I WAS GANDHI’S JAILER

•IN YERVADA
4 – Profit Management JAIL
,1922
• The manager must be able to devise a more or less precise
evaluation of the company’s expected gains and pricing at distinct
output levels. To clarify, uncertainty reduction assists the firm in
achieving higher revenues. While comprehending the importance of
business economics, profit calculation and profit planning are the
most difficult concepts.
• 5 – Wealth Management
• It infers regulation and drafting of capital expenses due to the
involvement of a huge amount. Disposing of the capital assets is
quite complicated and hence, demands a substantial amount of labor
and time. Subsequently, this requires the business to manage
current assets and current liabilities properly.
 What is Business Economics? Write in brief
IN
the subject-matter of Business Economics.
• Business economics or managerial economics discusses the usage
and importance of economic policies and concepts in business
governance. Moreover, it analyzes economic models, approaches,
and philosophies applied to solve rational business issues. The
introduction to business economics is certainly both an art and a
science.
• It is a sphere of economics analyzing the study of organizational,
fiscal, environmental, and market-related problems. Therefore, this
includes the topics of product factors, scarcity, consumption, and
dissemination.
• It is important to comprehend the nature of business economics,
which is closely related to normative economics
• Simply put, economic theory is utilized for administration in a
doubtful situation to solve or elucidate difficulties in company
management.
• Scope Of Business Economics
• 1 – Demand Analysis and Forecasting
• This aids in directing the organization to arrange production
schedules and harness resources. Additionally, it assists the
leadership preserve and boosting the revenue base and market
position through discerning various factors affecting the product
demand.
PATRICK QUINN
 YERVADA CENTRAL
Differentiate between Economics
Business Economics. What are and the
JAIL,1923
responsibilities of a Business Economist
towards his organisation? Explain.
• Role of Business Economist:
• Identifying various business problems: Various companies face many
problems such as labour problems, pricing problems, and other
problems related to Government controls and restrictions. The basic
job of business economist is to identify various problems that are
uplifting a company, find out various reasons behind these
problems, analyze their effects on the functioning of the company
and finally suggest rational alternative and corrective measures to be
taken by the management.
• 4 – Profit Management
• The manager must be able to devise a more or less precise
evaluation of the company’s expected gains and pricing at distinct
output levels. To clarify, uncertainty reduction assists the firm in
achieving higher revenues. While comprehending the importance of
business economics, profit calculation and profit planning are the
most difficult concepts.
• 5 – Wealth Management
• It infers regulation and drafting of capital expenses due to the
involvement of a huge amount. Disposing of the capital assets is
quite complicated and hence, demands a substantial amount of labor
and time. Subsequently, this requires the business to manage
current assets and current liabilities properly.
• 2 – Cost And Production Analysis
• The business economics definition entails the production of cost
assessment of various outputs and recognizing elements behind the
deviations in estimated costs. That is to say, the manager selects
cost reduction output levels and also avoids the time and material
wastage to attain the desired profit percentage. This also constitutes
the implementation of Break-even analysis
• 3 – Costing Decisions and Strategies
• Valuation is the root of the company’s earnings since its success is
mostly based on the accuracy of costing decisions. Moreover, the
key aspects incorporate pricing methods, price discovery in
numerous market forms, product line pricing, and differential pricing.
• Providing a quantitative base for decision making & forward
planning: The business economics with his vast experience has to
provide a quantitative base for decision making, policy making &
forward planning in a business. Business economist helps to study
the in-depth knowledge of the various factors, controllable & non-
controllable which influence the working of a business unit.
• Advisory to the company: The business economist advises the
businessman on all economic and non-economic matters. By virtue
of business economist experience it helps to analyze various
problems related with volume of investment, sales promotion,
competitive conditions, financial positions, labour relation, and
Government policies so that he it will help to secured the business
while doing every activity.
• Maintaining Relationships
• The Business Economist must establish and maintain contacts with
data sources for his analysis and forecasts. He makes contact with
individuals who are specialists in different fields. He must join
professional associations and subscribe to the journals giving him
fresh and latest information.
• Earning Full Status on the Managerial Team
• A Business Economist has to participate in decision-making and
forward planning. For this, he must be able to earn full status on the
business team. He must be prepared to take up assignments on the
special projects also. He should be able to express himself clearly so
that his advice is understood and accepted.
 Gandhi’s Cell was
• Knowledge about the environment factors which affects the
business: In order to make the business more viable and profitable
the business economist should have a detailed knowledge and
always open
information about the environment of a company.
• RESPONSIBILITIES:
• Making Successful Forecasts
• Managers have to make decisions concerning the future and it is
uncertain. This uncertainty cannot be eliminated altogether but it can
be reduced through scientific forecasts of the economic environment
to his employers. This is required for business planning.
• Offer: The definition of an offer is provided in section 2(a) of the
Indian Contract Act 1872.
• Acceptance-
• Invitation to offer: An invitation to offer can turn into an offer if
accepted by the other party.
• Offer: An offer becomes a binding agreement upon acceptance by
the other party.
• Legal Consequences-

MURDERERS &
• Invitation to offer: An invitation does not result in legal
consequences.

