 So, welcome to the course on managerial economics. This course is specially designed for the MBA students. And the motivation for this course comes from the fact that managers needs clear understanding about the economic principles because the understanding of economic concept and economic principle helps them in managing the day to day problem associated with the business decision. So, in this course specifically, we will see that what are the different domain of a business decision problem and how economic concept and economic principle generally get used to solve this business decision problem. So, to start with, we will talk about or we will define the economics, what is economics. Then we will talk about what is managerial economics, how this economics or which part of the economics considered to be the managerial economic. Then we will talk about specifically the economics and managerial decision making. And we will just do a review of the economic terms. There are many concepts like opportunity cost, rationality, marginal and incremental analysis. In today's session, we will focus only on the economic rationality. So, to start with, there are numerous definitions of economics. Maybe one group of economics, they call it is like science of wealth that is typically given by father of economy that is Adam Smith. This is called as science of wealth. Similarly, from another economics marshal, the definition comes as economics of wealth here. And similarly, from the other economics robins, it comes that economics of choice, scarcity of choices. So, we will pick up the third definition that comes from robins that economics is a study of the science of choices and the scarcity. And from there, we will try to link that how this is related to the decision problems and how it is related to the day to day business activity of a typical organizer. So, the word economy derived from the Greek word okios, which means household. And when we talk about this household, if the word comes from Greek word okio. So, basically this is the management related to the household. Now, what is economics? So, reaching to this economics that how economics has become the scarcity and choices, we need to understand the fact that human wants are unlimited. So, whether you talk about an individual, whether you talk about the people, whether you talk about as a group of people, whether you talk about the economy, human wants are always unlimited. And why we call human wants are unlimited? Because of the fact that we always we have a wish list that may be in a specific time period, these are the things I have to get or these are the things I have to achieve. But wants are unlimited because everything never convert into the satisfying satisfaction, the want satisfaction because whatever the want and whatever we are doing there is a difference, there is a gap. So, wants are unlimited, individual or the group or the economy as you hold the never get satisfied that beyond this I do not want anything else. So, for its comes to individual when we are in the lower income group, we will aspire always to go to the middle income group, when we are in the middle income group, we always aspire to get into the high income group. Similarly, in a economy level when it comes to if the GDP growth is 5 percent, they always aspire to have a GDP growth of 7 percent. When GDP growth is 7 percent, they always aspire to GDP growth of 10 percent. So, any individual, any economy, they always increase their want, they always feel that there are some wants which need to be fulfilled in the next time period. But the other side of the story is that human wants are unlimited, but the resources to satisfy those wants, those are basically scarce and unlimited. So, in the one hand, human wants are unlimited, the people, the individual, the economy, they go on, they go on demanding the whatever the wish list or whatever their wants. On the other hand, resources are scarce, resources are not unlimited, rather they are limited to satisfy this want. Now, what people are, what individual they try to do in this process? In this process, they want to maximize their gain. How they want to maximize the gain? They want to maximize the gain whatever the limited resources, whatever the time available, whatever the resources available may be in term of the raw materials, in term of the time. They want to see that how much they can maximize or how much they can achieve whatever their want they have given. So, if you take in a very layman understanding that why this wants and resources, as an individual we have only 24 hours in a day. So, if you look at, we never get satisfied that this is 24 hours, maybe if the 24 hours could have been 30 hours, I could have done this. If the 24 hours would have been 24 hours, I would have done this. This is in term of the time. Similarly, when it comes to resources, if I have more money, I would have done that. If I have more money, I would have done the other. So, whether it is money, whether it is time or maybe if I would have been studied more, maybe I would have aspiring a job which comes in a higher qualification. So, whatever it if you look at, these are all resources, whether it is time, whether it is money, whether it is qualification, typically from the individual point of view. But there is a scarcity to it and that is why there is always a gap between whatever the human wants and whatever the resources available to satisfy those wants. And as an economic agent, typically in the individual as an economic agent, they always try to maximize the gain, looking at the fact that whatever the resources available, how best they can use the available resources to satisfy their want or to maximize the gain. So, economic problems come from here that human wants are unlimited. However, the resources to satisfy these wants or those are typically limited, those are not unlimited. So, here it comes that the economic agents and the society have some economic problem because of scarcity of resources. Because there is a gap between the want and the resources available resources that leads to the fact that there is a economic problem. And this economic problem generally economic agent in an individual level, economic agent in a society level generally they face this problem. And why this economic problem comes? Because there is a gap between whatever the human want and whatever the limited resources available to them. Now, what is the challenge for the economic