This book Essentials of Business Economics is comprehensive, clear, simple, and student-friendly. It is designed as an essential textbook for students of B.Com, B.B.A. and B.A. courses of Madras university.
Cover
Title Page
Copyright Page
Dedication
Contents
Preface
Chapter 1 Introduction to Economics
1.1 Introduction
1.2 Definition of Economics
1.2.1 Wealth Definition: Adam Smith
1.2.2 Welfare Definition: Alfred Marshall
1.2.3 Scarcity Definition: Lionel Robbins
1.2.4 Growth Definition: Paul A Samuelson
1.3 Scope of Economics
1.3.1 Consumption
1.3.2 Production
1.3.3 Exchange
1.3.4 Distribution
1.3.5 Public Finance
1.4 Importance and Significance of the Study of Economics
1.5 Nature of Economics: an Art or Science?
1.5.1 Economics as a Science
1.5.2 Economics as an Art
1.5.3 Economics Both a Science and an Art
1.6 Economics – A Positive or a Normative Science
1.6.1 Economics as a Positive Science
1.6.2 Economics as a Normative Science
1.6.3 Interdependence of Positive and Normative Science
1.7 Methods: Micro and Macro
1.7.1 Microeconomics
1.7.2 Macroeconomics
1.7.3 Interdependence of Micro and Macroeconomics
1.8 Methods of [Constructing an Economic Theory] Economic Analysis
1.8.1 Deductive Method [From General to Particular]
1.8.2 Inductive Method [From Particular to General]
1.8.3 Interdependence of Deductive and Inductive Methods
1.9 Basic Economic Problems
1.9.1 What Goods to be Produced and in What Quantities?
1.9.2 How to Produce?
1.9.3 For Whom to Produce?
1.9.4 Economic Growth
1.10 Economic Systems
1.10.1 Capitalist Economy
1.10.2 Socialist Economy
1.10.3 Mixed Economy
Review Questions
Chapter 2 Introduction to Business Economics
2.1 Introduction
2.2 Definition of Business Economics
2.2.1 General Economic Theory and Business Economics - A Comparison
2.3 Nature and Scope of Business Economics
2.3.1 Business Decisions
2.3.2 Scope of Business Economics
2.4 Relationship of Business Economics and Other Disciplines
2.4.1 Business Economics and Economics
2.4.2 Business Economics and Operation Research
2.4.3 Business Economics and Accounting
2.4.4 Business Economics and Mathematics
2.4.5 Business Economics and Statistics
2.4.6 Business Economics and Theory of Decision Making
2.4.7 Business Economics and Computer Science
2.5 Objectives of a Business Firm
2.5.1 Profit Maximisation as an Objective of a Firm
2.5.2 Sales Maximisation Goal
2.5.3 Maximise the Rate of Growth Goal
2.5.4 Welfare Goals
2.5.5 Multi-Goals of a Modern Firm
2.5.6 Long-term Objectives of Firms
2.6 Decision Making in Business
2.7 Economic Concepts in Business Application
2.7.1 Production Possibility Frontiers
2.7.2 Accounting Profit and Economic Profit
2.7.3 The Opportunity Cost Principle
2.7.4 Marginal Opportunity Cost
2.7.5 Incremental Principle
2.7.6 Principle of Time Perspective
2.7.7 The Discounting Principles
2.7.8 The Equi-Marginal Principle
2.7.9 Concept of Efficiency
2.7.10 Incrementalism and Marginalism
2.8 Case Study Method
Review Questions
Chapter 3 Business Cycle
3.1 Introduction
3.2 Meaning
3.3 Definition
3.4 Features / Characteristics of a Business Cycle
3.4.1 Cyclical Fluctuations
3.5 Phases of Business Cycles
3.5.1 Boom or Prosperity
3.5.2 Recession
3.5.3 Depression
3.5.4 Recovery
3.5.5 Inflation
3.5.6 Deflation
3.5.7 Reflation
3.6 Causes of Business Cycle
3.6.1 Internal Factors
3.6.2 External Factors
3.7 Consequences / Effects of Business Cycles
