W HAT IS MANAGERIAL ECONOMICS?

Managerial economics is a science that deals with the application of various economics theories, principles, concepts and techniques to business management in order to solve business and management problems

It deals with the practical application of economic theory and methodology to decision-making problems faced by private, public and non profit making organizations..
In the words of Spencer and Seigelman Managerial Economics is the integration of economic theory with business practice for the purpose of facilitating decision making,and forward planning by the management

SCOPE

OF

MANAGERIAL ECONOMICS

The term scope indicates the area of study, boundaries, subject matter and width of a subject. Business economics is comparatively a new and upcoming subject. The following topics are covered in this subject Objectives of a firm Demand Analysis and Forecasting Production and Cost Analysis Pricing Decisions, Policies and Practices Profit Management Capital Management Linear Programming and Theory of Games Market Structure and Conditions Strategic Planning

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IMPORTANCE ECONOMICS

OF THE

STUDY OF MANAGERIAL

1) It gives guidance for identification of key variables in decision-making process. 2) It helps the business executives to become much more responsive realistic and competent to face the ever changing challenge in the modern business world. 3) It helps a firm in forecasting the most important economic variables like demand and supply, cost, revenue ,price ,sales and profit etc. 4) It also helps in understanding the various external factors and forces which effect the decision-making of a firm. 5) It helps in the optimum use of scarce resources of a firm to maximize its profits

NATURE OF MANAGERIAL ECONOMICS

Fundamental Academic subject Economic rational of business administration Allocation of resources Micro-economic nature Theory of the firm Market conditions Macro settings Profits and pricing Basics for decision making Help of quantitative techniques

NATURE OF MANAGERIAL ECONOMICS