COUNTERFEITERS
• Offer: An offer leads to legal consequences and can form the basis
of a contract.
• Availability : The technique employed should be able to produce
meaningful results quickly. If the technique takes a long time it may not
be of much help to the management.
• 5. Accuracy: It is necessary to check the accuracy of past forecasts
against Present performance and of present forecasts against future
performance, Some comparison of the model with what actually happens
and of the assumptions with what is borne out in practice are most
desirable.
• Statistical Method of Demand Forecasting
• Statistical methods are a commonly used approach for demand
forecasting as they can provide accurate predictions based on historical
data. Some of them used for predicting include Time series analysis,

HAVING A GOOD
Regression analysis, ARIMA (Autoregressive Integrated Moving Average),
and Exponential smoothing. The choice of method depends on the nature
of the data and the business problem. A combination of these may also

HUMOROUS CHAP
provide a more robust forecast.
What is demand forecasting? Describe its
significance and limitations.
• Demand forecasting is the process of predicting the future demand
for a product or service.
• It involves analyzing historical data and other relevant information to
make an estimate of how much of a product or service will be
required in the future.
• The purpose of demand forecasting is to help businesses make
informed decisions about production, inventory management,
pricing, and other critical aspects of operations.
• Demand forecasting is an important tool for companies as it helps
them to ensure they have the right products available in the right
quantities at the right time to meet customer demand.
• This helps companies to minimize waste, reduce costs, and increase
efficiency, which can result in improved financial performance.
• Importance of Demand Forecasting in Business:
• Demand forecasting plays a crucial role in business by enabling
improved planning, cost reduction, better customer service,
enhanced financial performance, and gaining a competitive
advantage over competitors.
• Improved Planning and Decision Making: By accurately forecasting
demand, companies can make informed decisions about production,
inventory management, staffing, and pricing.
• Increased Efficiency: Accurate demand forecasting allows companies
to optimize their operations, minimize waste, and reduce costs.
 PRISONER AS A
• Better Customer Service: By forecasting demand, companies can ensure
that they have the right products available in the right quantities at the
right time to meet customer demand.

SERVANT OF
• Enhanced Financial Performance: By improving planning, efficiency, and
customer service, demand forecasting can help companies to achieve
better financial performance.
GANDHI
• Competitive Advantage: Accurate demand forecasting can give
companies a competitive advantage over their competitors.
• Limitations:
• Unpredictable Events
• The accuracy of prediction can be greatly impacted by unexpected
events, which include natural disasters, economic slowdowns, or any
sudden change in consumer buying behavior. These unexpected events
can cause a sudden change in demand that cannot be predicted using
only historical sales insights.
• Limited Historical Data
• The base of any forecast is data, and more data corresponds to
higher accuracy. Predicting order requires a lot of high-quality info
from different sources such as past year sales, marketing, and
finances. In case this is not available, it is not possible to predict
demand accurately.
• Changes in Consumer Behavior
• In today’s times, market scenarios change rapidly. Consumers are
bombarded with new solutions, products, and services every day.
This Impacts their buying behavior quickly, making the past demand
forecast invalid and inaccurate.
• Lack of Data on New Products
• Whenever a company launches a new product in the market, it is
extremely difficult for analysts to forecast their demand. As the
offerings are new in the market, there is limited data available from
past sales. Demand forecasting for new products makes it difficult
for planners to anticipate how consumers will respond to newly
launched merchandise.
• Model Limitations
• Forecasting models have several limitations, such as lack of
accuracy, external factors, time consumption, limited scope, and
assumption based. These models can be valuable tools for
businesses, but they should be used in conjunction with other
sources of information. They should be regularly reviewed and
updated to ensure that it is precise.
• Human Error

