Author(s) - Professor Keith Lumsden


Very few managers have a grasp of economic principles and because of this, it is often wrongly concluded that economics is irrelevant to running a business. In fact, economic factors affect businesses and decision making at three levels. At the macro level, factors such as the business cycle, interest rates and exchange rates directly affect product demand and cost of production. At the market level, the type of competition, ranging from monopoly to perfect competition, determines profitability and business strategy. At the company level, efficiency principles including marginal analysis, opportunity cost and profit maximization, have a direct bearing on business success. So by ignoring economic principles, you will be unable to figure out likely changes in market conditions, you will be unable to understand competitive forces and you will have little idea of how to allocate resources efficiently.

Topics Covered

  1. Economic Concepts, Issues and Tools
  2. An Overview of Economics
  3. Demand 4. Supply
  4. The Market
  5. Economic Efficiency
  6. Organisation of Industries
  7. Public Goods and Externalities
  8. Income Distribution
  9. International Sector
  10. Macroeconomics Overview
  11. Potential Output
  12. The Circular Flow of Income
  13. A Simple Model of Income Determination
  14. Expanded Model of Income Determination
  15. Fiscal Policy
  16. Money, The Central Bank and Monetary Policy
  17. The Quantity Theory and the Keynesian Theory of Money
  18. Integration of the Real and Monetary Sectors of the Economy
  19. Inflation and Unemployment
  20. The World Economy
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