First Semester

Category Archive First Semester

Managerial Skills | Principles Of Management

skillManagerial Skills | Principles Of Management

A managerial skill is an ability of managers to make a business decision and lead subordinates within a organizations to perform tasks efficiently and effectively. Simply we can say managerial skills is the knowledge and ability of the manager to carry different activities and make a reliable decision during complex problems.

Each and every manager in any organization need managerial skills and abilities to carry out various management functions. The corresponding management skills required for different managers of different department are as follows:

Technical skill:

Technical skills involve use of tools techniques, and procedures that are required to perform an organizational role. Technical Skill is the ability to perform a specialized task that involved a certain method or process. This skill is particularly important at the lower levels of the organization where the manager needs to know how the work is done. For top-level managers, these abilities tend to be related to knowledge of the industry and a general understanding of the organization’s process and products. The lower-level managers or supervisors need technical skills because they have  to see that  goods and services are produced and delivered or not.

Human skill:

Human skill is the ability to understand, communicate, motivate, coordinate, lead and control the behavior of other individuals and groups. It reflects the leadership ability of a manager. An understanding of human relations and organizational behavior is most important to managers in the middle management hierarchy. Middle level managers are concerned with directing lower level supervisors and other middle managers.

Conceptual skill:

Conceptual skill is the ability to identify problems and resolve problems for the benefit of the organization and everyone concerned. It is most important at the upper levels of the organization where long-range forecasting and planning are the main activities. Managers use these skills when they consider the role of the business in its external environment.

Source : Principles Of Management ( Asmita Publication)




Functions of Management | POM

funcFunctions of Management | Principles Of Management

Management is the process of managing and working with people to accomplish organizational goals. The functions of management include planning, organizing, staffing, directing, coordinating, leading, controlling etc.



Planning is the primary function of  management.Planning is concerned with the determination of goals to be achieved and the course of action to be followed. Planning sets the goals and decides how to achieve them. It discovers alternatives and choose course from among future of action alternatives. It is a rational and intellectual process, which is concerned with deciding in advance what is to be done in the future. Thus, planning the process of establishing goals and choosing a course of action for achieving those goals.


Organizing means grouping activities, assigning activities, and providing the authority necessary to carry out the activities Organizing may be defined as identifying, assembling and coordinating the human, financial, physical, informational, and other resources needed to achieve goals. All the tasks necessary to achieve goal are assigned to people and creating authority-responsibility relationship among them.


Staffing is the human resource management function in organization. It is the process of determining human resource needs and recruiting, selecting, training and developing human resources. A manager decides how many and what kind of people a business needs to meet its goals and then recruits, selects, and trains the right people. Thus, it is hiring and assigning people to carryout tasks.


Leading is the process directing, motivating, and communicating with employees to perform tasks for goal achievement. It is concerned with interpersonal aspect of managing and directing the activities of others. Managers work with people and resources to accomplish organizational goals. Leading takes place in teams, departments and divisions. To be good leaders, managers must be knowledgeable about human behavior, the concept of leadership, and communication.


Controlling is the management function of monitoring progress and making needed changes. It measures and corrects the performance to achieve planned targets. Planning, or and leading do not guarantee success. Controlling monitors progress and implements necessary changes. It is the process of measuring and comparing operating results with the plans and taking corrective results when results deviate from plans.

Source :Principles Of Management ( Asmita Publication)



Copyright : Shishir Subba


The importance of motivation is obvious. We need motivation in order to reach our goals. In fact it is one of the most important and driving factor for us reaching our goals. So when that being said it is not hard to imaging how things would be if there was no such thing as motivation.

Motivation does not have to be positive emotions. Fear can be a very effective motivating factor. Stress is an example of negative motivating ineffective feelings. Most people have a tendency to become narrow sighted when they are stressed, some even get paralysed or apathy.

