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2. Engineering, Technology & Economics
The branch of science and technology concerned with the design, building, and use of engines, machines, and structures.
Engineering is the discipline, art, skill and profession of acquiring and applying scientific, mathematical, economic, social, and practical knowledge, in order to design and build structures, machines, devices, systems, materials and processes that safely realize improvements to the lives of people.

3. Technology
The application of scientific knowledge for practical purposes, especially for industries and society: "computer technology"; "recycling technologies".
Technology is the branch of knowledge that deals with the creation and use of technical means and their interrelation with life, society, and the environment.

4. Economics
The branch of knowledge concerned with the production, consumption, and transfer of wealth.
Economics is the social science that analyzes the production, distribution, and consumption of goods and services. The word "economics" has its origin in the Greek "oikonomikós" (relating to household management), from "oikos" (house) +(nomos, "custom" or "law"), hence "rules of the house(hold)".Current economic models emerged from the broader field of political economy in the late 19th century.
Economics aims to explain how economies work and how economic agents interact. Economic analysis is applied throughout society, in business, finance and government, education social institutions, war, and science.

5. Definitions of Economics
Wealth definitions
Welfare definitions-economics is a study of mankind in the ordinary business of life; it examines that part of individual and social action which is most closely connected with the attainment and with the use of the material requisites of wellbeing.” Alfred Marshall
Scarcity definition
Growth – Oriented definition

6. Wealth Definition

7. Welfare Definition

8. Scarcity Definition

9. Growth Definition

10. Nature & Scope of Economics

11. Science refers to a systemized body of knowledge which collects facts and tries to make an association between these facts which are useful for daily life and works on some laws and principles and these rules and principles are universally applicable. The following are the essentials of science –
A systematic study of facts
Certain rules and principles
Rules and principles of science are based on cause and effects
Rules and principles of science are universally applicable.
Art refers to that branch of knowledge which teaches how to do a particular act in a systematic manner or in its best.

12. Economics is a Science Systematic study of facts
Use of economic laws and principles
It establishes relationship between cause and effects
Universality of laws and principles

13. Economics as an Art Helpful in the solution of economic problem
Increasing importance of applied economics
Economic aspect of problems
Economics as an art does not weaken its scientific aspect
Thus an economist works as a scientist when he studies economics and an artist when he practices it. According to Cossa- “ Science requires art, art requires science, each being complementary to other.”
Thus economics is a science in its methodology and an art in its application.

14. Positive Science

15. Normative Science

16. Positive VS Normative

17. Positive & Normative Positive Economics:-
Derives useful theories with testable propositions about WHAT IS?
Normative Economics:-
Provides the basis for value judgments on economic outcomes. WHAT SHOULD BE?

18. Economics Economics can be defined as-
“Economics is the social science which studies human activities and how society maximizes the satisfaction with the promotion of welfare and economic growth by efficient use of limited or scarce resources which have alternative uses.”

19. Scope of economics Micro Economics Macro Economics
Micro economics can be defined as that branch of economic analysis which studies the economic behavior of the individual unit i.e. a firm , a producer, an industry, a consumer etc.
The important areas of study under micro economics are-
Theory of consumer behavior and Demand Analysis

20. Theory of production and cost
Theory of distribution or factor pricing
Theory of economic welfare
MACRO ECONOMICS- Macro economics the behavior of all the units combined together i.e. total production, total investment, level of employment, national income. The fields covered under macro economics-
Theory of Income, Output and Employment
Theory of business cycle
Theory of general price level
Theory of economic growth
Theory of money

21. Managerial economics
Managerial economics constitutes those theories, tools and techniques useful in business decisions having economic or financial implications.

22. What is Managerial Economics?
Douglas - “Managerial economics is .. the application of economic principles and methodologies to the decision-making process within the firm or organization.”
Pappas & Hirschey - “Managerial economics applies economic theory and methods to business and administrative decision-making.”
Salvatore - “Managerial economics refers to the application of economic theory and the tools of analysis of decision science to examine how an organisation can achieve its objectives most effectively.”

23. Nature of Managerial Economics
Managerial economics is Science as well as Art
It is a micro economics in character
It is a normative science.
Prescriptive rather than descriptive
Pragmatic approach
Use of macro economics principles
Integration of economics and business management

24. Applications of Managerial Economics
Demand forecasting
Cost and revenue decision
Pricing decision
Capital and investment decision
Study of economic environment
Estimating economic relationship
Basis of business policy

25. Scope Product policy, sales promotion and market strategy
Demand analysis and forecasting
Cost analysis
Production analysis
Market and market structure
Pricing decisions
Profit management
Capital and investment management

26. Responsibilities and specific functions of a Manager
Better management of resources
Forecasting- demand and sales
Market research
Investment analysis
Production and inventory control
Study of environment
Creating competency to work with global world.

27. Role of science and technology in economic development
Reduction in the human efforts
Utilization of natural resources
Increased efficiency
Solving the problem of scarcity
Factor substitution
Mechanization of production process
Exploration and discovery
Infrastructural development
Improvement of agriculture
Dealing with rural problems
Science and technology for national self relience

28. Demand Analysis
In common usage, demand means a desire or a want but in economics:
Desire, want and demand are three different concept.
1. Demand is an effective desire: a desire becomes an effective desire only when it is supported by following three factors;-
-Desire for a commodity and the availability of desired commodity
- Ability to pay
Willingness to pay
A desire can not be a demand unless it is supported by all the factors.

