This PPT focuses on the introduction to Managerial Economics. The nature and scope of managerial economics along with its relationship with other subjects. This PPT will provide insights about the roles and responsibilities of managerial economists and objectives of the firm.
The document discusses business environment, its meaning and importance. It explains that business environment includes internal factors within a firm's control as well as external factors outside its control, like political, economic, social, technological, environmental and legal conditions. It also discusses Porter's five forces model for analyzing industry competition and outlines various components that influence a firm's external environment, including its economic system.
Operational research emerged in 1885 when Frederick Taylor emphasized applying scientific analysis to production methods. Operational research systematically studies the basic structure, relationships, and functions of an organization using an interdisciplinary team approach from fields like statistics, engineering, and management. The goal is to help management make better decisions by developing mathematical models to quantitatively solve problems and find optimal solutions, though perfect answers may not always be possible. Computers are often needed to solve the complex mathematical models.
Managerial economics applies economic concepts and tools to help managers make rational decisions and solve business problems efficiently. It borrows theories from microeconomics and tools from decision science. The goal is to find optimal solutions to business problems by integrating economic theory, quantitative techniques, and business practice. Managerial economics helps maximize firm effectiveness by facilitating resource allocation and policy formulation. It deals with topics like production, costs, pricing, demand, and market structure at the firm level.
nature scope significance of Managerial EconomicsAditya Roy
Managerial economics deals with applying economic concepts and methodologies to help managers make rational decisions. It bridges the gap between economic theory and business practices. While traditional economics studies broad economic principles, managerial economics focuses on microeconomic problems faced by individual firms. It uses tools from decision science and economics to identify issues, organize information, and evaluate alternatives to find optimal solutions for business problems. The goal of managerial economics is to help managers achieve organizational objectives efficiently by making well-informed choices.
Managerial economics applies economic theories, principles, and analytical tools to managerial decision-making. It is the branch of economics that studies the management of a firm. Some key points covered in the document include:
- Managerial economics uses concepts from micro and macro economics. It focuses on applying economic theories to solve practical business problems.
- It involves using analytical tools like mathematical and statistical methods to evaluate alternatives and select optimal choices for issues like pricing, production, costs, profits, and more.
- Managerial economics principles include opportunity cost, marginal analysis, equi-marginal returns, incremental costs and benefits, time value of money, and discounting cash flows.
- Economic models are structural methods
This document provides an overview of managerial economics. It defines managerial economics as the application of economic theories, principles, and analytical tools to managerial decision-making. It discusses how managerial economics is related to but narrower in scope than economics. It also outlines how managerial economics integrates concepts from other disciplines like accounting, mathematics, statistics, operations research, and decision theory to help analyze problems and guide optimal business decisions.
The document discusses business environment, its meaning and importance. It explains that business environment includes internal factors within a firm's control as well as external factors outside its control, like political, economic, social, technological, environmental and legal conditions. It also discusses Porter's five forces model for analyzing industry competition and outlines various components that influence a firm's external environment, including its economic system.
Operational research emerged in 1885 when Frederick Taylor emphasized applying scientific analysis to production methods. Operational research systematically studies the basic structure, relationships, and functions of an organization using an interdisciplinary team approach from fields like statistics, engineering, and management. The goal is to help management make better decisions by developing mathematical models to quantitatively solve problems and find optimal solutions, though perfect answers may not always be possible. Computers are often needed to solve the complex mathematical models.
Managerial economics applies economic concepts and tools to help managers make rational decisions and solve business problems efficiently. It borrows theories from microeconomics and tools from decision science. The goal is to find optimal solutions to business problems by integrating economic theory, quantitative techniques, and business practice. Managerial economics helps maximize firm effectiveness by facilitating resource allocation and policy formulation. It deals with topics like production, costs, pricing, demand, and market structure at the firm level.
nature scope significance of Managerial EconomicsAditya Roy
Managerial economics deals with applying economic concepts and methodologies to help managers make rational decisions. It bridges the gap between economic theory and business practices. While traditional economics studies broad economic principles, managerial economics focuses on microeconomic problems faced by individual firms. It uses tools from decision science and economics to identify issues, organize information, and evaluate alternatives to find optimal solutions for business problems. The goal of managerial economics is to help managers achieve organizational objectives efficiently by making well-informed choices.
