Managerial Economics & Rational Decision Making
The theory of a firm emphasizes the fact that the firm aims at maximizing profit, but that concept has been taken further to the maximization of shareholder’s wealth or value. Maximization of shareholder’s value is the broad objective of every modern organization. This is the discounting future stream of cash flow. For simplicity, we represent cash flow with profit then, V =. Where (TR-TC= Profit). TR is Total Revenue whose maximization depends on i). Demand & forecasting, ii). Pricing policy, iii). New product development etc. TC is Total Cost whose minimization depends on i). Production techniques, ii). The cost function, iii). Process development etc. The cost of capital r must also be minimized and it depends on i). The riskiness of firm, ii). Condition in the capital market. The course shall be an in-depth analysis and comprises of:
Module One: Introduction to Managerial Economics
Definition of managerial economics, optimization techniques- functional relationship, marginal analysis, Relationship between Total, marginal, and average value. The concept of derivative.
Module Two: Demand Theory
Demand Theory, firm and industry demand function. Price, income and cross elasticity of demand and its application to business. Relationship between Total, average, marginal revenue and elasticity of demand, Consumer behavior and rational choice. Estimating demand function- the identification problem, consumer interviews, market experiments, regression analysis.
Module Three: Business and Economic Forecasting
Business and economic forecasting – Survey techniques, estimation of linear, non linear trend, seasonal variation, cyclical variation, Elementary forecasting techniques. How leading and lag indicators are used, statistical analysis of economic variables.
Module Four: Production Economics
Theory of Production -Production function, the law of diminishing marginal returns, the optimal level of input utilization. Isoquant & Isocost their marginal rate of technical substitution. Output elasticity of inputs returns to scale. Effect of technological change and industrial innovation.
For further information and registration, please visit the course page here or contact us at training@nazellinkconsult.com