3.8 Measures to Minimise the Effects of Cycles
3.8.1 Preventive Measures
3.8.2 Relief Measures
Review Questions
Chapter 4 Demand Analysis
4.1 Introduction
4.2 Meaning and Definition of Demand
4.3 Features of Demand
4.4 Demand Schedules and Demand Curves
4.4.1 Individual Demand Schedule
4.4.2 Market Demand Schedule
4.5 Determinants of Demand/Factors Affecting Demand
4.6 Law of Demand
4.6.1 Definitions
4.6.2 Assumption
4.6.3 Explanation of the Law
4.7 Reasons Behind Downward Slope of the Demand Curve
4.8 Exceptions to the Law of Demand
4.9 Movement: Expansion or Contraction of Demand
4.10 Shift in the Demand Curve
4.11 Types of Demand
4.11.1 Price Demand
4.11.2 Income Demand [Normal Goods]
4.11.3 Cross-Demand
4.12 Demand Distinction
4.12.1 Producer’s Goods and Consumer’s Goods
4.12.2 Durable and Non-durable Goods
4.12.3 Derived Demand and Autonomous Demand
4.12.4 Industry Demand and Company Demand
4.12.5 Short-run and Long-run Demand
4.12.6 Joint and Rival/Composite Demand
4.12.7 Individual Demand and Market Demand
Review Questions
Chapter 5 Elasticity of Demand
5.1 Meaning and Definition
5.2 Determinants of Price Elasticity of Demand
5.3 Importance of Elasticity of Demand
5.4 Types of Elasticity of Demand
5.4.1 Price Elasticity of Demand
5.4.2 Income Elasticity of Demand
5.4.3 Cross-elasticity of Demand
5.5 Measurement of Elasticity of Demand
5.5.1 Total Expenditure Method
5.5.2 Percentage or Proportionate Method
5.5.3 Geometric or Point Method
5.5.4 Arc Elasticity of Demand
5.5.5 Revenue Method
5.6 Advertising and Demand
5.6.1 Advertising Elasticity of Demand
5.6.2 Another Formula
5.6.3 Factors Affecting Advertising Elasticity of Demand
5.6.4 Methods of Advertisement Outlays
5.6.5 Role of Advertising
Review Questions
Chapter 6 Demand Forecasting
6.1 Introduction and Meaning
6.2 Objectives of Demand Forecasting
6.2.1 Short-term Objectives
6.2.2 Long-term Objectives
6.3 Types of Forecasting
6.3.1 Micro Level or at the Level of Firm
6.3.2 Industry Level
6.3.3 Macroeconomic Forecasting
6.3.4 Short-term Demand Forecasting
6.3.5 Long-term Demand Forecasting
6.3.6 Medium-term Demand Forecasting
6.4 Requirements for Demand Forecasting
6.4.1 Elements Connected to Consumers
6.4.2 Elements Concerning the Suppliers
6.4.3 Elements Concerning the Market / Industry
6.4.4 Miscellaneous Elements
6.5 Approach to Forecast
6.6 Methods of Demand Forecasting
6.6.1 Survey or Opinion Method
6.6.2 Statistical Methods
6.7 Features of a Good Forecasting Method
6.8 Forecasting Demand for New Products
Review Questions
Chapter 7 Supply Function
7.1 Meaning and Definition
7.2 Distinction Between Supply and Stock
7.3 Factors Determining Supply
7.4 Supply Schedule and Curve
7.4.1 Supply Schedule of an Individual Firm
7.4.2 Market Supply Schedule
7.4.3 Supply Curve of a Firm
7.5 Law of Supply
7.6 Movement: Expansion or Contraction of Supply
7.7 Shift in Supply Curve
7.8 Elasticity of Supply
7.9 Types of Elasticity of Supply
7.10 Measurement of Elasticity of Supply
7.10.1 Percentage Method
7.10.2 Point Elasticity vs. Arc Elasticity
7.10.3 Diagrammatic Method
7.11 Determinants of Elasticity of Supply
7.12 Importance of Elasticity of Supply
7.13 Equilibrium of the Firm or Profit Maximisation
Review Questions
Chapter 8 Theory of Consumer’s Behaviour (Utility Analysis of Demand)
8.1 Introduction
8.2 Meaning and Measurement of Utility
8.2.1 Measurement of Utility
8.3 Concepts of Utility
