Managerial economics applies economic principles to managerial decision-making, focusing on microeconomic applications rather than macroeconomic theory. It aids managers in choosing between alternative courses of action to solve economic problems and make decisions. The objectives of a firm include profit maximization, value maximization, revenue maximization, size maximization, long-run survival, and welfare maximization for personal or social welfare.

2. 1. Difference between Economics and
Managerial Economics.
2. Decision-Making and it’s process
3. Objectives of A Firm.

3. Difference between Economics and
Managerial Economics
Economics Managerial Economics
1. Deals with the body of
principles.
2. Characteristics of both
micro and macro in nature.
3. Economics is based on
certain assumptions.
4. In economics different
theories of distribution are
studied.
5. It is both normative and
positve science.
1. Deals with applications of
principles.
2. M E is micro in nature.
3. In M E these assumption
disappear due to practical
situation.
4. Only the study of theory of
project.
5. It is mainly normative
science

4. When two or more alternative courses of economic action are
available, there is the problem of choice - the economic
problem. Once one of the available alternative action chosen,
the economic problem is solved. The act of choice signifying
solution of an economic problem is economic decision-
making.
Decision making is an integral part of today’s business
management. Managerial Decision-Making serves as a link
between traditional economics and the decision making
sciences for business decision making.

6.  Profit maximisation
 Firm’s value maximisation
 Money/ Revenue maximisation
 Size maximisation
 Long run survival of firm
 Welfare maximisation
a) Personal welfare
B) Social welfare