agent? May be at the individual, may be at a group, may be at a country level. The challenge comes here that they need to choose the scarce resources among alternatives based on the choice and valuation of the alternatives. So, the challenge comes here that they have to choose the scarce resources, resources are limited, they have to choose the scarce resources among alternative based on choice and valuation of alternatives. Now, what are the alternatives over here? So, typically talking about one individual agent, what are the wants? May be the want, may be one, may be the want, may be two, the wants may be three, the wants may be four, may be this will be less than 10 items in the list of one. May be we will take an example that resources are available only to satisfy the wants that come, may be four wants in the list of 10, two wants in the list of 10 or three wants in the list of 10. Now, so if you look at here we have wants that is human wants, here we have the resources. So, may be to put it in a number, so we suppose there are 10 items in the wants, there is 10 wish list from the 10 wish list of the economic agent and the resources are just satisfied to four item. Now, in this case what will be the alternatives? Alternatives that the human, the economic agent has to be, has to choose four items from this 10 items where the resources can, what the resources can satisfy. Now, this four items will be chosen from 10 items. So, what are the alternatives available to the human beings or whatever the alternative available to the economic agent? They have to choose among this 10 four. So, there are 10 alternatives and among this 10 alternatives the, the economic agent has to choose four items or four alternatives. So, they need to choose the scarce resources among the alternatives based on the choice and valuation of the alternative. Whatever the choice, whatever the valuation on the basis of that if there are 10 items they have, they need to find out what is there in the priority list, what they require most and on that basis they will choose that four items typically in this case where the resources can satisfy to fulfill those four items. So, since resources are scarce, human ones are unlimited, the economic agent has to choose the alternative choose among the alternative which the resources can satisfy. Now, from here the definition or the meaning of economics comes that economics is the study of how economic agents or society choose to use scarce productive resources that have alternative uses to satisfy ones which are unlimited and varying degree of importance. So, looking at this definition the first part of this definition if you look at this is a study of how economic agent and society use the scarce resources, scarce productive resources. So, the first one is that the about the choice part of it, choice part of the economic agent that how they choose the resources that is productive resources what is available to them and then the second part is that this resources have alternative uses. So, if the resources are not getting used to fulfill may be the first one that this can also be used to satisfy the other kind of one. So, this resources they have alternative use if the economic agent they are not choosing this resources may be the other economic agent will choose that resources and they will try to satisfy their want by using that particular resources. So, the first part is about the study of choice of the scarce resources by the economic agent. Second part the resources have alternative use and what is the alternative use? Alternative use to satisfy the wants and the third part of the definition comes from the third part of definition comes that human wants are unlimited and this alternative uses is there is they have varying degree of importance depends upon that what is the want of the economic agent. So, the entire definition we can break into three part first part is talk about the study of choice because the economic agent has to choose the scarce resources for the alternative use. Second part is that the resources have alternative use if it is not getting fulfilled one want that is also getting used to fulfill the other one and also this resources they have the varying degree of importance. So, taking this we can may be simply we can say that this is the economic is the study of scarcity and choice because the scarcity comes there is a gap between the human want and the resources available to them there is a resource scarcity and since there is a resource scarcity the next challenge comes from the for the economic agent to choose the scarce resource for the alternative uses for their wants. So, from economics from the definition of economics now will come specifically what is microeconomics. So, microeconomics is the study of economic phenomena at the micro level typically individual and the firm level. So, this is the microeconomics when we do the individual level study whether it is about the individual consumer, individual producer, individual firm, individual organization that is the microeconomics and it is the study of how individual firms or consumer do or should make economic decision taking the constant into the account. So, microeconomics is essentially deals with the fact that how individual firm, individual producer, individual consumer they should take their decision they should make their economic decision taking whatever the constant into account. So, in this case what is the basic constant in case of the economic theory the basic constant is there is all the theory all the principle comes from the fact that there is a resource scarcity and there is unlimited human wants. So, basically managerial economics is the microeconomics applied to the decision made by the business manager, but there are some topics from the macroeconomics which also essentially comes between the comes in the purview of managerial economics, but here typically in this course will focus more on the microeconomics concept and which is generally applied by the manager to take the business decision problem. So, managerial economics is the microeconomics applied to the decision made by the business manager and now we will see that how we generally link this economics into the managerial decision problem and from there this managerial economics comes into picture. So, there are two stakeholders here one is the manager manager is the person who directs resources to achieve the stated goal and so what is the