Economics for Industrial Management

Content The microeconomic theory unit is based on fundamental principles of economics, for instance, weighing costs against advantages, the principle of diminishing returns and the concept of alternative cost. These principles are used to study how household consumption behaviour impacts on the demand for goods and services and how producers' production and cost structures impact on the supply of goods and services. The unit also focusses on how the public sector can influence a market through taxation and regulations and how these can be used to increase welfare in times of information problems, environmental problems and lack of competition because of monopoly and oligopol. The macroeconomic theory unit explains aggregated entities such as total production and its use, inflation, unemployment, national budget and balance of payments, and how the entities influence one another. The potentials and limitations of economic politics are treated. Economic politics is divided into financial politics, directly influencing real entities in the economy, and monetary politics, indirectly impacting on the real economy through interests and inflation. Different exchange rate systems are presented as well as the different conditions of economic politics in different exchange rate systems. Macro theory is also discussed in terms of its division between long-term growth and short-term fluctuation and their respective driving forces.