Managerial Economics

Managerial Economics generally refers to the integration of economic theory with business practice. It deals with the use of economic concepts and principles of business decision making. Managerial Economics is thus constituted of that part of economic knowledge or economic theories which is used as a tool of analyzing business problems for rational business decisions. Managerial economics can be viewed by most modern economists as a practical application of economics theory in using effectively the firms scarce resources.

The Causes and Effects of Unemployment

The term unemployment is used to describe anyone who is able to work, but doesn’t have an occupation. Unemployment is one of the most common and chronic problems worldwide. It is a concern for individuals as well as global communities. Unemployment is expressed as percentage of the total available work force that is unemployed, but actively seeking employment and willing to work which is known as the unemployment rate.

Basically there are five types of unemployment: frictional unemployment, cyclical unemployment, structural unemployment, real wage or classical unemployment, and seasonal unemployment. The level of unemployment varies with economic conditions and other circumstances.… Read the rest

Abey Francis

Single Global Currency – Concept, Advantages and Disadvantages

At the beginning of World War I, this standard ceased to exist and in 1920 countries permitted greater exchange rate flexibility, which however did not last long and after the end of the World War II the Bretton Woods system has been implemented. This standard has been created as a result of numerous meetings between the World War II winning states with the final conference taking place at the Hotel in Bretton Woods, New Hampshire. The standard took the name of this last conference’s venue. In August 15, 1971 Richard Nixon in his speech announced that the price of dollar will be no longer fixed against gold.… Read the rest

Abey Francis

Difference Between Economies of Scale and Economies of Scope

Economies of Scale

The term economies of scale refers to a situation where the cost of producing one unit of a good or service decreases as the volume of production increases.

Economies of scale arise when the cost per unit falls as output increases. Economies of scale are the main advantage of increasing the scale of production.

Alfred Marshall made a differentiating concepts of internal and external economies of scale. That is that when costs of input factors of production go down, it is a positive externality for all the firms in the market place, outside the control of any of the firms.… Read the rest

Abey Francis

Why Competition may Sometimes be Helpful?

Market structures refer to a total number of businesses in the market, their share and extent of competition in those businesses. Competition is a crucial aspect which cannot be overlooked in business. This is because human needs are many but resources for satisfying them are limited. As a result, firms have to compete to ensure they provide required services at certain cost. The major objective to operate a successful business is to earn a profit. In this process, resources are deployed to generate profits and thus businesses have to allocate resources strategically to ensure maximum benefits are achieved. In some business models, competition is steep while in others, they serve as a monopoly.… Read the rest

Abey Francis

Welfare Economics

“The greatest meliorator of the world is selfish, huckstering trade.” (R.W. Emerson, Work and Days)

Welfare Economics is a normative branch of economics that is concerned with the way economic activity ought to be  arranged so as to maximize economic welfare. The hallmark of welfare  economics is that policies are assessed exclusively in terms of their effects on the well-being of  individuals. Accordingly, whatever is relevant to individuals well-being is relevant under  welfare economics, and whatever is unrelated to individuals well-being is excluded from  consideration under welfare economics. Economists often use the term utility to refer to the well-being of an individual, and,  when there is uncertainty about outcomes, economists use an ex ante measurement of well-being,  so-called expected  utility.… Read the rest

Abey Francis

The Role of Government in Environmental Protection

The final controlling authority in most of the issues related to environment is the government itself. For example, most of the thermal power plants are owned by the government and also only the government can build dams, roads, railways, etc. Industrial or any other related activity cannot start without the approval of the government. Therefore, the government has to apply various checks and controls so that the environment is managed properly.

How can the government establish incentives that would lead industries to choose the efficient amount of pollution control in their own best interest, even if they do not face all the social costs of residual emissions?… Read the rest

Abey Francis