Unlocking The Secrets of Managerial Economics
Unlocking The Secrets of Managerial Economics
Unlocking The Secrets of Managerial Economics
Dr Soumyatanu Mukherjee
“McDonald's adoption of price tactics like "value meals" and special deals maximizes revenue generation from customers”
“How Discogs Marketplace Differs From eBay in business strategy of selling CDs?”
“Uber and OLA Are in ‘an Arms Race in Marketing Spend Right Now’”
Sadly, billions of dollars are lost each year because many existing managers fail to use basic tools from managerial
economics to
- optimize the production process and input mix, choose product quality,
Happily, if you learn a few basic principles from managerial economics, you will be poised to drive the inept managers out
of their jobs!
Today
• Introduction
• Course specifics
• Economics (or, Eco-No-Mix?)
• Scarcity, Opportunity Costs, Incentives – Basic Introduction
How this course will be delivered
• Teaching Assistant:
– Mr. Hardik Sen
– Email: hardiksen@xlri.ac.in
Course contract
• You are expected to
– Respect your co-learners (maintain discipline & decorum, NO mobiles/ NO laptops
(unless I instruct you)/ NO iPads/ NO food/ NO napping/ NO chatting/ NO fighting)
• Class participation marks = starts with 3 for all, provided you also maintain decorum in class
• Course outline
• The whole of
science is nothing
more than the
refinement of
everyday thinking.
Big Questions
• When you hear the term “Economics”, what
words come into mind?
• In a typically developed country, labour is relatively more scarce than technology and equipment, while in a
developing country it is the opposite.
• Think of electricity or drinking water. In most parts of India, their availability is limited, especially during
summer months.
• Fundamentally, for the government or policy makers, there are two alternative options to ‘solve’ this problem:
– increase supply by sufficiently investing in power and water projects
– decrease demand by propagating a slogan that we should reduce consumption ‘in the national interest’.
Economics – All About Making “Choices”
Which one is the right approach?
• Unfortunately, the second approach is being propagated in most of the
cases. Is this really what we want, especially over a longer time-horizon?
NO.
The best possible decision is the one that minimizes the opportunity cost.