8.3.1 Initial Utility
8.3.2 Marginal Utility
8.3.3 Total Utility
8.4 Forms of Utility
8.5 Features of Utility
8.6 Approaches to Consumer Behaviour
8.6.1 Law of Diminishing Marginal Utility
8.6.2 Consumer’s Equilibrium
8.6.3 Law of Equi-marginal Utility
8.7 Marshall’s Consumer Surplus
8.8 Criticism of Utility Analysis of Demand/Defects of Cardinal Analysis
9.4 Characteristic Features/Properties of Indifference Curve
9.5 Significance/Usefulness and Importance of IC Analysis
9.6 Marshallian Utility Analysis vs IC Analysis
9.7 Superiority/Differences of IC Analysis [Over Marshallian Utility Analysis]
9.8 Critical Evaluation of IC Analysis
9.9 Marginal Rate of Substitution
9.9.1 Differences between MRS and DMU
9.10 Budget Line and Consumer’s Equilibrium
9.11 Consumer’s Equilibrium
9.12 Elasticity of Substitution [ES]
Review Questions
Chapter 10 Theory of Production
10.1 Introduction
10.2 Factors of Production
10.2.1 Land
10.2.2 Labour
10.2.3 Capital
10.2.4 Entrepreneur/Organisation
10.3 Production Function
10.3.1 Features of Production Function
10.3.2 Assumptions of Production Function
10.3.3 Production Function Table
10.3.4 Uses of Production Function in Decision-Making
10.4 Law of Variable Proportions (Production Function With One Variable Factor)
10.4.1 Assumptions of the Law
10.4.2 Three Stages of the Law
10.5 Law of Returns to Scale
10.5.1 Three Stages of Law of Returns to Scale
10.6 Difference between Laws of Variable Proportions and Returns to Scale
10.7 Producer’s Equilibrium
10.7.1 Least Cost Combination Principle [Optimum Combination]
10.7.2 Limitations of the Principle of Least Cost Combination
10.8 Economies of Scale
10.8.1 Internal Economies
10.8.2 External Economies
10.8.3 Internal Diseconomies
10.8.4 External Diseconomies
10.8.5 Significance of Economies of Scale
10.9 Small-scale Production
10.10 Iso-quant Analysis
10.10.1 Shift of Iso-quants
10.10.2 Difference between IC and Iso-quant
10.10.3 Properties of Iso-quants
10.10.4 Principles of Diminishing Marginal Rate of Technical Substitution
10.10.5 Types of Iso-quants
10.11 Production Function Theories
10.11.1 Cobb-Douglas’ Production Function
10.11.2 Constant Elasticity of Substitution [CES] Production Function
10.11.3 Leontief Production Function
Review Questions
Chapter 11 Cost and Revenue
11.1 Introduction
11.2 Cost Concepts
11.2.1 Opportunity Cost vs. Outlay Cost
11.2.2 Explicit Cost vs. Implicit Cost
11.2.3 Fixed Cost vs. Variable Cost
11.2.4 Direct Cost vs. Indirect Cost
11.2.5 Accounting Cost vs. Economic Cost
11.2.6 Past Cost and Future Cost
11.2.7 Out-of-Pocket Cost and Book Cost
11.2.8 Incremental Cost and Sunk Cost
11.2.9 Shutdown Cost and Abandonment Cost
11.2.10 Replacement Cost and Historical Cost
11.2.11 Private Cost and Social Cost
11.2.12 Short-run Cost and Long-run Cost
11.3 Cost–Output Relations
11.4 Short-Run Cost Curves
11.4.1 Total Cost
11.4.2 Average Cost
11.4.3 Marginal Cost
11.4.4 Relationship between AC and MC
11.5 Long-Run Cost Curves
11.5.1 Long-run Total Cost [LTC]
11.5.2 Long-run Average Cost [LAC]
11.5.3 Relationship between LAC and SAC
11.5.4 Long-run Marginal Cost [LMC]
11.6 Concept of Revenue
11.6.1 Total Revenue [TR]
11.6.2 Average Revenue [AR]
11.6.3 Marginal Revenue [MR]
11.7 Behavioural Principles
11.7.1 Revenue Curves of the Firm under Perfect Competition
11.7.2 Revenue Curves of the Firm under Imperfect Competition
11.8 Break-Even Analysis
