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    Scope of Managerial Economics

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    aruproy.aa
    Managerial economics deals with the economic problems that businesses face and helping management make decisions. It uses microeconomic analysis to understand what's happening within firms and macroeconomic conditions of the broader environment. Managerial economics is normative, focusing on the types of decisions firms should make to prosper, rather than merely describing firm behavior. It integrates concepts from economics, operations research, statistics and other disciplines to analyze practical management problems across areas like production, marketing, finance, and more.

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    Scope of Managerial Economics

    Uploaded by

    aruproy.aa
    7 views6 pages
    Managerial economics deals with the economic problems that businesses face and helping management make decisions. It uses microeconomic analysis to understand what's happening within firms and macroeconomic conditions of the broader environment. Managerial economics is normative, focusing on the types of decisions firms should make to prosper, rather than merely describing firm behavior. It integrates concepts from economics, operations research, statistics and other disciplines to analyze practical management problems across areas like production, marketing, finance, and more.

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    SCOPE OF MANAGERIAL ECONOMICS

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    Managerial economics deals with the economic problems that businesses face and helping management make decisions. It uses microeconomic analysis to understand what's happening within firms and macroeconomic conditions of the broader environment. Managerial economics is normative, focusing on the types of decisions firms should make to prosper, rather than merely describing firm behavior. It integrates concepts from economics, operations research, statistics and other disciplines to analyze practical management problems across areas like production, marketing, finance, and more.

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    7 views6 pages

    Scope of Managerial Economics

    Uploaded by

    aruproy.aa
    Managerial economics deals with the economic problems that businesses face and helping management make decisions. It uses microeconomic analysis to understand what's happening within firms and macroeconomic conditions of the broader environment. Managerial economics is normative, focusing on the types of decisions firms should make to prosper, rather than merely describing firm behavior. It integrates concepts from economics, operations research, statistics and other disciplines to analyze practical management problems across areas like production, marketing, finance, and more.

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    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    of 6

    NATURE OF MANAGERIAL ECONOMICS

    Managerial economics is concerned with the business firm and the economic
    problems that every business management need to solve.
    MACRO-ECONOMIC CONDITIONS

    We know that the decisions of the firm are made almost always within the broad
    framework of economic environment within the firm operates, known as macro-
    economic conditions. With regard to these conditions, we may stress three points:

     The economy in which the business operates is predominantly a free


    enterprise economy using prices and market.

     The present day economy is the one undergoing rapid technological


    and economic changes.

     The intervention of government in economic affairs has increased in


    recent times and there is no likelihood that this intervention will stop in
    future.

    1
    MICRO-ECONOMIC ANALYSIS
    The micro-economic analysis deals with the problems of a individual firm, industry,
    consumer, etc. In the case of managerial economics, micro-economics helps in
    studying what is going on within the firm; how best to use the available scarce
    resources between various activities of the firm; how to be technically as well as
    economically efficient.
    Managerial economics also uses some of the well-accepted models in price theory,
    such as the model for monopoly price, kinked demand model, the model of price
    discrimination and the behavioral and managerial models.

    2
    CHARACTERISTICS OF MANAGERIAL ECONOMICS

    Managerial economics is micro-economics in character as it concentrates only


    on the study of the firm and not on the working of the economy.

    Managerial economics takes the help of macro-economics to understand and


    adjust to the environment in which the firm operates.

    Managerial economics in normative rather than positive in character. It is


    prescriptive rather than descriptive. That is, it is concerned with the type of
    decisions that the firm should take in order to prosper, which involves value
    judgments and not a mere description of behavior of the firm.

    3
    Managerial economics in normative rather than positive in character. It is
    prescriptive rather than descriptive. That is, it is concerned with the type of
    decisions that the firm should take in order to prosper, which involves value
    judgments and not a mere description of behavior of the firm.

    It is both conceptual and metrical. It takes the help of conceptual framework to


    understand and analyze the decision problems and takes the help of
    quantitative techniques to measure the impact of different factors and policies.

    The contents of managerial economics are based mainly on the ‘theory of


    firm’. It is only for the analysis of profits that help is taken of the ‘theory of
    distribution’.

    Knowledge of managerial economics helps in making wise decisions.


    Managers continue to face the problem of scarcities and consequently, must
    continue to make choices.

    4
    SCOPE OF MANAGERIAL ECONOMICS

    Managerial economics has a close connection with economic theory (micro-


    economics as well as macro-economic) operations research, statistics, mathematics
    and the theory of decision-making. Managerial economics also draws together and
    relates ideas from various functional areas of management like production, marketing,
    finance and accounting, project management, etc. A professional managerial
    economist has to integrate concepts and methods from all these disciplines and
    functional areas in order to understand and analyze practical managerial problems.

    5
    Scope of Managerial Economics

    A professional managerial economist has to integrate


    concepts and methods from all these disciplines and
    functional areas in order to understand and analyze
    practical managerial problems.

    Objectives of the firm


    Demand analysis and Demand forecasting
    Production and cost
    Competition
    Pricing and output
    Profit
    Investment and capital budgeting
    Product policy, sales promotion, and Market Strategy

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