What is Managerial Economics ?
what is managerial economics
Scope of Managerial Economics
Theory of Production and Production decision
Analysis of Market Structure and Pricing Theory
Profit Analysis and Profit Management
Theory of capital & investment decisions
Macroeconomics applied to business environment
Issues Related to macro Variables
Issues Related to foreign trade
Issues Related to Government policies
some other topics in managerial economics
Operations Research (OR)
Management theory and accounting
Managerial economics (also called business economics), is a branch of economics that applies microeconomic analysis to specific business decisions. As such, it bridges economic theory and economics in practice. It draws heavily from quantitative techniques such as regression and correlation, Lagrangian calculus, [linear If there is a unifying theme that runs through most of managerial economics it is the attempt to optimize business decisions given the firm’s objectives and given constraints imposed by scarcity.
Almost any business decision can be analyzed with managerial economics techniques, but it is most commonly applied to ; * Risk analysis – various uncertainty models, decision rules, and risk quantification techniques are used to assess the riskiness of a decision. * Production analysis- microeconomic techniques are used to analyze production efficiency, optimum factor allocation, costs, economies of scale and to estimate the firm’s cost function. * Pricing analysis – microeconomic techniques are used to analyze various pricing decisions including transfer pricing, joint product pricing, price discrimination, price elasticity estimations, and choosing the optimum pricing method. * Capital budgeting- Investment theory is used to examine a firm’s capital purchasing decisions. Definitions
Managerial economics is most easily understood as the applications of economic analysis to business problems. This comes in a wide variety of subject matter and a number of very different approaches to the subject.
Managerial economics and microeconomics are closely associated as most of the economics analysis found in books has its origin in theoretical microeconomics. Topics like the theory of demand the profit- making, optional prices and advertising expenditures and the impact of market structure on the firm’s behavior are all approached using the economist’s standard intellectual ‘tool kit’ which consists of trading and testing models.
‘Managerial economics is concerned with the application of economics concepts and economics to the problems of formulating rational decision making’. * Mansfield
“Managerial economics is the integratin of economics theory with business practices for the purpose of facilitating decision making and forward planning by management”. * Spencer
‘Managerial economics is concerned with the application of economics principles and methodologies to the decision- making process within the firm or organization. It seeks to establish rules and principles to facilitate the attainment of the desired economics goals of management” * Douglas
“Managerial economics applies the principles and methods of economics to analyze problems faced by management of a business, or other types of organizations and to help find solutions that advance the best interests of such organizations ”.
- Davis and Chang These definitions of managerial economics together reveal the nature of managerial economics. Three major factors have contributed to the emergence of managerial economics as a separate course of managerial studies they are (a) changing market condition (b) the increment of the use of economics logic concepts theories and tools of economics analysis in the process of business...
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