Is motivation important in the workplace? You bet! Why? First, you spend more time at work than you do awake at home. And typically, work environments are very goal oriented. Some people argue that getting goals motivates people. This is of course not true. It is the rewards for reaching the goals that motivates or the feeling of fulfilment when they reach their goals or the satisfaction of being important etc. This is why many companies and organisations are very strong on bonuses and appraisals.

  • Motivation is generally what energizes, maintains, and controls behavior; it acts as a stimulus for desirable actions.
  • The importance of motivation in the workplace is straightforward theoretically, but difficult to measure empirically.
  • Salary is often enough to keep employees working for an organization, but not necessarily enough to capitalize on their full potential.
  • Motivated employees will retain a high level of innovation while producing higher quality work at a higher level ofefficiency.
  • Theopportunity cost in motivating employees is essentially zero.
  • Motivated employees always look for better ways to do a job.
  • Motivated employees are qualitative.
  • Motivated workers are more productive and efficient.

In summary, motivated employees will retain a high level of innovation while producing higher quality work at a higher level of efficiency. While these benefits are broad, and therefore relatively vague, it also puts forth the argument that motivated employees have no downsides or costs. The opportunity cost in motivating employees is essentially zero, assuming it does not require additional capital to coach managers to act as effective motivators.


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Types of Motivation | Psychology


psychoTypes of Motivation | Psychology

Primary (physiological) motives:

Motivation is not solely a cognitive process. Physiological arousal can provide the energy that fuels social motives as well as biological ones. Biological motives are largely rooted in the physiological state of the body. These motives are not learned and regarded as inborn. It is primary because their fulfillment is indispensable and of primary importance. Without them individual cannot survive. These primary motives include thirst, hunger, sex, temperature regulation, sleep, elimination, need for oxygen, pain avoidance, maternal needs, and so on. These needs have physiological basis as explained two of the physiological needs below:


Hunger is the drive that arises from the need for food, which in turn develops from food deprivation. Questions like what are the body mechanisms that regulate the hunger drive and what psychological processes are at work during are being attempted to answer by both physiological and psychologists.

The act of chewing and swallowing provide some sensations of satiety (state of being satisfied). Hunger was previously assumed due to stomach contraction. Walter Cannon in 1934 concentrated on linking hunger to the “pangs” produced by an empty stomach. According to him, person does not realize he or she is hungry until such distant signals of pain or discomfort are apparent. Empty stomach leads to stomach contractions called hunger pangs. The pang was considered a signal of hunger. But later experiments with the animals whose stomachs have been removed were found regulating food intake to maintain a normal weight level.

The detail investigations and experiment made by other psychologists in later period confirmed that there is a close relation between blood chemistry and hunger. The reduction of the sugar in the blood starts hunger sensations, while its excess reduces it. Later experiments confirmed that several biochemical conditions regulate this drive (Morgan, 1965). The function of the liver is being considered important in this respect. Research suggests that receptors in the liver are important in regulating hunger (Friedman and Stricker, 1976). These receptors were found sensitive to the blood sugar level. In a state of food deprivation, blood sugar level becomes low and these receptors send rapid messages to the brain. The involvement of the brain has been indicated by experimental removal of the ‘satiety cells’ in the hypothalamus. When this portion of the brain is absent, the animals ate to the point where they become three times their normal size. After removal of other areas of the hypothalamus, the animal stopped eating before its normal need have been satisfied.

Though many areas of the body work to regulate the hunger drive this is only a part of the story. Hunger drive is more complex in human beings. Psychological factor is considered important along with physiological factors. Food taking behaviour is influenced by taste, colour, eating habits, and so on. Individual learns to respond in a particular way to these external stimuli. As a result, people eat even if they are not hungry. Incentive, thus, is important in understanding behaviour that is influenced by hunger motivation. Like Pavlov’s dog, people learn to salivate in anticipation of food cues. Sight, sound, aroma of the food can stimulate eating behaviour. Food taking behavior is shaped and reshaped by socio-cultural environment.