11.8.1 BEP in Terms of Physical Units
11.8.2 BEP in Terms of Sales Value
11.8.3 Uses of BEA
11.8.4 Reasons for Popularity of BEA
11.8.5 Limitations of BEA
11.9 Cost Control
11.9.1 Meaning
11.9.2 Techniques of Cost Control/Reduction
11.9.3 Factors Hindering Cost Control in India
Review Questions
Chapter 12 Market Structure
12.1 Introduction and Meaning
12.2 Extent of Market
12.3 Value and Price
12.4 Classification of Markets
12.4.1 On the Basis of Size
12.4.2 On the Basis of Time
12.4.3 On the Basis of Situation [Relationship/Competition]
12.5 Competition
12.5.1 Perfect Competition
12.5.2 Monopoly and Discriminating Monopoly
12.6 Imperfect Competition
12.6.1 Monopolistic Competition
12.6.2 Oligopoly
12.6.3 Duopoly
12.7 Comparison of Different Market Structure
Review Questions
Chapter 13 Price Policy and Pricing Methods
13.1 Introduction
13.2 Pricing Policy
13.3 Objectives of Pricing Policy
13.4 Importance of Price Policy
13.5 Factors Affecting Pricing Policy
13.6 Principles of Price Policy
13.7 Pricing Methods
13.7.1 Cost-oriented Methods
13.7.2 Competition-oriented Methods
13.7.3 Other Methods
13.8 Public Utilities
13.8.1 Characteristics of Public Utilities
13.8.2 Pricing Methods in Public Utility
Review Questions
Chapter 14 Price Determination under Perfect Competition
14.1 Introduction
14.2 Equilibrium between Demand and Supply Price
14.3 Changes in Equilibrium
14.4 Equilibrium Price of Firm and Industry
14.5 Time Element in Price Determination
14.5.1 Market Period
14.5.2 Short Period
14.5.3 Long Run
14.5.4 Secular Period
14.6 Market Period Price Determination
14.6.1 Perishable Goods
14.6.2 Durable Goods
14.7 Short Period Price Determinations
14.8 Determination of Long Period Price
14.9 Conclusion
Review Questions
Chapter 15 Price Determination under Monopoly
15.1 Introduction
15.2 Kinds of Monopoly
15.2.1 Private and Public Monopolies
15.2.2 Pure Monopoly
15.2.3 Simple Monopoly
15.2.4 Discriminating Monopoly
15.3 Nature of Demand, Revenue and Cost under Monopoly
15.3.1 Costs under Monopoly
15.4 Monopoly Power
15.5 Determination of Price in Monopoly
15.6 Price Discrimination
15.6.1 Conditions for Price Discrimination
15.6.2 Types of Discriminating Monopoly
15.7 Degrees of Price Discrimination
15.7.1 Price Discrimination of First Degree
15.7.2 Price Discrimination of Second Degree
15.7.3 Price Discrimination of Third Degree
15.8 When Price Discrimination is Profitable
15.9 When Price Discrimination is Possible
Review Questions
Chapter 16 Price Determination under Imperfect Competition
16.1 Introduction
16.2 Nature of Demand and Cost in Monopolistic Competition
16.2.1 Demand Curve
16.2.2 Cost Curve
16.3 Price Determination in Monopolistic Competition
16.4 Equilibrium of the Firm in Monopolistic Competition
16.4.1 Short-run Equilibrium
16.4.2 Long-run Equilibrium
16.5 Group Equilibrium in Monopolistic Competition
16.6 Price Determination in Oligopoly
16.7 Sweezy’s “Kinked-Demand” Curve—Pricing in Oligopoly
16.7.1 Assumptions
16.7.2 Explanation
16.8 Price Determination in Duopoly
16.8.1 Cournot’s Duopoly Model
Review Questions
Question Papers
Index
Dr. T. Aryamala is Associate Professor of Economics, (Coordinator, Shift II), Asan Memorial College of Arts and Science, Chennai. She has over 25 years of teaching experience. Her areas of specialisation include International Trade and International Economics, Managerial Economics and Indian Economy.
