Meaning and Scope of Managerial Economics

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Emergence of managerial economics as a separate course of management studies can be attributed to at least three factors.:

(a)growing complexity of business decision making process due to changing market conditions and business environment (b) consequent upon, the increasing use of economic logic , concepts theories and tools o economic analysis in the process of business decision making (c)Rapid increase in demand for professionally trained managerial manpower

The growing complexity of business decision- masking has inevitably increased the application of economic concepts, theories and tools of economic analysis in this area. The reason is that making an appropriate business decision requires a clear understanding of market conditions, the nature and degree of competition, art fundamentals and the business environment This requires intensive and extensive analysis of the market conditions in the product market, input market and financial market.. On the other hand, economic theories, logic and tools have been developed to analyze and predict market behaviour. The application of economic concepts, theories, logic and analytical tools in the assessment and prediction of market conditions and business environment has proved to be of great help in business decision making. The contribution of economics to business decision-making has come to be widely recognized. Consequently economic theories and analytical tools which are widely used in business decision-making, have crystallized into separate branch of management studies, called Managerial Economics or Business Economics


Managerial Economics generally refers to the integration of economic theory with business practice. While economics provides the tools which explain the various concepts such as demand, supply, price, competition etc. Managerial economics applies these tools to the...
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