2) Thirst

Like hunger thirst is also a periodic drive. But it is usually felt faster than hunger. The strength of thirst is also greater than hunger drive. The necessity of thirst for survival is greater than food. Common experiences and observations show that people can live for many days without taking any food, but not without taking water. This is because thirst is closely related to survival of body cells.

People experience thirst as dryness in the mouth and throat. This is due to the diminution of water in the salivary glands, which is the result of a reduction of water in the blood. This is called dehydration of the body tissue and it results in thirst drive. Experiments have shown that receptors of the kidney and hypothalamus play more central roles in regulating the thirst drive.

When the body is depleted of fluids the flow of blood through the kidneys drops off. In response to this decreased flow of blood, the kidneys secrete the hormone called angiotensin. Angiotensin, in turn, signals the hypothalamus of fluid depletion.

Experiment results have found that hypothalamus is also responsible for thirst drive. The saturated cells and salty pretzels osmoreceptors in the hypothalamus can also detect fluid depletion from changes that occur within the brain. The brain, like the rest of the body, becomes fluid-depleted. Fluid depletion causes the osmoreceptor cells to shrivel, which in and of itself may trigger thirst.

It is found that receptors in the mouth and throat do play some role in thirst. When a thirsty person begins drinking, the receptors monitor the amount of fluid taken. At some point these receptors signal the hypothalamus to stop taking water. Drinking, like eating, has complex origin. It can be motivated by a combination of internal and external cues. 

3)Sex Motive

Sex motive, although not so essential for an individual’s survival like food and water, constitutes a highly powerful psycho-physical motive. Its satisfaction results in immense happiness and well being to an individual and as a medium of survival to the species. Where the root of the sex motive is purely biological and innate in the non-human animals, it is not so simple to point out the roots in humans whose sex drive is governed by both the physiological and psychological factors. Therefore, the human sex motive is termed as a complex blend of innate as well as acquired tendencies.

In most animals, sex hormones are undeniably essential in stimulating the sex drive. These hormones, the testosterone in the males and estrogens in the females, are secreted by   their testes and the ovaries. The experiments   connected with the removal of the testes and ovaries in the case of male and female animals or birds or injection of the doses of the male or female sex hormones have clearly demonstrated the extent to which secretion to sex hormones actually determines sexual behavior among different species.

This dependency on hormones is seen far less as we move up the phylogentic scale from lower animals and birds to monkeys and chimpanzies. Finally, in sexually experienced adult humans, we see still more freedom from hormonal controls. Castrated males and ovariectomized females sometimes experience little or no decline in sex drive or satisfaction. Females may also remain sexually active after the natural decline in ovarian function that occurs with age (in the form of menopause)

In addition to the dependency on hormones, females of most species, excluding humans are sexually receptive only at certain times when they are on heat or, in more technical language, during the estrus cycle. During this period, the female ovaries secrete a greater quantity of estrogen into her blood stream and she becomes receptive to the advances of the males. This period coincides with the occurrence of ovulation in the females and consequently may results in pregnancy.

In human beings, although the pregnancy is possible only in the estrus periods, the sex drive is not dependent upon the occurrence of an estrus cycle. In general, human females and males can be sexually motivated at any time quite independent of the period of fertility and hormones production. Much of their motivation in the form of sexual arousal and behavior is rooted in earlier experiences and social learning and controlled by lesions in the hypothalamus, the sub-cortical structure in the brain.

On account of the involvement of the cortical areas of the brain, the sources for the instigation of sex drive and sexual arousal vary very much in human beings. Sometimes it is the emotional feelings of the sex partner and at other times it may be a visual, auditory, a tactile sensation, a picture or a fantasy. In practice, the sex game is more psychological than biological or organic. For example, a smell of one’s favorite perfume or even a little moonlight works wonders in stimulating sex drive in humans. The other variables related with one’s socio-cultural environment, sexual experience and learning also play a leading role in guiding and deciding the mode and nature of sex drive and behavior in human beings independent of their fertility period and secretion of hormones.