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This book Essentials of Business Economics is comprehensive, clear, simple, and student-friendly. It is designed as an essential textbook for students of B.Com, B.B.A. and B.A. courses of Madras university.
Table of contents
Cover
Title Page
Copyright Page
Dedication
Contents
Preface
Chapter 1 Introduction to Economics
1.1 Introduction
1.2 Definition of Economics
1.2.1 Wealth Definition: Adam Smith
1.2.2 Welfare Definition: Alfred Marshall
1.2.3 Scarcity Definition: Lionel Robbins
1.2.4 Growth Definition: Paul A Samuelson
1.3 Scope of Economics
1.3.1 Consumption
1.3.2 Production
1.3.3 Exchange
1.3.4 Distribution
1.3.5 Public Finance
1.4 Importance and Significance of the Study of Economics
1.5 Nature of Economics: an Art or Science?
1.5.1 Economics as a Science
1.5.2 Economics as an Art
1.5.3 Economics Both a Science and an Art
1.6 Economics – A Positive or a Normative Science
1.6.1 Economics as a Positive Science
1.6.2 Economics as a Normative Science
1.6.3 Interdependence of Positive and Normative Science
1.7 Methods: Micro and Macro
1.7.1 Microeconomics
1.7.2 Macroeconomics
1.7.3 Interdependence of Micro and Macroeconomics
1.8 Methods of [Constructing an Economic Theory] Economic Analysis
1.8.1 Deductive Method [From General to Particular]
1.8.2 Inductive Method [From Particular to General]
1.8.3 Interdependence of Deductive and Inductive Methods
1.9 Basic Economic Problems
1.9.1 What Goods to be Produced and in What Quantities?
1.9.2 How to Produce?
1.9.3 For Whom to Produce?
1.9.4 Economic Growth
1.10 Economic Systems
1.10.1 Capitalist Economy
1.10.2 Socialist Economy
1.10.3 Mixed Economy
Review Questions
Chapter 2 Introduction to Business Economics
2.1 Introduction
2.2 Definition of Business Economics
2.2.1 General Economic Theory and Business Economics - A Comparison
2.3 Nature and Scope of Business Economics
2.3.1 Business Decisions
2.3.2 Scope of Business Economics
2.4 Relationship of Business Economics and Other Disciplines
2.4.1 Business Economics and Economics
2.4.2 Business Economics and Operation Research
2.4.3 Business Economics and Accounting
2.4.4 Business Economics and Mathematics
2.4.5 Business Economics and Statistics
2.4.6 Business Economics and Theory of Decision Making
2.4.7 Business Economics and Computer Science
2.5 Objectives of a Business Firm
2.5.1 Profit Maximisation as an Objective of a Firm
2.5.2 Sales Maximisation Goal
2.5.3 Maximise the Rate of Growth Goal
2.5.4 Welfare Goals
2.5.5 Multi-Goals of a Modern Firm
2.5.6 Long-term Objectives of Firms
2.6 Decision Making in Business
2.7 Economic Concepts in Business Application
2.7.1 Production Possibility Frontiers
2.7.2 Accounting Profit and Economic Profit
2.7.3 The Opportunity Cost Principle
2.7.4 Marginal Opportunity Cost
2.7.5 Incremental Principle
2.7.6 Principle of Time Perspective
2.7.7 The Discounting Principles
2.7.8 The Equi-Marginal Principle
2.7.9 Concept of Efficiency
2.7.10 Incrementalism and Marginalism
2.8 Case Study Method
Review Questions
Chapter 3 Business Cycle
3.1 Introduction
3.2 Meaning
3.3 Definition
3.4 Features / Characteristics of a Business Cycle
3.4.1 Cyclical Fluctuations
3.5 Phases of Business Cycles
3.5.1 Boom or Prosperity
3.5.2 Recession
3.5.3 Depression
3.5.4 Recovery
3.5.5 Inflation
3.5.6 Deflation
3.5.7 Reflation
3.6 Causes of Business Cycle
3.6.1 Internal Factors
3.6.2 External Factors