IN
• One of the demand forecasting constraints is the lack of expertise in
data analysis, data science, market research, and statistical analytics.
If the people involved in the process do not have that expertise, it
increases the possibility of human error impacting the accuracy of
the forecast.
• Data Inaccuracy
• The demand forecast is as accurate as the data used for analytics.
Most companies struggle with data capturing, storage, and
maintaining their health. Even if the companies can capture enough
info to project customer requirements, ensuring it is high quality and
precise is very complex and difficult. And inaccurate data cannot
provide correct predictions.
What are the essentials of a good forecasting
system? Describe the different methods of
demand forecasting for a new product.
• 1. Plausibility : Management must be able to understand and have
confidence in the techniques used. Understanding is essential for a
proper interpretation of the result.
• 2. Simplicity and Case of Comprehension : Elaborate mathematical
and econometric procedures may be judged less desirable if

DUE TO
management does not really understand what the forecaster is doing
and fail to understand the procedure.
• 3. Economy : The cost of forecasting has to be weighted against the
HEALTH
importance of the forecast to the operations of the firm. There is no
point in pursuing very high levels of accuracy at great expense if the
forecast is of no importance to the firm. . The technique employed
REASONS
should be able to produce.
• Survey Method of Demand Forecasting
• The survey method of demand forecasting involves gathering data
directly from consumers, customers, or market participants to make
predictions about future demand for a product or service. This can be
done through various means, such as telephone, online, focus
groups, or in-person interviews. The data collected through surveys
can provide valuable insights into consumers’ opinions, attitudes,
and buying behavior, which can be used to make informed predictions
about future demand.
• Delphi Method of Demand Forecasting
• The Delphi method is a group consensus-based approach for demand
forecasting. It involves collecting predictions and opinions from a
panel of experts and then using an iterative process to reach a
consensus forecast. It involves identifying a panel of experts,
collecting initial projections from each expert, compiling, and
aggregating the initial estimates, providing expert feedback on the
overall results, collecting updated forecasts from the experts, and
creating a consensus demand forecast.
• Barometric Method of Demand Forecasting
• The barometric method of demand forecasting is a technique that
predicts the future trend for a product or service based on an
analysis of external factors such as economic indicators, market
trends, and industry-specific variables.
• Econometric Method of Demand Forecasting
• The econometric method of demand forecasting is a statistical
approach to predicting future sales for a product or service based
on past sales data and relevant economic and market factors. It uses
regression analysis and other statistical tools to establish

IN 1930
relationships between demand and independent variables such as
economic indicators, market trends, and other relevant variables.

AGAIN HE CAME
• Expert Opinion Method of Demand Forecasting
• The expert opinion method of demand forecasting involves
gathering opinions and insights from individuals with expertise in a
particular product or market to make predictions about future
demand. It typically relies on experts in a given field’s experience,
knowledge, and judgment, who can provide insights into market
trends, consumer behavior, and other relevant factors.
Mention the internal and external economies
of the scale
• I. Internal Economies:
• As a firm increases its scale of production, the firm enjoys
several economies named as internal economies. Basically,
internal economies are those which are special to each firm.
For example, one firm will enjoy the advantage of good
management; the other may have the advantage of
specialisation in the techniques of production and so on.
• “Internal economies are those which are open to a single
factory, or a single firm independently of the action of other
firms. These result from an increase in the scale of output of a
firm and cannot be achieved unless output increases.”
• External Economies:
• External economies refer to all those benefits which accrue to
all the firms operating in a given industry. Generally, these
economies accrue due to the expansion of industry and other
facilities expanded by the Government. According to
Cairncross, “External economies are those benefits which are
shared in by a number of firms or industries when the scale of
production in any industry increases.”
• Moreover, the simplest case of an external economy arises
when the scale of production function of a firm contains as an
implicit variable the output of the industry. A good example is
that of coal mines in a locality.
Write a detailed note on “the concept of
Equi-Marginal Utility.
• Law of Equi-Marginal Utility explains the relation between the
consumption of two or more products and what combination of
consumption these products will give optimum satisfaction. Marginal
Utility is the additional satisfaction gained by consuming one more
unit of a commodity. Let’s try and understand.
• The law states that a consumer should spend his limited income on
different commodities in such a way that the last rupee spent on
each commodity yield him equal marginal utility in order to get
maximum satisfaction.
• Suppose there are different commodities like A, B, …, N. A consumer
will get the maximum satisfaction in the case of equilibrium i.e.,
• MUA / PA = MUB / PB = … = MUN / PN
• Where MU’s are the marginal utilities for the commodities and P’s
are the prices of the commodities.
• Assumptions of the Law
• There is no change in the price of the goods or services.
• The consumer has a fixed income.
• The marginal utility of money is constant.
• A consumer has perfect knowledge of utility.

