*Economics : Economics is the science of Human Behavior as relationship between ends and a scarce means which have alternative

ive uses”
*10 Principles of Economics:
1. People Face Tradeoffs: -To get one thing, we usually have to give up something else, Ex: Leisure time vs. work
2. The Cost of Something is what You Give Up to Get It: - Opportunity cost is the second best alternative foregone, -The opportunity
cost of going to college is the money you could have earned if you used that time to work.
3. Rational People Think at the Margin: -People will only take action of the marginal benefit exceed the marginal cost.
4. People Respond to Incentives: -Incentive is something that causes a person to act. Because people use cost and benefit analysis, they
also respond to incentives.
5. Trade Can Make Everyone Better Off: - Trade allows countries to specialize according to their comparative advantages and to enjoy
a greater variety of goods and services
6. Markets Are Usually a Good Way to Organize Economic Activity: -Adam Smith made the observation that when households and
firms interact in markets guided by the invisible hand, they will produce the most surpluses for the economy.
7. Governments Can Sometimes Improve Economics Outcomes: Market failures occur when the market fails to allocate resources efficiently.
8. The Standard Of Living Depends on a Country’s Production: The more goods and services produced in a country, the higher the
standard of living.
9. Prices Rise When the Government Prints Too Much Money: When too much money is floating in the economy, there will be higher
demand for goods and services.
10. Society Faces a short-Run Tradeoff Between Inflation and Unemployment: -In the short run, when prices increase, suppliers will
want to increase their production of goods and services.
*Difference Between Accounting profit and Economic profit:
Accounting profit is the difference between the Economic profit is the difference between the
total revenue and the total cost, excluding the cost total revenue and the total cost, including the cost
of the opportunity. of the opportunity.
A firm cab be said to have accounting profits if the Economic profit is obtained when the revenue
revenue exceeds the accounting cost of the firm. exceeds the opportunity’s cost.
It is a company’s total revenue reduced by the Economic profit uses implicit costs, not just
explicit costs of producing goods or services explicit costs
Accounting profit does not recognize the opportunity cost Economic profit recognizes the opportunity cost.
*Forecasting: Forecasting is the process of making predictions of the future based on past and present data and analysis of
trends. A common place example might be estimation of some variable of interest at some specified future date.

* Features of forecasting:
1. Forecasting assume that the same causal system that existed in the past will continue to exist in the future.
2. Forecasts are not perfect; actual results usually differ from predicted values; so forecasting errors should be allowed.
3. Forecasts for groups of items tend to be more accurate than forecasts for individual items because
forecasting errors in a group usually have a canceling effect.
* Elements of a good forecast :
1. Timely should be the forecast: Usually, a certain amount of time is needed to respond to the information
contained in a forecast.
2. The forecast should be accurate, and the degree of accuracy should be stated. This will enable users to
plan for possible errors and will provide a basis for comparing alternative forecasts.
3. Reliable should be the forecast: it should work consistently. A technique that sometimes provides a good
forecast and sometimes a poor one will confuse the users about the results forecasting.
4. expressed in meaningful units. Financial planners need to know how many dollars will be needed,
production planners need to know how many units will be needed, and schedulers need to know what
machines and skills will be required.
5. The forecast should be in writing: Although this will not guarantee that all concerned are using the same
information, it will at least increase the likelihood of it.
6. The forecasting technique should be simple to understand and use: Users often do not understand either
the circumstances in which the techniques are appropriate or limitations of the techniques.
7. The forecast should be cost-effective: The benefits should outweigh the costs.
*Types of forecasting methods:
a. Qualitative forecasting: is an estimation methodology that uses expert judgment, rather than numerical
analysis. This type of forecasting relies upon the knowledge of highly experienced employees and
consultants to provide insights into future outcomes. Qualitative forecasting is most useful in situations
where it is supposed that future results will be different from results in prior periods, and therefore cannot be
predicted by quantitative means.
b. Quantitative forecasting : uses numerical facts and historical data to predict upcoming events. They
usually avoid personal biases that sometimes contaminate qualitative methods.
*Importance of Time series:
1. Helpful for study of pas behavior : Time series are very helpful in study of past behavior of business.
2. Helpful in forecasting : Forecasting is science of estimation. Today is the day of competition so if you
have to win from competition then you must learn this science, this science, this science can be utilized if we
make time series, we can read the history and then we can decide what happen in future.
3. Helpful in evaluating the achievements : Time series is equipment in your hand based on which you can
evaluate your business achievements.
4. Helpful in comparison : If we can calculate our two or more business unit’s time series the we can
compare the performance of our business units.
*Market Equilibrium Through Demand and Supply :

Market equilibrium refers to the stage where the quantity demanded for a product is equal to the quantity
supplied for the product. The demand curve shows the quantities of a particular good or service that buyers
will be willing and able to purchase at each price during a specified period. The supply curve shows the
quantities that sellers will offer for sale at each price during that same period. By putting the two curves
together, we will get a price at which the quantity buyers are willing and able to purchase the equal amount
which the quantity sellers will offer for sale. The price when the quantity demanded is equal to the quantity
supplied for the product is known as equilibrium price. According to economic theory, the market price of a
product is determined at a point where the forces of supply and demand meet. The point where the forces of
demand and supply meet is called equilibrium point. There may be three states based on the demand and
supply. (Pic) Let the current price is Tk.58 per kg. of rice. Because we no longer have a balance between
quantity demanded and quantity supplied, this price is not the equilibrium price. At a price of Tk.58,
quantity of rice consumers willing to buy is 15 lac kg. The supply curve tells us supply is 35 lac kg of rice
what sellers will offer for sale. The difference, 20 lac kg rice is called a surplus. So price will be lower that
Tk.58. Now suppose that the current price is Tk.54 per kg. of rice. At this price, 15 lac kg of rice would be
supplied and 35 lac kg would be demanded. So there will be a shortage in the market. A shortage is the
amount by which the quantity demanded exceeds the quantity supplied at the current price. So market price
will be more than Tk.54. Now suppose that market price is Tk.56. At this price level the quantity demanded
is equal to quantity supplied. So there will be no surplus or shortage. Market will be in equilibrium stage at
this price where the demand and supply of rice is 25 lac kg.