role of manager role of manager is they have the resources and generally their role is to see that how the resources can be used to meet the objective of the firm or the meet of meet the goal of the firm. If the goal of the firm is profit maximization if the goal of the firm is the revenue maximization how this resources can be used to meet that objective of the profit maximization or objective of the objective of the revenue maximization. So, manager is the person who directs resources to achieve the stated goal. The second stakeholder here is the study of economics. Economics is what the science of making decision in the presence of scarce resources. So, we had a discussion on that why how resources are scarce and human wants are unlimited and the challenge for the economic agent is to use the scarce resources into the productive use, choosing among their alternatives. So, in the taking that cube we can define economics here is the science of making decision in the presence of scarce resources. So, manager is one who direct the resources to achieve the stated goal of the firm and economics is one which talks about or which is the study or the science of the making decision in the presence of the scarce resources. So, taking together both the stakeholder manager and economics manager is the person and the study what is getting used in solving managerial decision problem is economics and from there we get the managerial economics and managerial economics is the study of how to direct scarce resources in the way that most efficiently achieve a managerial goal. So, what is managerial economics? Managerial economics is the study of how to direct scarce resources in the way that most efficiently achieve the managerial goal. So, basically when a manager uses this economics for solving the managerial decision problem that content is the part of the managerial economics and from this two stakeholder manager and economics we can define managerial economics is the study of how to direct scarce resources in a way that most efficiently achieve the stated goal. So, since the definition of the managerial economics is to science of directing scarce resources to manage more effectively here we get resources. Now, what are the resources over here? The resources may be the financial resources, the resources may be the human resources, the resources may be the physical resources. So, here in managerial economics it is a study of directing the scarce resources that is directing the financial resources, directing the human resources and directing the physical resources. Then it comes since it is the directing the human resources here it comes to the management of customers that management of supplier management of competitor and management of the internal organization and the organization can be business, the organization can be non profit organization, the organization can be household. But here the difference comes if the organization is business the goal of the organization is different and accordingly the scarce resources has to be directed or the resources has to be planned to satisfy this one. If the because business organization is one which has the motto of profit making and as compared to that we have the non profit organization and non profit organization is not about making profit and in this case again the again the business decision or the challenge for the manager will be different because here it is not about achieving the profit rather here it is a non profit organization. So, non profit organization they have to look what is the goal of this typically this typical non profit organization and accordingly the manager has to direct the scarce resources into the end productive use. Then we have household. So, household is again if you look at it is not profit making rather it is about how to generate more income so that they can use that for their consumption or the saving or maybe for the future consumption and in this case again the since the goal of the household is different here again the scarce resources has to be used in a different fashion to meet the end objective. Now, since we say that economics is one which generally used in the managerial decision problems the economic concept and the economic principle is generally used in the managerial decision problem. We will see that what comes from the economic theory what comes from the decision sciences for this managerial economics. So, typically there is a managerial decision problem and how this managerial decision problem gets solved they use the concept of microeconomics macroeconomics which is part of economic theory and then they use the concept of decision science typically the mathematical economics and econometrics where we use different mathematical tool, statistical tool and econometrics tool to solve the problem. And from this from the economic theory from the decision sciences we get into the managerial economics and this managerial economics is basically the application of economic theory and decision science tools to solve the managerial decision problem. So, we have economic theory from there we get the economic concept and principle. We have decision sciences from decision sciences we get the basically the mathematical tool statistical tool and the econometrics tool application of economic theory and decision science tools to solve the managerial decision problem basically leads to the optimal solution to the managerial decision problem. So, if there is a managerial decision problem it can be solved through the through using the concept and the principle from economic theory and to that using the tools from the tools from the decision sciences that may be statistical tool, mathematical tool or the econometrics tool and taking this economic theory using the decision tool generally the manager try to give the optimal solution and from there the optimal solution immerse for the managerial decision problems. So, when it comes to economics and the managerial decision decision making we need to see that how there is a relationship with the other business discipline typically this managerial economics. We talk about demand and price elasticity in case of managerial economics which has also a link with the discipline of marketing. We talk about the capital budgeting, break even analysis, opportunity cost, economic value added that has a relevance with the finance. Then we talk about linear programming, regression analysis, forecasting that is part of the