Managerial Economics
Economics
- The study of how individuals and
societies chose to use the scarce
resources that nature and previous
generations have provided.
- Study of wealth.
- Is the proper allocation of human and
non-human resources among their
alternatives in order to satisfy the
human wants and desires.
Supply and Demand – two words that
economists use most often; forces that make
market economies work
Supply- willingness and ability to sell goods and
services at a particular prices, in a given period
of time.
Demand- willingness and ability to buy goods
and services in a given period of time.
• Buyers – determine demand
• Sellers – determine supply
Scarcity- Limited resources.
Production- the process that transforms scarce
resources into useful goods and services.
Inputs/ resources- Anything provided by nature
or previous generations that can be used
directly and indirectly to satisfy human wants.
Outputs- Goods and services of value to
households.
Market- is an institution through which buyers
and sellers interact and engage in exchange.
lizzie
2 Major Division of economics:
Microeconomics- The branch of economics that
examines the functioning of individual
industries and the behavior of individual
decision-making units: firms and household).
Macroeconomics- looks at the economy as
whole. The branch of economics that examines
the economic behavior of aggregates: income,
employment, output, and so on- on a national
scale.
 In market economies, prices are the signals
that guide the allocation of resources.
Economic Resources:
1. Land- household supply land or other
real property in exchange for rent.
2. Labour- household supply work for
wages to firms that demand labour.
3. Capital- household supply their savings,
for interest or for claims to future
profits to firms that demand funds to
buy capital goods.
4. Entrepreneurship
 In societies of many people, production
must satisfy wide0ranging taste and
preferences. Producers therefore
specialize and when there is a
specialization, there must be an
exchange, and markets are the
institutions through which exchange
takes place.
 2. To produce goods at a lower cost
without sacrificing the quality of
The circular Flow of Economic activity products.
3. To help us solve the economic
Output problems.
(Product )
markets:
Goods and Managers should apply/ practice the ff:
services
- SWOT Analysis
- SMART
Firm-
Household-
Primary Leader- Inborn vs. Managers- can be attained
consuming
producing units
units by studying and attending seminars and
trainings.

Managers- are the one who directs resources to

Intput (Factor)
markets: labor, achieve a stated goal.
capital, land and
entrepreneurship
DUTIES OF MANAGERS:

1. Direct the efforts of others including

 To produce goods and services, firms most
buy resources in input or factor markets.
Firms buy inputs from households, which
supply these inputs. When a firm decides
how much to produce (supply) in output
markets, it must simultaneously decide how
much for each input it needs to produce the
desired level of output.
4 fundamental Questions:
1. What goods and services you are going
to produce?
2. How these goods will be produce?
3. How much is the demand needed by
the community?
4. For whom these goods shall be
produced?
Why study economics?
1. To earn a living.
those who delegate task within those in
organization such as firms, family, or a
club.
2. The managers are the one who
purchase inputs to be used in the
production of goods and services such
as the output of a firm for the needy or
shelter for the homeless.
3. The managers are the one in charge in
making other decision such as product
price or quality.
4. The managers are responsible for his
own action as well as action of
individuals and input under the
managers control.
Managerial economics- study of how to direct
the scarce resources in the way that most
efficiently achieved by managerial goals.

lizzie
Effective managers must:

1. Identify goals and constraints.

2. Recognized the nature and importance
of profits,
3. Understands incentives that you will
derived in putting up a business,
4. Understands the market
5. Recognizes the time and value of
money
6. Use the managerial analysis.

5 Forces of Profitability:

1. Entry (knows the fundamentals on how

to start a business.)
2. Power of input of suppliers
3. Power of the buyers
4. Industry revival rate
5. Substitute or complement.

lizzie