3.7 Consequences / Effects of Business Cycles
3.8 Measures to Minimise the Effects of Cycles
3.8.1 Preventive Measures
3.8.2 Relief Measures
Review Questions
Chapter 4 Demand Analysis
4.1 Introduction
4.2 Meaning and Definition of Demand
4.3 Features of Demand
4.4 Demand Schedules and Demand Curves
4.4.1 Individual Demand Schedule
4.4.2 Market Demand Schedule
4.5 Determinants of Demand/Factors Affecting Demand
4.6 Law of Demand
4.6.1 Definitions
4.6.2 Assumption
4.6.3 Explanation of the Law
4.7 Reasons Behind Downward Slope of the Demand Curve
4.8 Exceptions to the Law of Demand
4.9 Movement: Expansion or Contraction of Demand
4.10 Shift in the Demand Curve
4.11 Types of Demand
4.11.1 Price Demand
4.11.2 Income Demand [Normal Goods]
4.11.3 Cross-Demand
4.12 Demand Distinction
4.12.1 Producer’s Goods and Consumer’s Goods
4.12.2 Durable and Non-durable Goods
4.12.3 Derived Demand and Autonomous Demand
4.12.4 Industry Demand and Company Demand
4.12.5 Short-run and Long-run Demand
4.12.6 Joint and Rival/Composite Demand
4.12.7 Individual Demand and Market Demand
Review Questions
Chapter 5 Elasticity of Demand
5.1 Meaning and Definition
5.2 Determinants of Price Elasticity of Demand
5.3 Importance of Elasticity of Demand
5.4 Types of Elasticity of Demand
5.4.1 Price Elasticity of Demand
5.4.2 Income Elasticity of Demand
5.4.3 Cross-elasticity of Demand
5.5 Measurement of Elasticity of Demand
5.5.1 Total Expenditure Method
5.5.2 Percentage or Proportionate Method
5.5.3 Geometric or Point Method
5.5.4 Arc Elasticity of Demand
5.5.5 Revenue Method
5.6 Advertising and Demand
5.6.1 Advertising Elasticity of Demand
5.6.2 Another Formula
5.6.3 Factors Affecting Advertising Elasticity of Demand
5.6.4 Methods of Advertisement Outlays
5.6.5 Role of Advertising
Review Questions
Chapter 6 Demand Forecasting
6.1 Introduction and Meaning
6.2 Objectives of Demand Forecasting
6.2.1 Short-term Objectives
6.2.2 Long-term Objectives
6.3 Types of Forecasting
6.3.1 Micro Level or at the Level of Firm
6.3.2 Industry Level
6.3.3 Macroeconomic Forecasting
6.3.4 Short-term Demand Forecasting
6.3.5 Long-term Demand Forecasting
6.3.6 Medium-term Demand Forecasting
6.4 Requirements for Demand Forecasting
6.4.1 Elements Connected to Consumers
6.4.2 Elements Concerning the Suppliers
6.4.3 Elements Concerning the Market / Industry
6.4.4 Miscellaneous Elements
6.5 Approach to Forecast
6.6 Methods of Demand Forecasting
6.6.1 Survey or Opinion Method
6.6.2 Statistical Methods
6.7 Features of a Good Forecasting Method
6.8 Forecasting Demand for New Products
Review Questions
Chapter 7 Supply Function
7.1 Meaning and Definition
7.2 Distinction Between Supply and Stock
7.3 Factors Determining Supply
7.4 Supply Schedule and Curve
7.4.1 Supply Schedule of an Individual Firm
7.4.2 Market Supply Schedule
7.4.3 Supply Curve of a Firm
7.5 Law of Supply
7.6 Movement: Expansion or Contraction of Supply
7.7 Shift in Supply Curve
7.8 Elasticity of Supply
7.9 Types of Elasticity of Supply
7.10 Measurement of Elasticity of Supply
7.10.1 Percentage Method
7.10.2 Point Elasticity vs. Arc Elasticity
7.10.3 Diagrammatic Method
7.11 Determinants of Elasticity of Supply
7.12 Importance of Elasticity of Supply
7.13 Equilibrium of the Firm or Profit Maximisation
Review Questions
Chapter 8 Theory of Consumer’s Behaviour (Utility Analysis of Demand)
8.1 Introduction
8.2 Meaning and Measurement of Utility
8.2.1 Measurement of Utility
8.3 Concepts of Utility