29. 2.-Demand is the quantity of a commodity demanded at a particular price- Prof. Mill suggests- “ Demand of a commodity is the quantity of it that a consumer is ready to purchase at a given price.”
3.- Demand is the quantity of a commodity demanded at a particular time. Prof. Bentham has related the demand of commodity with a particular time and also a particular price. In his words- “ the demand of a commodity at a given price is the quantity of it which bought at a particular time at that price”.
Thus, demand can be defined as an effective desire of a commodity which is expressed with reference to a particular time and a particular price.
Demand is an effective desire that buyers are willing to purchase at alternative prices for a given period.

30. Essential Elements of demand
There must be some desire for a particular commodity
Desired commodity must be available in market
The consumer must have sufficient money to purchase the commodity
The consumer must be ready to spare the money for the purchase of commodity
The demand must be expressed at particular time and at particular price.

31. Types of demand Price Demand Income Demand Cross Demand
Demand for Consumer Goods
Demand for Producer Goods
Short run and long-run Demand
Joint Demand
Derived Demand
Collective Demand

32. Price demand
Price demand shows the inverse relationship between demand and price. Being other things constant if price rises, demand decreases and vice versa.

33. Income
As income increases, the demand for a normal good or superior good will increase.
As income increases, the demand for an inferior good will decrease.

34. Cross Demand
Cross demand studies effect on the demand of a particular commodity due to changes in the price of other related goods.
Prices of Related Goods
When a fall in the price of one good reduces the demand for another good, the two goods are called substitutes.
When a fall in the price of one good increases the demand for another good, the two goods are called complements.

35. Determinants of Demand
Product’s Own Price
Consumer Income
Prices of Related Goods
Tastes
Quality
Expectations
Cost of Repair and maintenance
Number of Consumers

36. Factors affecting the demand of capital goods
Demand of goods and services to be produced
Size of population
Probability of technical advancement
Propensity to consume
Government policy

37. Law of Demand
Law of demand explains the relationship between price and demand of a commodity.
It states that, other things equal (ceteris paribus), the quantity demanded of a good falls when the price of the good rises.
Thus law of demand explains inverse relationship between price and quantity demanded.

38. Relationship between Price and Demand is Inverse but not necessarily Proportionate- it is very important to note regarding law of demand that it is only a qualitative statement and not a quantitative statement. This law explains that demand of a commodity increases when price decreases and decreases at higher prices but it doesn’t tell us how much quantity increase on a certain fall in the price of a commodity and vice- versa. Thus law of demand indicates only the direction of change in the demand but it does not establish any arithmetical relationship between price and demand

40. The Demand Schedule and the Demand Curve
The demand schedule is a table that shows the relationship between the price of the good and the quantity demanded.
The demand curve is a graph of the relationship between the price of a good and the quantity demanded.
While “Other thing being equal”

41. Price of Ice-cream Cone ($) Quantity of cones Demanded
Demand Schedule
Price of Ice-cream Cone ($)
Quantity of cones Demanded 12
0.20
0.50 10
1.00 8
3.00 2
2.50 4
2.00 6
1.50

42. Demand Curve
Price of Ice-Cream Cone
$3.00
2.50 2
2.00 4
1.50
1.00
0.50 6 8 10 12
Quantity of Ice-Cream Cones

43. Market Demand Schedule
Market demand is the sum of all individual demands at each possible price.
Graphically, individual demand curves are summed horizontally to obtain the market demand curve.
Assume the ice cream market has two buyers as follows…

44. Market demand as the Sum of Individual Demands
Price of Ice-cream Cone ($)
Catherine
Nicholas
Market
0.00 12 + 7 = 19
0.50 10 6 16 2
2.50 4
2.00 6
1.50 8
1.00 3 5 7 10 13
3.00 1 1

45. Assumptions Income of consumer is constant
No change in habits or tastes
No change in the price of related goods
No new substitute should be developed
No expectation of further change in prices
Not a prestigious good

46. Causes of the application of law of demand
Law of diminishing marginal utility
Substitution effect
Income effect
Change in number of consumers
Diverse use of a commodity

47. Expansion of demand vs. increase in demand
Contraction of demand vs. decrease in demand D3 D3 D3
Increase in demand
Decrease in demand

48. Shifts in the Demand Curve
Price of Ice-Cream Cone D2 D1
Increase in demand D3
Decrease in demand
Quantity of Ice-Cream Cones

49. Exceptions to the Law of Demand
Conspicuous necessities
Giffin’s Paradox
Commodities of prestige
High priced commodities
Expectation of further change in price
Ignorance of consumers
Emergencies

50. Normal Good – demand rises as income rises and vice versa Inferior Good – demand falls as income rises and vice versa
A positive sign denotes a normal good
A negative sign denotes an inferior good

51. Goods which are complements:
Cross Elasticity will have negative sign (inverse relationship between the two)
Goods which are substitutes:
Cross Elasticity will have a positive sign (positive relationship between the two)

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