Managerial economics applies economic theories, principles, and analytical tools to managerial decision-making. It is the branch of economics that studies the management of a firm. Some key points covered in the document include:
- Managerial economics uses concepts from micro and macro economics. It focuses on applying economic theories to solve practical business problems.
- It involves using analytical tools like mathematical and statistical methods to evaluate alternatives and select optimal choices for issues like pricing, production, costs, profits, and more.
- Managerial economics principles include opportunity cost, marginal analysis, equi-marginal returns, incremental costs and benefits, time value of money, and discounting cash flows.
- Economic models are structural methods
This document provides an overview of managerial economics. It defines managerial economics as the application of economic theories, principles, and analytical tools to managerial decision-making. It discusses how managerial economics is related to but narrower in scope than economics. It also outlines how managerial economics integrates concepts from other disciplines like accounting, mathematics, statistics, operations research, and decision theory to help analyze problems and guide optimal business decisions.
It includes important Definitions of economics and managerial economics. Also includes related topics like Micro and Macro Economics, objectives of a firm and various profit maximization models.
The document discusses different theories of cost, including traditional and modern theories. Under traditional theory, costs are categorized as total, average, and marginal in both the short-run and long-run. Total cost equals total fixed cost plus total variable cost. Average cost depends on average fixed and average variable cost. Marginal cost is the change in total cost from producing one additional unit. In the long-run, all costs are variable. Modern theory proposes cost curves are L-shaped rather than U-shaped as traditionally thought.
This document provides an overview of marginal costing. It defines marginal costing as a technique that differentiates between fixed and variable costs to determine the effect of changes in volume or output on profit. Marginal cost is defined as the additional cost of producing one more unit. The key features, assumptions, and advantages of marginal costing are outlined, including how it is used for decision making, cost control, and determining profitability. Formulas for calculating break-even point, margin of safety, and other metrics using marginal costing are also presented.
What is profit , types of profit, theories of profitarvind saini
in this report, it discuss about major role of profit , its types and various theories of profit to understand the principles of accounting. and how it helps to understand the various techniques to understand it
This document provides an overview of economic concepts and analysis for business. It defines key terms like microeconomics, macroeconomics, positive and normative economics, short run and long run analysis, and partial and general equilibrium. It also discusses production possibility frontiers and the basic assumptions of economics. Managerial economics is introduced as the application of economic principles to managerial decision making within an organization. The roles of scarcity, opportunity cost, margins, and discounting in economic analysis are outlined. Finally, the document compares how capitalist, socialist, and mixed economies approach solving economic problems.
Macroeconomics is the study of the behavior and performance of the economy as a whole. It deals with aggregate economic quantities such as output, income, employment, and prices. Macroeconomics analyzes economy-wide phenomena like growth, recessions, inflation, and the impact of fiscal and monetary policy. The goal of macroeconomics is to promote full employment, stability, and economic growth on a national scale.
Relationship of Managerial Economics with other disciplines,Difference betwee...Pooja Kadiyan
This document provides an overview of key concepts in managerial economics. It discusses the relationship between managerial economics and other disciplines like economics, operational research, accountancy, mathematics, statistics, psychology, and management theory. Microeconomics studies individual actors in markets while macroeconomics looks at whole economies. The document outlines differences between micro and macroeconomics. Finally, it explores important economic concepts used in managerial decision making, including incremental concepts, time perspective, discounting, opportunity costs, equimarginal principle, contribution concept, and negotiation principle.
Macroeconomics deals with the aggregate or total level of key economic variables for an entire economy, such as output, consumption, investment, employment, and prices. It examines unemployment, inflation, and output growth. The document provides definitions and explanations of these macroeconomic concepts as well as the scope and importance of macroeconomics in understanding national economies and formulating policy.
This document discusses the concepts of cost and revenue and how they relate to profit maximization for firms. It defines key cost concepts like fixed vs variable costs, historical vs replacement costs, and private vs social costs. Cost is determined by factors like plant size, output level, input prices, productivity, technology, and management efficiency. In the short run, total costs increase with output while average costs initially decrease and then increase due to limitations on varying fixed costs. Maximizing profit requires increasing revenue and decreasing costs.