8.3.1 Initial Utility
8.3.2 Marginal Utility
8.3.3 Total Utility
8.4 Forms of Utility
8.5 Features of Utility
8.6 Approaches to Consumer Behaviour
8.6.1 Law of Diminishing Marginal Utility
8.6.2 Consumer’s Equilibrium
8.6.3 Law of Equi-marginal Utility
8.7 Marshall’s Consumer Surplus
8.8 Criticism of Utility Analysis of Demand/Defects of Cardinal Analysis
9.4 Characteristic Features/Properties of Indifference Curve
9.5 Significance/Usefulness and Importance of IC Analysis
9.6 Marshallian Utility Analysis vs IC Analysis
9.7 Superiority/Differences of IC Analysis [Over Marshallian Utility Analysis]
9.8 Critical Evaluation of IC Analysis
9.9 Marginal Rate of Substitution
9.9.1 Differences between MRS and DMU
9.10 Budget Line and Consumer’s Equilibrium
9.11 Consumer’s Equilibrium
9.12 Elasticity of Substitution [ES]
Review Questions
Chapter 10 Theory of Production
10.1 Introduction
10.2 Factors of Production
10.2.1 Land
10.2.2 Labour
10.2.3 Capital
10.2.4 Entrepreneur/Organisation
10.3 Production Function
10.3.1 Features of Production Function
10.3.2 Assumptions of Production Function
10.3.3 Production Function Table
10.3.4 Uses of Production Function in Decision-Making
10.4 Law of Variable Proportions (Production Function With One Variable Factor)
10.4.1 Assumptions of the Law
10.4.2 Three Stages of the Law
10.5 Law of Returns to Scale
10.5.1 Three Stages of Law of Returns to Scale
10.6 Difference between Laws of Variable Proportions and Returns to Scale
10.7 Producer’s Equilibrium
10.7.1 Least Cost Combination Principle [Optimum Combination]
10.7.2 Limitations of the Principle of Least Cost Combination
10.8 Economies of Scale
10.8.1 Internal Economies
10.8.2 External Economies
10.8.3 Internal Diseconomies
10.8.4 External Diseconomies
10.8.5 Significance of Economies of Scale
10.9 Small-scale Production
10.10 Iso-quant Analysis
10.10.1 Shift of Iso-quants
10.10.2 Difference between IC and Iso-quant
10.10.3 Properties of Iso-quants
10.10.4 Principles of Diminishing Marginal Rate of Technical Substitution
10.10.5 Types of Iso-quants
10.11 Production Function Theories
10.11.1 Cobb-Douglas’ Production Function
10.11.2 Constant Elasticity of Substitution [CES] Production Function
10.11.3 Leontief Production Function
Review Questions
Chapter 11 Cost and Revenue
11.1 Introduction
11.2 Cost Concepts
11.2.1 Opportunity Cost vs. Outlay Cost
11.2.2 Explicit Cost vs. Implicit Cost
11.2.3 Fixed Cost vs. Variable Cost
11.2.4 Direct Cost vs. Indirect Cost
11.2.5 Accounting Cost vs. Economic Cost
11.2.6 Past Cost and Future Cost
11.2.7 Out-of-Pocket Cost and Book Cost
11.2.8 Incremental Cost and Sunk Cost
11.2.9 Shutdown Cost and Abandonment Cost
11.2.10 Replacement Cost and Historical Cost
11.2.11 Private Cost and Social Cost
11.2.12 Short-run Cost and Long-run Cost
11.3 Cost–Output Relations
11.4 Short-Run Cost Curves
11.4.1 Total Cost
11.4.2 Average Cost
11.4.3 Marginal Cost
11.4.4 Relationship between AC and MC
11.5 Long-Run Cost Curves
11.5.1 Long-run Total Cost [LTC]
11.5.2 Long-run Average Cost [LAC]
11.5.3 Relationship between LAC and SAC
11.5.4 Long-run Marginal Cost [LMC]
11.6 Concept of Revenue
11.6.1 Total Revenue [TR]
11.6.2 Average Revenue [AR]
11.6.3 Marginal Revenue [MR]
11.7 Behavioural Principles
11.7.1 Revenue Curves of the Firm under Perfect Competition
11.7.2 Revenue Curves of the Firm under Imperfect Competition
11.8 Break-Even Analysis
11.8.1 BEP in Terms of Physical Units