management science. So, even if this topic we cover in the managerial economics it has also a link with the other business discipline like marketing, finance and the management science. Similarly, this has relationship with the strategy that is type of competition structure conduct and performance analysis. It has a relationship with the managerial accounting that is relevant cost, break even analysis, incremental cost analysis and opportunity cost. Now, what are the question? What is the general question the manager must answer or from here we can form what is the what kind of we can form an opinion that what kind of managerial decision problem is generally involved in the organization. Now, the question that manager must answer what are the economic condition in a particular market? What is the market structure? What kind of form of market it is being followed? What is the supply and demand condition? What is the technology being used? What kind of government regulation is there? What is the international dimension in term of international trade and international finance? What is going to be the future condition for this firm and what are the macro economic factors that change in the macro economic variable change in the government policy or change in the economic environment of economy generally how it affects the firm. Then the question that manager must answer looking at all this factor whether it is technology, whether it is policy, whether it is relationship with the international or the world economy. The question that manager must answer is should our firm be in the business if so what price and output level achieve our goals. So, if you look at these are the two basic managerial problem what the manager phase that is should our firm to be in the business and if so what is the price and output level is required to achieve our goals. Here we need to specify whether the firm is having a profit maximization goal whether the firm is having the revenue maximization goal. Then looking at this there are few more set of challenges that is for the managers what the managers must answer that is how can we maintain competitive advantage over our competitor that is we will take typically through the product differentiation whether it is a cost leader whether it is a low cost firm whether it is a high cost firm. Product differentiation should be in term of content in term of quality in term of the services whether it is a niche market whether the outsourcing alliance merger acquisition is going to the beneficial and again what is the international dimension that is in term of the merger, merger, equation, alliance and the outsourcing. So, here again the another challenge comes from the manager that what are the risk involved in that and what is risk? Risk is the chance or possibility that actual future outcome will differ from those expected today. So, after taking all this decision whether it is related to price whether related to output the manager is also need to answer that what is the risk involved when the firm is taking a specific price strategy or specific output plan. So, that is again they had need to know the economic concept and economic principle to understand this. Now, what are the type of risk over here? There is a risk associated when there is a change in the demand and supply condition. There is a risk associated when there is a technological changes and the effect to competition. There is a risk associated when there is a change in the interest inflation rate, risk associated with the exchange rates for company engage in tensile trade and also risk associated with the political risk for the company with foreign operation. So, now we will take a small example to understand this how this generally from the day to day activities of the company how this managerial decision problem involved. So, if you have some idea about this sub drink manufacturer Coca-Cola and Pepsi there are the two major sub drink manufacturer in the world. They manufacture only concentrate and shifts to the network of the bottler and who finally gives the bottled sub drink. In 1919 Pepsi bottling group following Coca-Cola bottling company and what they did what they did they denounced the increase in the price of concentrate and how they did that because in November 1999 Coca-Cola also announced the increase in the price of concentrate by 7 percent. Before that also Pepsi followed the another decision of Coca-Cola like Coca-Cola separated its manufacturing with the bottling company and the same decision is followed by Pepsi. So, whether it is the separation of the bottling company or whether it is the increase in the price of Coca-Cola immediately both the decision get followed by the Pepsi group. Now 7 percent increase in the price will lead to increase in the retail price from 1.99 dollar to 2.49 dollar. So, price increase is welcomed by the beverage digest editor with the justification of improving the overall profit and margin. So, when there is a 7 percent increase in the price of the product that leads to increase in the retail price from 1.99 to 2.49 dollar. However, the increase in the price is where welcomed by the beverage digest editor and the justification for approving this is that there is overall profitability and margin and that is why the price should increase. Now here how we can reframe this to a question of managerial economics or part of managerial economics or part of managerial business decision. If coke increase its price by 7 percent should Pepsi follow. This will typically address in the theory of market typically address when you talk about the elasticity of demand. How would the price increase affect the consumer demand? It is again the price demand relationship and the elasticity of demand. How should advertisement expenditure to be related to pricing? Here we talk about the cost of production. How advertisement cost increase the average cost? This we will discuss in the case of cost analysis and the monopolistic competition. Was it correct for Pepsi to follow Coca-Cola in separating bottling business from manufacturing concentrate? This will analyze through our oligopoly market structure generally how the firms behave in a market when there is a they know that there is a interdependence between both the firm in the typical market. Then here again the question related since the profitability of both the company also depends on the sensitivity of the consumer demand to price increase and the cost