregone. This is called opportunity cost. 
 
?This choice implies sacrifice of other alternatives. hence cost of 
this choice will be evaluated in terms of the sacrificed 
alternatives. 
 
Page 5


1 
2: Introduction to Managerial Economics 
2 
Prof. Trupti Mishra, School of Management, IIT Bombay 
Session Outline 
1. Opportunity Cost 
2. Measuring and Maximizing Profit 
3. Understanding Incentive 
4. Marginal and Incremental analysis 
5. Model of an economy 
 
3 
Prof. Trupti Mishra, School of Management, IIT Bombay 
1. Opportunity Cost 
?Economic agents has to make rational choices in all aspects of 
business, since resources are scarce and wants are unlimited.  
 
? It is necessary to choose one alternative among various 
alternatives. 
 
?Rank all the alternatives on priority basis, and then choose the 
alternative which is on the top of priority list. 
4 
Prof. Trupti Mishra, School of Management, IIT Bombay 
1. Opportunity Cost 
?The cost of this choice is the benefit of the next best alternative 
foregone. This is called opportunity cost. 
 
?This choice implies sacrifice of other alternatives. hence cost of 
this choice will be evaluated in terms of the sacrificed 
alternatives. 
 
5 
Prof. Trupti Mishra, School of Management, IIT Bombay 
1. Opportunity Cost 
?Therefore, opportunity cost is the highest valued benefit 
that must be sacrificed as a result of choosing alternative. 
 
?Suppose a machine can produce either X or Y . The 
opportunity cost of producing a given quantity of X is the 
quantity of Y, which the resources would have produced. 
Read More
Offer running on EduRev: Apply code STAYHOME200 to get INR 200 off on our premium plan EduRev Infinity!

Content Category

Related Searches

practice quizzes

,

ppt

,

Sample Paper

,

Objective type Questions

,

MCQs

,

mock tests for examination

,

shortcuts and tricks

,

past year papers

,

Summary

,

study material

,

Exam

,

Extra Questions

,

Introduction to Managerial Economics Economics Notes | EduRev

,

Introduction to Managerial Economics Economics Notes | EduRev

,

Semester Notes

,

Introduction to Managerial Economics Economics Notes | EduRev

,

video lectures

,

pdf

,

Free

,

Previous Year Questions with Solutions

,

Viva Questions

,

Important questions

;