4)Sleep and Rest

Sleep like food and water is a basic necessity of life. Need for sleep arises particularly when the individual is tired. Sleep acts as a type of rest by providing the cell bodies to recover the energy used in activity. Hence sleep is essential for health.

Research indicates that when people stay awake for long periods of time, perceptual disorientations occur, including depression, extreme elation, and anxiety. Military personnel, after 45, 65, and 95 sleepless hours, showed severe perceptual and emotional disturbances, as well as disrupted intellectual functioning (Morris & Singer, 1961). When talkathon contestants went 88 consecutive hours without sleep, they gradually become intensely concerned about their own mental health (Cappon & Banks, 1960). Whether such symptoms arise from deprivation of sleep, deprivation of dreams or both is not fully clear.

Physiology of sleep certain brain mechanisms are actively involved in producing sleep. Excitation of the thalamus, a switchboard mechanism below the cerebrum, seems to induce quiescence. In contrast, the reticular formation, an important sub-cortical arousal mechanism, influences sleep by ceasing the transmission of impulses to many cortical synapses. In other words, sleep is a consequence of excitation in certain brain regions, quiescence in others and even the brain stem and cortex seem to be part of our sleep inducing system (Murray, 1965).

More recently, it has been discovered that certain respiratory patterns are associated with the brain waves of the hypnagogic state, which is the interval of drowsiness between waking and sleeping. Like Rapid Eye movements (REMs) and study of dreaming, this finding may be especially useful in future investigations of hypnagogiy. This condition is of growing interest to researchers because of the vivid imagery that occurs just before falling asleep and just before awakening (Schacter, 1976).

Need for sleep is very important for our physiological and psychological health because it reduces the effect of fatigue by providing rest to the cell bodies.


Social motives are acquired, social, learned or complex motives. Like physiological drives, social motives prompt goal-directed behaviour. These motives are not related to survival but satisfy us in a number of ways. People sing, play musical instruments, compose music, paint, write. Such urge to create, achieve, and understand the world is somehow related to social survival. These motives result mainly from man’s interaction with his social environment. Some of the social motives include need for praise, recognition and status, achievement, mastery motive, aggressiveness, power, self-submission, gregariousness, imitation, sympathy, life goal, level of aspiration and need for achievement, interest and so on. Psychologist Henry Murray (1938) constructed a list of 20 human motives that consist largely of social motives.

These motives are not innate so people can survive physically without them but it will almost impossible to live socially. Since life is more and more depending upon social survival in most of the countries these social motives have important implication in the life of the people. Some of the secondary motives are like power, prestige, need for approval, curiosity need, aggressive, pugnacity, hoarding, affiliation need, need for achievement, recognition and status etc. As the need themselves indicate they are important aspects to provide some insight of the people and community. These motives are persisting characteristics of a person because they are learned. The strength of these motives differs individual to individual and culture to culture. Below is the description of two social motives.

1)Achievement motivation:

Some people are always continuously driven by goal in their life. They always want to achievement some goal in their life. This is called achievement motivation. People with achievement motivation always want to accomplishment something in their life and advance up the ladder of success. For this kind of people accomplishment is much important than rewards.

In the organizational settings achievement-oriented employees always works harder when they think that they will receive personal credit for their efforts, when the risk of failure is only moderate, and when they receive specific feedback about their past performance. These people take responsibility of their actions, take pride in the positive result, have control over their destiny, seek regular feedback, and they enjoy being part of a winning achievement. Such activity can be both individual and group effort.

2)Affiliation motivation:

Affiliation motivation is a social need. Human beings are social by nature and they always want company, share their basic emotions and help each other. Such needs are vital for group survival. However, in some people affiliation need is more stronger than other social needs i.e., achievement need. In the organizational settings, people with affiliation needs tend to be friendly, helpful, closer and more concerned about other people. People with higher achievement need, however, tend to work hard, impress their managers, respect technically capable people and less concerned with personal feelings. However, the employee with affiliation need are more happy with like-minded people, feel rewarded being with friends and need more time for building personal relationship with others. They derive satisfaction from the company of close people.