of sweeteners and other inputs. They need to check what is the sensitivity and the sensitivity can be analyzed through the elasticity of demand. What price should Coke and Pepsi pay for these outputs? Here again we will see that what is who is going to decides the price. So, partly it will be address in the cost analysis and partly it will be address in the market structure. How are they affected by the shift in this market? So, here again we will discuss this in the context of the demand analysis and the theory of market structure. So, it is just a small example to understand the difference between the understand the relationship between two companies that is Coke and Pepsi. It is an event if you look at it is an event it is an economic activity and similarly for the other economic activity that what happens in the day to day business life that can be that solution can be found by using the economic concept and economic principle and this generally we address in the managerial economics. So, the entire managerial economics course is planned in four module. Module one talks about introduction to managerial economics. Typically the economics term what generally being used and the basic economic analysis and the optimization technique. Then theory of demand will address the relationship between demand supply market equilibrium and also the demand forecasting, then theory of consumer behavior, then theory of production and cost basically deals with the short run long run production analysis, short run long run cost analysis, expansion path and economic region of production and also the economic of scale. Finally, module four will talk about the different kind of market structure, the pricing practices and finally, the sum up of the entire course. So, to start this module one where we basically deals with the economics economic terms or the basic assumption generally will be using for the entire course or the entire what is the basic assumption generally used for all economic principle we are going to discuss this. So, there are two assumptions mainly taken one is satiriparibus another is the rationality. What is satiriparibus? It is a it is a Latin phrase that means all variables other than one being studied are assumed to be constant and here the literally the satiriparibus means that other things being equal. So, if there are five variables the study variable are five when the relationship between two variables are being studied the other three variables has to be constant. So, satiriparibus means all variable other than one being studied are assumed to be constant and the literal meaning of satiriparibus is other things being equal. So, that is the assumption that is the basic assumption we follow for all all of our theory all of our principle. Then the second assumption comes as the economic rationality and here rationality implies basically acting objectively keeping in view the end and means the objective and the constant. So, if Lehmann understanding rationality is one where we are not biased for anything rather we are unbiased and keeping the objective in mind we take a decision or we take a activity. So, it is implies acting objectively keeping in view of the end and means and the objective and the constant. It generally in economics we assume the rationality on the part of its subject like all the economic agent that is consumer, producer, seller, firm or the economy as a whole. So, economic rationality means economic agents see feasible known and alternative course of action and rank them on the priority and choose the one which is highest in the ranking order. So, rationality is one where if you look at the process if you define the process first the economic agent has to see what is the feasible course of action that is known to them. What is the alternative course of action? Then they will rank them on the basis of the priority basis and they will choose that option which is highest in the ranking order and that is generally known as the economic rationality. Then we will talk about the resources there are when mainly four factors of production or the four resources that is used in economics that is one is land or any production process these are the factor of production and these are land, labor, capital and entrepreneurship. So, land refers to everything on earth that is in its natural state or on the earth's natural resources. Labor refers to all the people who work in the economy whether they are skilled, whether they are unskilled and accordingly the remuneration for both of them changes. So, for the skilled labor we will always say salary for unskilled labor we always say wages and land refers to everything on the earth that is in a natural state or earth's natural resources. However, the definition of land changes when the reclamation is being also done. So, that is also to be added in the in the list of the possible list of the land. Then capital it includes money needed to start and operate a business at a national level capital includes infrastructure such as roads, ports, sanitation facility and utility services and also in the industrial level or farm level even machine can be considered as capital because that they are also one kind of infrastructure to produce the goods and services. Then the last factor of production is entrepreneurship it is referred to the skill of people who are willing to restore time and money to run the business. So, manpower uses of skilled and their time and money to run the business that typically that is known as the entrepreneurship. So, we know that there is a scarcity and what is scarcity? Scarecity is the condition in which resources are not available to satisfy all the needs and want of the specified group of people. And if you look at most of the underdeveloped nations have natural resources, but do not have capital or the skilled labor to develop them and that is why there is a scarcity. And since there is a scarcity the allocation decision must to be made and what is the allocation decision? It comprises of three separate choices that is what how many goods and services should be produced? How should these goods and services be produced and for whom should these goods and services to be produced? So, what to produce? How to produce and for whom to produce three basic allocation problems or the three basic question that is generally known as a three basic economic problem that is one what to produce, second is how to produce and third one is for whom