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Tea by Musadiq
Tea by Musadiq
Tea by Musadiq
INTRODUCTION
MANAGERIAL ECONOMICS
The Determinants
Demand Forecasting
Profit Maximization
Foreign Trade
The economy of a country is directly dependent on its
relations with other countries, hence, the economy of particular
company gets affected by its trade relations with other countries.
If a company establishes its foreign trade with other country, then
a manager should be able to know about the competitors which
are operating their business in the country. In such situations a
proper decision should be made by a manager that how to
operate the business in these conditions. Also, the manager will
have to focus on the range of brands in which it has greatest
competitive advantage. It enables the companies to sell a
narrower range of leading brands into more and more
geographical markets.
Secondly, economy of the host country plays a major role in
foreign trade. If the economy of the country is weak, then a
manager should be able to decide not to invest the capital in that
particular country and if the economy of the country is good, then
it is better to invest the capital in that country. Also, a manager
should be able to know about the Government support of the
country in which the company is investing its capital. A manager
should respect the laws of the country.
A manager should, therefore, know the fluctuations in the
international market, exchange rate, prices and prospects in the
international market. He should also think about various future
aspects of the company otherwise the situations like market
failure, incomplete markets, macroeconomic instabilities etc. may
arise.
Government Policies
National Income:
National income is the money value of the end result of all the
economic activities from the nation. Economic activities generate
a large number of goods and services.
There are certain measures of national income of a country such
as…
Economic growth
It is the increase in the amount of the goods and services
produced by an economy over time. It is conventionally measured
as the percent rate of increase in real gross domestic product, or
real GDP. Growth is usually calculated in real terms, i.e. inflation-
adjusted terms, in order to net out the effect of inflation on the
price of the goods and services produced.
Inflation
It is a rise in the general level of prices of goods and services in
an economy over a period of time. The term "inflation" once
referred to increases in the money supply (monetary inflation);
however, economic debates about the relationship between
money supply and price levels have led to its primary use today in
describing price inflation.
Inflation can also be described as a decline in the real value of
money—a loss of purchasing power. When the general price level
rises, each unit of currency buys fewer goods and services.
Inflation can cause adverse effects on the economy. For example,
uncertainty about future inflation may discourage investment and
saving. Inflation may widen an income gap between those with
fixed incomes and those with variable incomes. High inflation may
lead to shortages of goods as consumers begin hoarding them out
of concern their prices will increase in the future.
References:
1. www.wikipedia.com
Managerial economics by
1. D. N. Dwivedi
2. Varshney.