Affiliation is important need for most of the people and in organizational setting such need may lead to positive social relationship, cooperation in work, develop friendly environment and may enable to achieve organizational goal. However, overemphasis on affiliation need may interfare in some organizational settings. Affiliation-oriented managers may have difficulty assigning challenging task, directing work activities, and monitoring work effectiveness.

3)Aggression Motivation:

Aggression motive is related to those behaviors that are intended to inflict physical or psychological harm on others. Various views have been propounded about the origin and working of this motive. Those believing in instinctive theory like Freud, Lorenz and Ardrey held that an aggressive motive is linked with an innate independent instinctual tendency in human beings which expresses itself in destructive and violent activities. However, this innate drive concept now stands rejected due to lack of substantial research.

From another viewpoint, aggression is caused as a result of frustration. However, later researches have proved that it is not essential that reaction to frustration always leads to aggression. Bandura (1973) suggests that frustration generates aggression only in those people who have previously developed aggressive attitudes and action as a means of coping with their environment. It leads us to a more accepted conclusion that aggression motive and aggressive behavior is the product of earlier experiences and social learning. One may be aggressive because one has been brought up in the environment where he frequently observes his parents, elders, teachers and peers showing aggression towards him or others. 

Copyright:Shishir Subba

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Copyright – Shishir Subba


In the process of explaining behaviour psychologists have to answer the question of “Why do human beings behave as they do?” The study of motivation is necessary because it explains the “why” of behaviour. The term motivation literally means to move or to energize or to activate. In this sense, anything that is responsible for internal or external activity may be called motivation. But unlike the straightforward term, the motivation is extremely complex, difficult to understand, interpret, predict and control. Modern psychologist thinks that single drive and motive alone does not govern behaviour of individual. Interaction of various drives and motives are responsible for the particular behaviour. Further, the behaviour is not easy to explain since socio-cultural context always influence the behaviour. Thus, while explaining ‘why’ of behaviour psychologists have to understand the socio-cultural context and setting to understand the person’s behaviour.

Motivation is a state of the organism in which the bodily energy is mobilized and the activity is selectively directed toward particular parts of the environment. Such behaviour generally continues until the goal is achieved. The level of activation during the motivated state is determined by the intensity and consistency of the behaviour. Some of the definitions of motivation is as follow:

  • By a motive we mean something that incites the organism to action or that sustains and gives direction to action once the organism has been aroused – Hilgard and Atkinson.
  • The psychology of motivation deals with the variables that activate and direct behaviour –Kendler.
  • A motive is any particular internal factor or condition that tends to initiate and to sustain activity – Guilford J.P. General Psy (1956).
  • A Motivation may be defined more formally as a phyusiological internal process initiated by some need which leads to activity or which will satisfy that need – Lovell.
  • Motivation is the process of arousing, sustaining, and regulating activity. Good.
  • Motivation refers to any inner condition of the individual that initiates or directs behaviour toward a special goal. Coleman.

Important characteristic of motives is that we never observe them directly; we infer their existence form what people say, the way they feel, and from observation. There is no need to be conscious, or aware, of our motives. The behaviour can be driven by unconscious motivation. If inferences are correct the motive is a powerful tool in explaining behaviour. Most of the everyday explanations of behaviours are given in terms of motives. One who understands motives behind particular behaviour usually understands the people as clinical psychologists do. Motives also help us make predictions about behaviour. If inferences are correct then predictions about the person can be made. Motive may not tell us what exactly happens but they give us an idea about the range of things a person will do. Motives are, thus, general states that enable psychologists to make predictions about behaviour in many different situations.