11.8.2 BEP in Terms of Sales Value
11.8.3 Uses of BEA
11.8.4 Reasons for Popularity of BEA
11.8.5 Limitations of BEA
11.9 Cost Control
11.9.1 Meaning
11.9.2 Techniques of Cost Control/Reduction
11.9.3 Factors Hindering Cost Control in India
Review Questions
Chapter 12 Market Structure
12.1 Introduction and Meaning
12.2 Extent of Market
12.3 Value and Price
12.4 Classification of Markets
12.4.1 On the Basis of Size
12.4.2 On the Basis of Time
12.4.3 On the Basis of Situation [Relationship/Competition]
12.5 Competition
12.5.1 Perfect Competition
12.5.2 Monopoly and Discriminating Monopoly
12.6 Imperfect Competition
12.6.1 Monopolistic Competition
12.6.2 Oligopoly
12.6.3 Duopoly
12.7 Comparison of Different Market Structure
Review Questions
Chapter 13 Price Policy and Pricing Methods
13.1 Introduction
13.2 Pricing Policy
13.3 Objectives of Pricing Policy
13.4 Importance of Price Policy
13.5 Factors Affecting Pricing Policy
13.6 Principles of Price Policy
13.7 Pricing Methods
13.7.1 Cost-oriented Methods
13.7.2 Competition-oriented Methods
13.7.3 Other Methods
13.8 Public Utilities
13.8.1 Characteristics of Public Utilities
13.8.2 Pricing Methods in Public Utility
Review Questions
Chapter 14 Price Determination under Perfect Competition
14.1 Introduction
14.2 Equilibrium between Demand and Supply Price
14.3 Changes in Equilibrium
14.4 Equilibrium Price of Firm and Industry
14.5 Time Element in Price Determination
14.5.1 Market Period
14.5.2 Short Period
14.5.3 Long Run
14.5.4 Secular Period
14.6 Market Period Price Determination
14.6.1 Perishable Goods
14.6.2 Durable Goods
14.7 Short Period Price Determinations
14.8 Determination of Long Period Price
14.9 Conclusion
Review Questions
Chapter 15 Price Determination under Monopoly
15.1 Introduction
15.2 Kinds of Monopoly
15.2.1 Private and Public Monopolies
15.2.2 Pure Monopoly
15.2.3 Simple Monopoly
15.2.4 Discriminating Monopoly
15.3 Nature of Demand, Revenue and Cost under Monopoly
15.3.1 Costs under Monopoly
15.4 Monopoly Power
15.5 Determination of Price in Monopoly
15.6 Price Discrimination
15.6.1 Conditions for Price Discrimination
15.6.2 Types of Discriminating Monopoly
15.7 Degrees of Price Discrimination
15.7.1 Price Discrimination of First Degree
15.7.2 Price Discrimination of Second Degree
15.7.3 Price Discrimination of Third Degree
15.8 When Price Discrimination is Profitable
15.9 When Price Discrimination is Possible
Review Questions
Chapter 16 Price Determination under Imperfect Competition
16.1 Introduction
16.2 Nature of Demand and Cost in Monopolistic Competition
16.2.1 Demand Curve
16.2.2 Cost Curve
16.3 Price Determination in Monopolistic Competition
16.4 Equilibrium of the Firm in Monopolistic Competition
16.4.1 Short-run Equilibrium
16.4.2 Long-run Equilibrium
16.5 Group Equilibrium in Monopolistic Competition
16.6 Price Determination in Oligopoly
16.7 Sweezy’s “Kinked-Demand” Curve—Pricing in Oligopoly
16.7.1 Assumptions
16.7.2 Explanation
16.8 Price Determination in Duopoly
16.8.1 Cournot’s Duopoly Model
Review Questions
Question Papers
Index
Biographical note
Dr. T. Aryamala is Associate Professor of Economics, (Coordinator, Shift II), Asan Memorial College of Arts and Science, Chennai. She has over 25 years of teaching experience. Her areas of specialisation include International Trade and International Economics, Managerial Economics and Indian Economy.
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