COW DUNG
• Consumer tries to have maximum satisfaction.
• The utility is measurable in cardinal terms.

POWDER
MY FIRST OLYMPIC PRIZE
Utility is an ordinal concept, not a cardinal
concept.” Discuss
• Utility is an ordinal concept that is used to measure the satisfaction
or usefulness a consumer derives from a particular good or service.
Unlike cardinal concepts, it cannot be measured quantitatively in
terms of a specific unit or numerical value.
• Ordinal Concept: Ordinal concept refers to the measurement of a
variable based on its position in a series or sequence. In other
The
words, Chancellor of or
it involves ranking Germany,
ordering the Adolf
different levels of a
variable according
Hitler, to their importance
was preparing with or value. Utility is an ordinal
his
concept because it is measured based on the consumer’s preference
performers to relative
or satisfaction level provetothe othersuperiority
goods or services.
of the Aryans by winning the most
gold medals in the events.
• No Specific Unit or Numerical Value: Unlike cardinal concepts that
can be measured using a specific unit or numerical value, utility is a
subjective concept that varies from person to person. It is impossible
to measure utility using a specific unit of measurement, such as
dollars or euros. Instead, it is measured based on the consumer’s
satisfaction level, which is subjective and varies from person to
person. But Jesse Owens, a black American
athlete, had other plans in his mind.
• In conclusion, utility is an ordinal concept that is used to measure
He was
the satisfaction determined
or usefulness a consumer toderives
prove Hitler’s
from a particular
theory
good or service. wrong
It cannot by taking
be measured home inone
quantitatively termsor
of a
two
specific unit of those
or numerical gold
value as it medals. And
is a subjective with
concept that
varies from person to person.
that goal in mind, he had trained
hard and disciplined himself for six
years.
Write notes on the following:
a) Sir Giffin’s Paradox
b) Income Elasticity
• The Giffen paradox is an economic concept that describes a situation
But when he reached Berlin and
where the demand for a certain good increases as its price rises,
went tothethe
which contradicts board
basic jump This
law of demand. trials, he
phenomenon was
was surprised
first proposed toRobert
by economist Sir see that a the
Giffen in German
late 19th
century.athlete named Luz Long was hitting
almost
• The Giffen paradox26 feet
occurs atathe
when goodpractice leaps.
is considered an inferior
good and has no close substitutes available in the market. Inferior
He also came to know that Hitler
goods are those for which demand decreases as income increases. In
hadconsumers
such cases, kept him under
who have wraps,
limited hoping
income allocate a significant
portion to winbudget
of their the to
jump
these with
goods. him.
• 1. Inferior Goods: The Giffen paradox is based on the concept of inferior
goods. These goods are typically of lower quality or less desirable
compared to other available options. As consumers’ income increases,
they tend to switch to superior alternatives. As a result, the demand for
inferior goods decreases with rising income.
• 2. Limited Substitutes: For the Giffen paradox to occur, the inferior good
must have limited or no substitutes available in the market. If there are
But
closean angryconsumers
substitutes, athlete canmakes
easily switch to alternative products as
their prices rise, following the law of demand.
mistakes. Jesse fouled in the first
• 3. Income and Substitution Effects: When the price of an inferior good
two trial leaps by taking off from
increases, it has two effects on consumer behavior: the income effect and
several inches
the substitution effect.beyond the line.
The income effect refers toThen
the change in
he thought
purchasing powerbitterly “Did
due to the price I come
increase, while 3000
the substitution effect
relates to the change in relative prices of goods.
miles for this? To foul out of the
trials and make a fool of myself ?”
• 4. Dominance of Income Effect: In the case of the Giffen paradox, the
income effect dominates the substitution effect. As the price of the
inferior good rises, consumers’ purchasing power decreases. Since
they have limited income, they are forced to allocate a larger
proportion of their budget to the inferior good, sacrificing other
goods. This leads to an increase in the quantity demanded of the
inferior good, contrary to the normal law of demand
• 5. Exceptional Situations: The Giffen paradox is considered rare and
A FIRM
exceptional. HANDSHAKE
It requires B/W
specific conditions, such asJESSE
limited
OWENS
substitutes AND LUZ
and a significant portionLONG
of income. Then
spent onLuzan inferior
good. Additionally,
encouraged the paradox
him often
and occurs in
suggested situations
to where
consumers are already living at or near subsistence levels.
leap from a few inches back of the
board. His tip helped Jesse
eventually qualify for the finals.
• Income elasticity of demand is an economic measure of how
responsive the quantity demanded for a good or service is to a
change in income.
• The formula for calculating income elasticity of demand is the