Motivation is considered as a physiological (internal) process that is initiated by some need and leads to activity to satisfy that need. Thus, it determines its level of activation, intensity, and consistency as well as general direction of behaviour. It can be said that psychology of motivation deals with the variables that activate and direct behaviour. The individual is energized due to physical deprivation within the body (e.g., hunger). The need due to physical deprivation arouses and energizes the individual. This energized condition is called drive. Drive is energy or fuel that makes activity possible. In fulfillment of this deprivation individual seeks certain goal (e.g., food). When goal is set individual acts in a particular way. Since this activity is directed to achieve a definite goal and influenced by past experiences it is termed as behaviour. Thus, motivation is considered as goal directed behaviour. Good has defined motivation as the process of arousing, sustaining, and regulating activity. It is also defined it as a state of the organism in which the bodily energy is mobilized and selectively directed towards the parts of the environment. Motivation, thus, is an internal condition of the organism that initiates and sustains activity. The activity is selective and always directed to a particular goal. The activity is possible because the need creates drive. The drive is an energized condition of the individual that continues until goal is achieved. It is evident from the above descriptions that when we use a term motivation, it basically involves need, drive and incentive. The behaviour moves in sequence known as motivational cycle or sequence.


Law of Return scale

Law of Return scale:

Law of returns scale explains the Long-run input output relationship ie;long run production function in which all the factors of production are variable. It explains how output changes when all factors of production are changed in the same proportion.

For e.g, If both the inputs are doubled ,the output may be more than double ,equal to double or less than double.

Possiblities of law of returns to scale:

  1. Increasing Returns to scale(IRS)
  2. Decreasing Returns to scale(DRS)
  3. Constant Returns to scale(CRS)

Increasing Returns to Scale(IRS):

Increasing returns to scale means output increases in greater proportion than the increase in inputs.

For e.g. if all inputs are increased by 25% and output increases by 30% then increasing returns to scale will be prevailing .Increasing returns to scale can be shown through different iso-quants.

When increasing returns to scale occur ,the successive isoquants will lie at decreasingly smaller distance because of the economics of the scale ie; internal economics and external economics

Decreasing Returns to Scale(DRS):

Deccreasing returns to scale means output increases in less proportion than the increase in inputs.

For e.g. if all inputs are increased by 25% and output increases by 20% then decreasing returns to scale will be prevailing .

When decreasing returns to scale occur ,the consecutive  isoquants will lie at increasingly wider distance because of the diseconomics of the scale ie; internal diseconomics and external diseconomics.

Constant Returns to Scale(CRS):

Constant returns to scale means output is proportional to the change in inputs ie; proportionate of output and input are equal.

For e.g. if all inputs are increased by 25% and output increases by 25% then decreasing returns to scale will be prevailing .

When constant returns to scale occur ,the successive isoquants will lie at equ-distance from each other because of the neither economics of the scale nor diseconomics of the scale.

When decreasing returns to scale occur ,the consecutive  isoquants will lie at increasingly wider distance because of the diseconomics of the scale ie; internal diseconomics and external diseconomics.





Auditory Sensation

Auditory Sensation:

Auditory sensation is one of the important sensation for human beings as it provides us the pleasure of enjoying sound. The physical stimulus for auditory sensation is sound waves.Auditory sensation is the experience of sound on ear. Ear is the receptor of auditory sensation .Frequency and intensity of sound determines the nature of sound.

Working of ear(Sensation in ear):

Our ears is divided into three parts:outer ear ,middle ear. And inner ear.The sound waves from the ear are first collected by the outer ear(pinna).It channels them into the auditory canal to reach and bump up against the eardrum,the thin stretchable ,vibrating membrane  that separates  the eardrum to vibrate. The quivering of the eardrum  causes three tiny bones in the middle ear called the hammer(Malleus),the anvil(Incus)and the stirrup(stapes) to hit each other in sequence and carry the vibrations to the inner ear. The last of these three bones,the stirrup is loosely connected to the oval window. Just below the oval window ,there is a membrane called the round window which tries to equalize the pressure in the inner ear when the stirrup hits against the oval window.

