Managerial Economics- Scope and Objectives - Free download as Powerpoint Presentation (.ppt), PDF File (.pdf), Text File (.txt) or view presentation slides online. Disclaimer 9. The Disturbing Wealth Gap and Why it Matters ? It deals with the use of economic concepts and principles of business decision making. It deals with the use of economic concepts and principles of business decision making. The capital theory helps managers in investment decision making, selecting appropriate projects, and capital budgeting. It must conduct a thorough analysis of market structure and thus take price and output decisions depending upon the type of market. The application of these concepts and theories in the process of business decision making is known as managerial economics. © Management Study Guide 3. Therefore, the price theory and market analysis helps in finalizing the pricing policies of an organization. To outline the types of issue which are addressed by managerial economics. Microeconomics strives to solve these issues, which are generally faced by business organizations. These two disciplines are closely associated with managerial economics. It deals with key issues such as what conditions favour entry and exit of firms in market, why are people paid well in some jobs and not so well in other jobs, etc. The most commonly used operational research technique for solving business problems is linear programming. In short, managerial economics emphasizes upon the firm, the decisions relating to individual firms and the environment in which the firm operates. The firm has now to choose among different alternative techniques of production. Involves determining the price of a product or services under different market price theory is concerned with the analysis of market structure and determination of price. Enables managers to select production techniques and best course of action, c. Comprises various economic concepts, such as demand theory, production theory, and capital theory, which helps in studying and analyzing different business problems, d. Helps organization in making future decisions with respect to economic variables, such as price, demand, supply, and cost, e. Applies different economic theories and tools to the real world business environment, f. Enables organizations to determine and analyze factors that affect business decisions, g. Helps in formulating business policies, h. Helps in assessing relationship between different economic variables, such as demand, supply, income, employment, and profit. It deals with the use of economic concepts and principles of business decision making. Why Savers are Losers in the 21st Century ? What Happens When Countries Do Not Pay Back Their Debt? The firm, for instance, must decide which is it’s niche market-domestic or foreign? Therefore, managing profit of an organization helps in minimizing the risk factor and predicting the actual profit for future. In business decisions making, microeconomics can be applied to deal with operational issues, which are internal to an organization. Managerial Economics- Scope and Objectives - Free download as Powerpoint Presentation (.ppt), PDF File (.pdf), Text File (.txt) or view presentation slides online. Managerial Economics is not only applicable to profit-making business organizations, but also to non- profit organizations such as hospitals, schools, government agencies, etc. Managerial economies are a developing science which generates the countless problems to determine its scope in a clear-cut way. In addition, the demand theory helps managers to answer the following questions: a. Provides an important aid in business decision-making. In general sense, managerial … There is always a condition of risk even when an organization has employed the best technique for production. In general sense, managerial economics involves the application of different economic tools, theories, and methodologies for analyzing business problems and decision making. It must segment the market. For achieving this objective, an organization needs to ensure the effectiveness of its decision making process. 5. Thus, managerial economics undertakes both macroeconomics and microeconomics theories. Managerial Economics in Other Disciplines. Thus it is not possible for an individual organization to deal with all these factors that constitute the economic environment of a country. Importance of Managerial Economics: The main objective of any business organization is to earn maximum profit. As we know, capital is a scarce resource of an organization; therefore, it should be allocated efficiently. Naturally, a manager decides how to allocate resources to their respective uses within the firm, while as stated above, the resource allocation decision outside the firm is primarily done through the market. Nature and Scope of Managerial Economics. Formerly it was known as “Business Economics” but the term has now been discarded in favour of Managerial Economics.. The managers use demand theory for deciding this. In other words, managerial economics undertakes the study of different economic tools that are used in business decision making. The type of economic system of the country, b. Top Five Factors That Spur Economic Growth, Overview of the Sharing Economy and the Emerging World of Work. Pricing Decisions, Policies and Practices. Thus, managerial economics also involves the study of certain other disciplines. Copyright 10. Scope of Managerial Economics: It is not yet clear as it is a developing science. The management discipline is concerned with a number of principles that help in business decision making and improving the effectiveness of business organizations. The Age of Austerity in the West in Response to the Global Economic Crisis, Relationship Between Inflation and Government. including economic principles and concepts for the analysis and solution of management problems of business organizations and industries. Managerial Economics has a more narrow scope - it is actually solving managerial issues using micro-economics. This theory helps managers to determine the factors that affect the buying decisions of consumers and their needs and requirements. Introduction. Managerial economics is a discipline which deals with the application of economic theory to business management. It also enables manage to determine the conditions that are conducive and profitable for price discrimination as well as how advertising would help in increasing the sales of an organization. Demand Analysis and Forecasting. The economic environment of a country comprises the following factors: a. Generally, managers, while managing capital, face issues related to the selection of investment project and efficient allocation of capital. The macroeconomic theory deals with issues related to the general business environment in which an organization operates. To introduce and define managerial economics. On the other hand, accounting helps an organization to know its functioning and performance. According to Douglas, “Managerial economics is concerned with the application of economic principles and methodologies to the decision-making process within the firm or organization. Managerial Economics is a great rational and analytical tool. Figure-1 shows the application of economics in business decision-making: Thus, managerial economics deals with the analysis of economic theories and laws to take decisions based on rational thinking. Demand Analysis and Forecasting 2. Cost and Production Analysis 3. The pattern of national income, employment, saving, and investment of the country, c. The functioning of the financial sector of the country, d. The structure and nature of foreign trade in the country, e. The trends of labor supply and capital market strength of the country, g. The value system of society, property rights, customs, and habits, i. The third question is regarding who should consume and claim the goods and services produced by the firm. Managerial Economics take a wider picture of firm, i.e., it deals with questions such as what is a firm, what are the firm’s objectives, and what forces push the firm towards profit and away from profit. Scope of Marginal Economics: Managerial Economics is a developing subject. Organizations generally deal with the concepts that are quantitative in nature, such as demand, price, cost, and interest rates.

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