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UM14MB501
Dr. Sangeeta Merholia
Unit 1 : Introduction
PES University
Lecture 1
• Introduction to Managerial Economics
• Meaning
• Nature
• Scope & Significance.
• A key area of managerial economics is the theory of a firm that entails the
best mix of the scarce resources to maximize profits within the firm.
Slope =
• Utility and usefulness • Total Utility : TU = MU1 + MU2 + MU3 +…. + MUn
• Marginal Utility : MUn = TUn – TUn-1
• For example, the investigator may want to study coffee bean growth. Possible
dependent variables include: number of beans, weight of the plant, leaf surface area,
time to maturation, height of stem.
• A good can be split up in small portion. It means that the purchaser can spend his income as he
wishes.
1 20 24 1 10 8
2 18 21 2 9 7
3 16 18 3 8 6
4 14 15 4 7 5
5 12 9 5 6 3
6 10 2 6 5 1
Let the prices of goods X and Y be
PX = Rs 2 and Py = Rs. 3 respectively.
1 10 2 8 3
2 9 4 7 6
3 8 6 6 9 Rs 10 + Rs 9
= Rs 19
4 7 8 5 12
5 6 10 3 15
6 5 12 1 18
Equi-Marginal Utility