to produce. On this basis on these three basic question the economic decision for the firm is dependent. Typically, when it comes to what it is about the product decision of the firm, whether to begin the production, whether to stop providing goods and services. How the hiring staffing procurement and capital budgeting decision and for whom the market segmentation decision targeting the customer most likely to purchase. So, what consider to the product decision of the firm? How is basically the hiring staffing procurement capital budgeting decision and for whom also the market segmentation decision that is targeting the for the customer who are the end users to purchase these goods. Now, from here there are three processes to answer this what how and for whom. One is the market process here generally the use of supply demand forces, material incentive to answer this what how and for whom. In the command process there is a use of government or the central authority usually indirect process and traditional process when there is a use of custom and tradition to decide what how and for whom. On the basis of three processes generally we can define the different types of economy and what is the economy and economy is the economic system or is the way the nation make economic choices about how the nation will use the resources to produce and distribute goods and services. So, from here the first kind of economy come that is market and capitalist economy and in a pure market economy there is no government involvement in the economic decision the government lets the market to answer the following three basic question that is what to produce how to produce and for whom to produce. So, in a market economy there is no government involvement this is also known as the capitalist economy. Generally the free hand principle or the invisible hand principle works here the market forces correct imbalance itself whenever it is required. The second in the market capitalist economics how the what is decided the consumer decide what should be produced in a market economic through the purchase the makes. So, the consumer decide what to produce because ultimately they are the end user. How to produce the production is left entirely up to business businesses must be competitive in such an economy and produce quality product at a lower price than their competitors and for whom typically in a market economy the people who have more money are able to buy more goods and services and typically the market and capitalist economy based on the Adam Smith invisible hand principle and typical example of market and capitalist economy is USA and the European countries. Then the second kind of question second kind of economy is command and capitalist economy and in the command economy the government answers the three basic economic question that is what a dictator of the central planning committee decide what products are needed. How since the government owns all means of production in a command economy decides how goods and services will be produced and for whom the government decides who will get what is produced in the command economy and typical example of command and socialist economy is China, Mexico and former USSR. What is the essential difference between the market or capitalist economy and command and socialist economy? In market and capitalist economy there is absence of government intervention the market forces is free the invisible hand principle works the market forces decides or the consumer producers decides what to produce how to produce and for whom to produce. Whereas in case of socialist economy or the socialist economy or the command economy generally the authority or the government means all the productive resources and generally they directs how the resources has to be used what to produce and finally who is going to consumer who is going to purchase those product. The typical example is the China then in between these two these are two extreme one is capitalist economy entirely free command economy that is or the socialist economy that is entirely restricted through the authority or through the government. So, in between these two we get the mixed economy and mixed economy is the particularly here it is a mix of the capitalist economy and the socialist economy here the private sector is allowed to use free market within the broader political and economic policy framework public sector reserve certain trade industry services or activity. So, here some of the sector is guided by the government restricted by the government some of the sector is given to the private sector and they have to they have to add or whatever the policy framework they have to add or whatever the rules and regulation. So, part of the sector goes to the private sector restricted by the government the typical example is India. India is generally known for the kind of economic structure they follow that is mixed economy. So, to summarize whatever we discussed today if we discuss that how generally the managerial economics immerse in the because the basis is the managerial decision problem and managerial decision problem can be solved with the help of the concept from economic theory that is from microeconomics, macroeconomics and using the decision tools that is statistical tool, mathematical tool and econometric tool and that generally used to solve the managerial decision problem and that way they get the optimal solution. Then we talked about what are the challenges the manager faces and from there if you look at the three basic problems that is what to produce, how to produce, whom to produce that is dealt with the three different kind of economy, three different kind of processes. And also we talked about two basic assumption that is economic rationality and the shattery paribas and along with it that also the whatever the simple understanding of factor of production or the inputs what gets used in the production. So, we will continue our discussion on reviewing the basic economic terms in the next session also. So, next session we will talk about the opportunity cost, the importance of profit or the concept of profit that is economic profit, accounting profit and also the marginal and incremental analysis and finally, we will see the model on an economy, how there is a interrelationship between the sector, how the resources flow from one sector to another flow and how the income flow from the another from one sector of the economy to the another sector.