ENGINEERING ECONOMICS AND FINANCIAL ACCOUNTING Lecture Notes free download

MG2452 ENGINEERING

 ECONOMICS AND 

FINANCIAL 

ACCOUNTING Lecture Notes for IT - Fifth (5th) 

semester

MG2452 Lecture Notes two marks and 16 marks free download

Syllabus :

UNIT I INTRODUCTION
Managerial Economics - Relationship with other disciplines - Firms: Types, objectives
and goals - Managerial decisions - Decision analysis.

UNIT II DEMAND & SUPPLY ANALYSIS

Demand - Types of demand - Determinants of demand - Demand function - Demand
elasticity - Demand forecasting - Supply - Determinants of supply - Supply function -
Supply elasticity.

UNIT III PRODUCTION AND COST ANALYSIS

Production function - Returns to scale - Production optimization - Least cost input -
Isoquants - Managerial uses of production function.
Cost Concepts - Cost function - Determinants of cost - Short run and Long run cost
curves - Cost Output Decision - Estimation of Cost.

UNIT IV PRICING

Determinants of Price - Pricing under different objectives and different market structures
- Price discrimination - Pricing methods in practice.

UNIT V FINANCIAL ACCOUNTING (ELEMENTARY TREATMENT)

Balance sheet and related concepts - Profit & Loss Statement and related concepts - -
Financial Ratio Analysis - Cash flow analysis - Funds flow analysis - Comparative
financial statements - Analysis & Interpretation of financial statements.

UNIT VI CAPITAL BUDGETING. (ELEMENTARY TREATMENT)

Investments - Risks and return evaluation of investment decision - Average rate of return
- Payback Period - Net Present Value - Internal rate of return.

UNIT –I

ECONOMICS

Economics is the study of how societies use scarce resources to produce valuable commodities and

distribute them among different people.

SCOPE OF ECONOMICS

1. Consumption: Satisfaction of human wants is called consumption which forms one of the

important branches of economics. This tells how people behave in consumption of goods and

services in order to maximize their satisfaction.

2. Production: Goods and services have to be produced with the help of factors of production. So,

production is another branch of economics. It concerned with how maximum goods are produced

with minimum cost or how the scarce factors could be utilized economically for better results.

3. Exchange: Goods and services cannot be produced at one place or at one point of time. Goods

produced by one are exchanged for the goods produced by the others. So, exchange forms another

branch of study in economics.

4. Distribution: Goods and services are produced with efforts, i.e., by combining the factors of

production. These efforts have to be paid for or rewarded. The land gets rent, the labor get wages,

the capital gets interest and the organizer gets profit. This branch of study is called distribution in

economics.

5. Public Finance: This branch of study in economics studies about the sources of revenue to the

government and the principles governing the expenditure for the benefit of the people. It also studies

about public debt and financial administration.

ECONOMICS IS A SCIENCE OR AN ART

Economics as a Science: A science is a systematized body of knowledge ascertainable by

observation experimentation. It is a body of generalizations, principles, theories or laws which traces

out a casual relationship between cause and effect.

Economics is a systematized body of knowledge in which economic facts are studied and analyzed in

a systematic manner. For instance, economics is divided into consumption, production, exchange,

distribution and public finance which have their laws are theories on whose basis these departments

are studied and analyzed in a systematic manner.

Hence economics is a science like any other science which has its own theories and laws which

establish a relation between cause and effect. Economics is also a science because its laws possess

universal validity such as the law of diminishing returns, the law of diminishing marginal utility the

law of demand, Gresham’s law, etc.

Again, economics is a science because of its self corrective nature. It goes on revising its conclusions

in the light of new facts based on observations. Economic theories or principles are being revised in

the fields of macro economics, monetary economics, international economics, public finance and

economic development.

Economics as an Art: Unlike natural science, there is no scope for experimentation in economics

because economics is related to man, his problems and activities. Economic phenomena are very

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