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Fy b Com Business Economics i

Fy b Com Business Economics i

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As per

Business Economics Paper I
Business Economics Paper I
Business Economics Paper I

Business Economics Paper I

Revised June 20
Revised June 20
Revised June 20

Revised June 2011110000

FFFF.Y.B.Com.
.Y.B.Com.
.Y.B.Com.

.Y.B.Com.
Lecture Notes
Lecture Notes
Lecture Notes

Lecture Notes

Dr. Ranga Sai
Dr. Ranga Sai
Dr. Ranga Sai

Dr. Ranga Sai

Vaze College, Mumbai
Vaze College, Mumbai
Vaze College, Mumbai

Vaze College, Mumbai

Dr.Ranga Sai

Business Economics Paper I, F.Y.B.Com (w.e.f. June 2008)

2

Revised Business Economics I Syllabus for F.Y.B.Com from June 2008 onwards

University of Mumbai

Section I

Module I: Demand analysis

Utility: Cardinal and ordinal approaches

Indifference Curve Analysis

Properties of IC, Consumer Equilibrium, Price Effect, Derivation of demand curve

from PCC

Consumer surplus

Elasticity of demand, Income, cross, promotional. Case studies-

Demand forecasting: meaning significance and methods-case studies

Module II Theory of production

Production function-short run and long run- Law of variable proportions- Isoquant-

producers’ equilibrium- returns to scale-economies of scale- economies of scope- case

studies

Module III Cost of production

Concepts: social costs private costs, economic and accounting costs- fixed and

variable cost curves in short and long run costs- Learning curve- producers’ surplus-

case studies

Section II

Module IV Revenue Concepts

Average Revenue, Marginal Revenue, Total Revenue- Relationship between Average

Revenue and Marginal revenue and elasticity of demand

Objectives of firm: Profit, sales and Growth Maximization, Break even analysis

Module V Markets

Equilibrium under perfect competition in the long run, Monopoly, Equilibrium in the

long run, Monopolistic competition: features, Oligopoly: features, Globalization:

cartels and price leadership in oligopoly

Case studies

Module VI Pricing Methods

Marginal cost, Full Cost, Discriminatory, multi-product and transfer pricing

Capital Budgeting- Meaning and importance- Investment criteria: Payback period,

Net present value and internal rate of return methods

Available for free and private circulation

At www. rangasai.com and www. vazecollege.net

Dr.Ranga Sai

Business Economics Paper I, F.Y.B.Com (w.e.f. June 2008)

3

CONTENT

Section I

Module I: Demand analysis

Indifference Curve Analysis

Properties of IC

Consumer Equilibrium,

Income Effect

Price Effect

Derivation of demand curve from PCC

Consumer surplus

Elasticity of demand, Income, cross, promotional. Case studies-

Demand forecasting

Module II Theory of production

Production function

Law of variable proportions

Isoquant- producers’ equilibrium- returns to scale

Economies of scale

Economies of scope

Module III Cost of production

Concept of costs

Behavior of short cost curves

Behavior of long run cost curves

Learning curve

Producers’ surplus

Case studies

Section II

Module IV: Revenue Concepts

Relationship between AR and MR

Objectives of firm

Break even analysis

Module V: Markets

Equilibrium under perfect competition

Long run,

Monopoly

Equilibrium in the long run,

Monopolistic competition

Oligopoly, Duopoly

Case studies

Module VI: Pricing Methods

Marginal cost,

Full Cost,

Price discrimination

Multi-product

Project Planning

Payback period,

Net present value

Internal rate of return

Dr.Ranga Sai

Business Economics Paper I, F.Y.B.Com (w.e.f. June 2008)

4

Dear Student friends…

During these days of commercialization it becomes very difficult to find

information on web which is relevant, authentic as well as free.

We believe that knowledge should be free and accessible to all those who

need.

With this intention the notes, which are originally intended for the

students of Vaze College, Mumbai, are made available to all, without any

restrictions.

These notes will be useful to all the F.Y.B.Com students of University of

Mumbai, who will be writing their Business Economics Paper I

examinations on or after March 2009. Distance Education students are

advised to refer the recommended syllabus.

This is neither a text book nor an original work of research. It is simple

reading material, complied to help the students readily understand the

subject and write the examinations. We no way intend to replace text

books or any reference material.

This is purely for academic purposes and do not have any commercial

value.

Feel free to use and share.

We solicit your opinions and suggestions on this endeavor.

Dr. Prof. Ranga Sai

rangasai@rangasai.com

June 2010

Dr.Ranga Sai

Business Economics Paper I, F.Y.B.Com (w.e.f. June 2008)

5

Module I: Demand analysis

Utility analysis of consumer behavior given by Marshall is based on the

cardinal measure of utility. The theory is based on the basic assumption

that the utility can be measured.

Accordingly, the theory describes utility as the want satisfying capacity

of a good. Such utility is classified as time utility- a good changes form

time to time depending on the seasons; place utility- a good changes

utility form place to place; form utility- where the good changes utility

with changing form.

Use value is the value of a good in use. It depends on the want satisfying

capacity of the good.

Exchange value, on the other hand deals with what a good can get in

return in the market.

The value paradox states that use value and exchange value are inversely

proportional. With increasing use value of good its exchange value

decreases. e.g. water, air.

Similarly with increasing exchange value its use value decrease .e.g.

diamonds, gold

But a transaction can take place only when use value is equal to exchange

value. This conflict is called as value paradox.

Under the utility theory the consumer behavior is explained by the Law of

diminishing marginal utility. According to the law ‘with the increasing

use of a good its marginal utility decreases’.

The consumer maximizes his satisfaction by equating marginal utilities of

all the goods he consumes. This is called the law of equi-marginal

utilities.

Dr.Ranga Sai

Business Economics Paper I, F.Y.B.Com (w.e.f. June 2008)

6

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