percentage change in quantity demanded divided by the percentage
change in income.
In that night Jesse met Luz to thank him and
• Businesses use the measure to help predict the impact of a business
talked about themselves, sport events and the
cycle on sales.
world situation among other things. Jesse
• The higher the income elasticity of demand for a particular good, the
came to know
more demand that
for that goodLuz
is tieddid not believe
to fluctuations in the
in consumers’
Aryan-supremacy
income. Businesses typicallytheory. They
evaluate the incomebecame good
elasticity of
friends
demand forafter that conversation
their products to help predict the and
impactLuz really
of a business
cycle on product sales
wanted Jesse to do his best – even if that
meant Jesse’s winning.
• Inferior Goods vs. Normal Goods
• Depending on the values of the income elasticity of demand, goods
can be broadly categorized as inferior and normal goods. Normal
goods have a positive income elasticity of demand; as incomes rise,
more goods are demanded at each price level.
• Normal goods whose income elasticity of demand is between zero
and one are typically referred to as necessity goods, which are
products and services that consumers will buy regardless of changes
in their income levels. Examples of necessity goods and services
include tobacco products, haircuts, water, and electricity.
• As income rises, the proportion of total consumer expenditures on
necessity goods typically declines. Inferior goods have a negative
income elasticity of demand; as consumers’ income rises, they buy
fewer inferior goods. A typical example of such a type of product is
margarine, which is much cheaper than butter.
• Furthermore, luxury goods are a type of normal good associated with income
elasticities of demand greater than one. Consumers will buy proportionately
more of a particular good compared to a percentage change in their income.
Consumer discretionary products such as premium cars, boats, and jewelry
represent luxury products that tend to be very sensitive to changes in
consumer income. When a business cycle turns downward, demand for
consumer discretionary goods tends to drop as workers become unemployed.
Differentiate between
(a) Explicit Cost and Implicit Cost
(b) Historical Cost And Replacement Cost
• Date Entry:
• Debit: Compensation Expense (based on the fair value of the options granted)
• Credit: Additional Paid-in Capital (APIC) – Stock Options (to reflect the stock
options’ value in equity)
• Vesting Period Entries (if applicable, over the vesting period):
• Debit: Compensation Expense (amortization of the total fair value over the
vesting period)
• Credit: Accumulated Share-Based Compensation (a contra-equity account that
accumulates the total compensation expense recognized)
• Exercise of Options Entry (when employees exercise the options):
• Debit: Cash (if the options are exercised for cash) or Common Stock (if
exercised through stock)
• Credit: Additional Paid-in Capital (APIC) – Stock Options (to reduce the amount
initially credited during the grant)
• Timelines
• Historical Cost: Reflects the cost at the time of acquisition, irrespective of changes in the asset’s market value.
• Replacement Cost: Provides an up-to-date valuation that considers current market conditions.
• 2. Conservatism
• Historical Cost: Considers assets at their original, often lower, purchase prices, promoting conservative
financial reporting.
• Replacement Cost: Reflects the potentially higher cost of replacing assets, which may result in a more realistic,
albeit less conservative, valuation.
• 3.Transparency
• Historical Cost: Offers transparency by adhering to widely accepted accounting principles.
• Replacement Cost: Enhances transparency by reflecting the actual cost of replacing assets in today’s market.
• 4. Decision-Making
• Historical Cost: May not provide insights into the current economic reality of asset replacement.
• Replacement Cost: Supports informed decisions by considering the actual cost of replacing assets, aiding in
budgeting and resource allocation.
• 5. Asset-Specific Considerations
• Historical Cost: Suitable for assets with stable values or those with minimal fluctuations in market prices.
• Replacement Cost: Particularly relevant for assets with volatile market values, such as inventory or real estate.
What is internal reconstruction of a
company? How is it different from external
reconstruction
• Internal reconstruction is the financial reconstructing method where
the companies try their best to emerge out of even the worst
situations themselves. They try to improve their strategies, change
their assets, handle their liabilities in the most efficient ways, and
make sure to begin their journey of recovering from a financial crisis.
• Whatever measures are taken, it is by the organization and the
internal members only. There is no intervention from anyone outside
the entity. This method is also known as reorganization where the
companies are allowed to continue. Normally, the share capital is
reduced to cover up for the losses incurred by the company.
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