The oval window is a membrane of the cochlea,the inner ear mechanism. The cochlea is a pea-sized coiled tube. It is filled with some fluid and contains the basilar membrane stretched throughout its lengths. Once transmitted across the oval window and into the inner ear , the sound waves  set up a disturbance in the fluids contained in the cochlea. When the fluids in the cochlea begin to move , the basilar membrane vibrates. The basilar membrane then transmits the sound vibration to the actual auditory receptors-hair cells located on the organ of Corti,a structure that is attached to the basilar membrane. As waves travel through the cochlea ,the hair is moved and the hair cells are pulled by their movement. Stimulation of the hair cells , in turn , excites the spinal ganglion cells , which send neural impulses through the auditory nerve to the brain.



Visual Sensation

Visual Sensation:

Visual sensation is the most important sensation for human beings as it supplies them with the greatest amount of information about the external world. The physical stimulus for visual sensation is light. Eye is the receptor of visual sensation .Visual sensation is the experience of light in the eye. Through eyes it is possible to see light,color,size,shape,movement,distance,etc.

Working process of eye(Sensation in eye):

Eye is the organ of vision. It consists of a complex structure.Rays of light enters the eye through the cornea(transparent covering that protects our eyes). Approximately 3% of the light rays are reflected off the cornea surface and the remaining are passed through the liquid aqueous humor(the fluid behind the cornea) and the pupil of the eye. The pupil of the eye  lies in the center of the Iris.The quantity of light that enters the eye is controlled by the size of the pupil  which is controlled by the muscles that lie in the inner boundary of the Iris. In dim light the muscles of the iris relax,causing the pupil to open wider to let in more light. In bright light the iris contracts,closing the pupil for cutting down the amount of light entering the eye.

                                     Through the pupil ,light enters the lens ,a transparent focusing mechanism which focuses it on a photosensitive surface called the retina lying well inside the wall of the eye ball.The common  complaints of near sightedness and far-sightedness are caused by an error in communication between the lens and the retina. The retina contains the receptor cells that respond to light .But before the light can reach the receptor cells ,it must pass through an layer of nerve fibres and blood vessels existing within the retina.Near the middle of the retina ,there lies a blind spot.There are no receptors in this blind spot.The receptors cells in retina are classified into two groups:Long thin rods and short squat cones.The retina is composed of millions of these two types of receptors.Cones are located at the centre of the retina,primarily in an area called the fovea. The cones enable us to see colour.They operate mainly in daylight and are responsible for visual acuity(keenness of vision,the ability to discriminate details and fine differences in the field of vision).The rods,that respond to low illumination are situated on the outside ,peripheral areas.They are mainly responsible for night vision ,the capability of seeing the world.

When the light falls at the rods and cones,it activates these light receptors and sets up neural impulses,messages in the form of electrochemical energy.This electrochemical energy from the rods and cones is then sent to bipolar cells and ganglion cells in the retina .In general ,multiple rods and  cones are connected to each bipolar cell and multiple bipolar cells coverage on each ganglion cell. The axons of ganglion cells make up the optic nerve . This optic nerve is responsible for sending the electrochemical messages to the visual area of the brain ,where sensation of vision are indicated.




Role of price mechanism

Role of price mechanism in full utilization of productive resources in free enterprise economy

  1. Explain the role of “Price mechanism” in assuring proper allocation and full utilization of productive resources in free enterprise economy.

Ans) Price mechanism refers to the process of price determination by the interaction between demand and supply forces without any external interference. That price will come to prevail in the market at which demand for a commodity is equal to its supply. Such a price is called equilibrium price. Operation of price mechanism in a market is explained with the help of the following figure. In this figure, price  per unit of the commodity is shown on Y-Axis and quantity demanded and supplied are shown on X-axis.

At OP1 price ,supply (P1B) is more than demand (P1A), ie; there is AB excess supply .In this situation there will be a tendency for the price to fall ,as there will arise competition among the sellers.

On the contrary, at OP2 price, demand (P2G) will be more than supply (P2F) ie; there will be excess demand equal to FG. In this situation, there will be a tendency for the price to rise ,as it will lead to competition among the buyers.

