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ECONAMICS ANALYSIS FOR BUSINESS PPT 1

This document provides an analysis of positive and negative externalities. It defines positive externalities as enhancing labor participation and reducing demands for social security, while negative externalities hinder minority group integration and reduce productivity. Positive externalities provide benefits beyond the private transaction to society, while negative externalities impose costs on third parties not involved in the private transaction. Social benefits exceed private benefits for positive externalities, while social costs exceed private costs for negative externalities. The document also discusses concepts of economies and diseconomies of scale.

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Er. THAMIZHMANI M
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703 views10 pages

ECONAMICS ANALYSIS FOR BUSINESS PPT 1

This document provides an analysis of positive and negative externalities. It defines positive externalities as enhancing labor participation and reducing demands for social security, while negative externalities hinder minority group integration and reduce productivity. Positive externalities provide benefits beyond the private transaction to society, while negative externalities impose costs on third parties not involved in the private transaction. Social benefits exceed private benefits for positive externalities, while social costs exceed private costs for negative externalities. The document also discusses concepts of economies and diseconomies of scale.

Uploaded by

Er. THAMIZHMANI M
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PPT, PDF, TXT or read online on Scribd
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ECONOMIC ANALYSIS FOR

BUSINESS
P20BA103

Submitted to Prepared by
Mr.B.BASKAR –ASP/MBA THAMIZHMANI M
DEPARTMENT OF MBA-1ST YEAR
MANAGEMENT STUDIES, DHANALAKSHMI COLLEGE OF
DHANALAKSHMI COLLEGE OF ENGINEERING(AUTONOMOUS),
ENGINEERING(AUTONOMOUS), PERAMBALUR-621212
PERAMBALUR-621212
POSITIVE VS NEGATIVE
EXTERNALITIES
Basis of difference Positive Externalities Negative Externalities

Meaning A positive externality is that it A negative externality is that


enhances labour participation, it hinders integration of
and therefore reduces demand minority groups in the society
for social security provisions. which will eventually cause
these members of minority
groups to be less productive.

Occurrence A positive externality exists when A negative externality exists


the private benefit enjoyed from when a third party suffers
the production or consumption some sort of cost or a loss as
of goods and services are a result of a transaction
exceeded by the benefits as a between a buyer and seller in
whole to the society. which the third party has no
involvement.
Basis of Difference Positive externalities Negative externalities

Effect Positive externalities have good Negative externalities have


effect on the society. bad effect on the society.

Excess in Social benefits exceed private Social costs exceed private


benefit in positive externalities costs for negative
externalities.
TYPES OF ELASTICITY OF DEMAND
• Price elasticity of demand
Ep= (% change in quantity demanded /
% change in prices)
Types of price Elasticity
1.perfectly elastic demand(E=∞)
2.perfectly inelastic demand(E=0)
3.unitary Elastic demand(E=1)
4.Elatic demand(E>1)
5. Inelastic demand(E<1)
Condt..
• Income elasticity of demand
Ei=(%change in quantity demanded/
percentage change in income)
Types of income elasticity of demand
1.High income elasticity
2.Unitary income elasticity
3.Low income elasticity
4.Zero income elasticity
5.Negative income elasticity
Condt..
• Cross elasticity of demand
Ec=(%change in quantity demanded of good A/
%change in price of good B)
• Advertising and promotional elasticity of
demand
Ec=(%change in quantity demand of product/
%change in advertising expense)
Approaches to consumer Behavior
• Law of diminishing marginal utility
• Indifference curve analysis
ECONOMIC SCALE
• According to pratten , Economies of scale is
the “ reduction in average unit costs
attributable to increases in the scale of
output.”
• There are two kinds
1. internal economies
2. external economies
DISECONOMIES SCALE
• It happens when the company or business
grows so large that the costs per unit increase.
• It takes place when economies of scale no
longer function for a firm.
• There are two kinds
1. internal diseconomies
2. external diseconomies
Thank you

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