Page 15 - DECO101_MICRO_ECONOMICS_ENGLISH

Micro Economics

Notes 3. Better marketing strategies to adopt top line growth in international operations

4. Reduce the input costs of production
5. Consolidate on the ‘colourworld’ and ‘home solutions’ initiatives to consolidate the
leadership position in decorative paints segment.
Question

How does economics play a role in decision-making at Asian Paints?
Ans. Analysis of economic variables allows the firm to make optimal business decisions.

The concepts of economics like demand, supply, production, costs and macro economic
variables that affect the entire economy play a vital role in decision-making.
Source: Atmanand, Managerial Economics, 2nd Edition, Excel Books, New Delhi.

1.4 Summary

Economics is the social science that examines how people choose to use limited or scarce
resources in attempting to satisfy their unlimited wants.
Economics is a science which studies human behavior as a relationship between ends and
scarce means which have alternative uses.

Economics is concerned with the application of economic concepts and analysis to the
problem of formulating rational economic decisions.
Micro-economics is the study of decisions that people and businesses make regarding the
allocation of resources and prices of goods and services

Macro-economics is the field of economics that studies the behavior of the economy as a
whole and not just on specific companies, but entire industries and economies.

Economic activity is the constant effort to match ends to means because of scarcity of
resources. The optimal economic activity is to maximise the attainment of ends, given the
means and their scarcities or to minimise the use of resources, given the ends and their
priorities.

1.5 Keywords

Economics: The study of how the forces of supply and demand allocate scarce resources.
General equilibrium: Market situation where demand and supply requirements of all decision

makers (buyers and sellers) have been satisfied without creating surpluses or shortages.
Macro economics: Study of the entire economy.

Micro economics: Study of firms and markets, individual units.
Normative analysis: A perspective on economics that incorporates subjectivity within its
analyses.
Partial equilibrium: Analysis that treats one particular sector of the economy as operating in
isolation from the other sectors of the economy.
Positive analysis: The study of economics based on objective analysis.
Scarcity: It refers to the deficiency of goods and services available.

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