At OP price, demand is equal to supply. Thus, OP price is called equilibrium price. At this price, demand for a commodity is equal to its supply.

Role of price mechanism:

The price mechanism solves the problem of allocation of resources which is associated with what ,how and for whom to produce.

  • What to produce?

         In a free market economy,producers are guided by profit motive. When price of a commodity increases with the increase in demand ,the profits  increase and this would encourage the production of this commodity.Producers would shift resources from the production of other commodities to this commodity.Therefore,the price mechanism would automatically solve the problem what to produce.

  • How to produce?

          It is the question of choice of production technique .There are generally two techniques of production available:

  1. Labour-intensive technique (in which more of labour is used than capital)
  2. Capital-intensive technique (in which more of capital is used than labour)

      If capital is available at alower rate, firms adopt capital-intensive technique of production.If labour is available at lower rate,firms adopt labour intensive techniques.

Therefore, it is the price of labour or the price of capital that will help the producer in deciding whether they should choose capital intensive or labour intensive technique.

  • For whom to produce?

       In a market economy,the producers must produce for those who have the ability and willingness to pay the highest price.The income of the consumers determines the ability to pay ie; there is a direct relationship between income and consumption pattern. Hence,both the ability and willingness to pay determines who gets the available commodities.

  • Fuller Utilization of the factors

         It is through price-mechanism that fuller utilization of the factors is attained in a capitalist economy .Volume of full employment depends upon the volume of production which in its turn ,depends upon the level of investment. Amount of investment  depends upon saving.Equality between saving and investment is brought about by change in price of capital ie; rate of interest.If at any given time ,total savings are large and condition of unemployment prevails in the economy ,the rate of interest will fall.Due to fall in the rate of interest there will be increase in investment.Increase in investment will result into increase in production and the condition of less than fuller utilization of the factors will become possible. Classical economists were of the view that under condition of less than full employment of labour,price of labour, ie; wage will fall. Fall in wage rate will stimulate demand and condition of full employment of labour will be achieved . In this way,price mechanism will help to achieve fuller utilization of the factors.


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Microeconomics- Business Decision making

Microeconomics- Business Decision making

  • a)Explain the role of microeconomics in business decision making.

Ans) The role of microeconomics in business decision making can be explained as under:

1) Optimal resource utilization:

The productive resources are scarce in the economy and microeconomics tells how the productive resources are allocated in the production of various goods and services .It also helps to find out ,what to produce, how much to produce and for whom to produce.

2) Demand analysis:

With the help of microeconomic analysis ,the business firms try to forecast the demand for their product. As we know ,the demand for the firm’s product would change in response to change in price of the firm’s product ,prices of other goods ,which may be substitute or complementary,consumer’s income ,his testes and fashion ,his expectations about future changes in price ,changes in the age composition  of population ,change in total population etc. These are the determinants of demand ,a study of which is essential for forecasting future demand for the product as well as the present sales.

3) Cost analysis:

Cost analysis is an important area of microeconomics .There are many theories to explain different condition of cost in microeconomics such as fixed cost and variable cost,average cost and marginal cost,short-run cost and long-run cost. These all help the business manager to compare cost of production of different periods and thereby to evolve suitable policies in controlling costs and deriving suitable profits.

4) Optimal production decision:

The production decision is concerned with proper product mix.What factors are to be combined in what manner to produce a given product ? Microeconomics deals with different production techniques that help to find out the optimal production decision.

5) Pricing policy:

We know that pricing of the product is the chief function of a firm. This depends upon the cost of production and at the same time price of substitutes and the nature of competition. Price affects profits which in turn determine the existence and the growth of the firm.The microeconomic analysis provides the business manager a thorough knowledge of the theories of production and pricing in order to make sure that the firm gets profits continuously.

Thus ,the role of microeconomics is both positive and normative .It not only tells us how the economy operates but also how it should be operated to promote general welfare.


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