1) The business cycle refers to periodic fluctuations in economic activity between periods of expansion and contraction.
2) It involves four phases - prosperity, peak, downturn/recession, and recovery.
3) Various theories have been proposed to explain the business cycle, including the monetary, psychological, innovation, and Keynesian theories.
4) Keynes argued that decreases in aggregate demand are the primary cause of depression and unemployment. Investment can be used to increase aggregate demand and reduce downturns in the short run.
Managerial Economics- Introduction,Characteristics and ScopePooja Kadiyan
This document provides an introduction to the scope of managerial economics. It defines managerial economics as the integration of economic theory with business practice to facilitate decision-making. The key areas covered in the scope of managerial economics include microeconomic analysis of the firm, acceptance and use of macroeconomic variables, a normative approach, and an emphasis on case studies. Microeconomics is applied to operational issues like production, costs, pricing, and investment. Macroeconomics is applied to the business environment, including factors like government policies, foreign trade, and the overall economic system.
This document provides an overview of business economics. It begins by defining economics and differentiating between traditional economics and business economics. Key concepts in business economics are then outlined, including demand analysis, cost-benefit analysis, and profit maximization. The document also discusses how business economics relates to other disciplines like accounting, mathematics, and statistics. Finally, fundamental concepts in business economics are defined, such as the incremental concept, time perspective concept, and opportunity cost concept.
This document provides an introduction to managerial economics. It defines economics as the study of human economic activity and wealth. It discusses microeconomics as the study of individual consumers and firms, and macroeconomics as the study of aggregate economic activity in a country. Managerial economics bridges traditional economics theory and real business practices by providing tools to help managers make competent decisions. It operates within the constraints of macroeconomic conditions and suggests prescriptive actions to optimally solve problems given a firm's objectives. The scope of managerial economics includes decisions around product selection, production methods, pricing, promotion, and location from an operational and environmental perspective.
pricing theory and procedure, pricing policies and practicesupamadas
This document discusses various pricing theories and methods. It begins by defining price and exploring the relationship between supply and demand under perfect competition. It then examines pricing under different market structures - monopoly, oligopoly and monopolistic competition. It describes key characteristics of each market type. Finally, it outlines several common pricing methods used by firms, including cost-plus pricing, marginal cost pricing, target return pricing, and pricing strategies for new products like price skimming and penetration pricing.
Responsibility accounting is a system of dividing an organization into similar units, each of which is to be assigned particular responsibilities. These units may be in the form of divisions, segments, departments, branches, product lines and so on. Each department is comprised of individuals who are responsible for particular tasks or managerial functions. The managers of various departments should ensure that the people in their department are doing well to achieve the goal. Responsibility accounting refers to the various concepts and tools used by managerial accountants to measure the performance of people and departments in order to ensure that the achievement of the goals set by the top management.
Responsibility accounting, therefore, represents a method of measuring the performances of various divisions of an organization. The test to identify the division is that the operating performance is separately identifiable and measurable in some way that is of practical significance to the management. Responsibility accounting collects and reports planned and actual accounting information about the inputs and outputs of responsibility centers.
The document discusses production possibility diagrams (PPDs), also known as production possibility frontiers (PPFs). It explains that a PPF shows the maximum combinations of two goods or services an economy can produce given limited resources. The PPF is normally drawn as a concave curve to the origin to reflect diminishing returns. Points on the curve represent efficient production combinations, while inside points are inefficient as resources are underutilized. Shifts in the PPF can occur due to changes in resources, technology or productivity.
1. Managerial economics draws from several disciplines including economics, management, accounting, mathematics, statistics, operations research, and decision theory. It aims to apply theories from these fields to help solve real-world business problems.
2. Managerial economics is rooted in microeconomic theories but also uses tools from macroeconomics. It also incorporates developments from management theory and accounting techniques related to costs, revenues, and financial decision-making.
3. Mathematics, statistics, and operations research provide quantitative tools to help managerial economists optimize costs and profits, predict demand, and make effective decisions under uncertainty. Computer science also supports data analysis and business operations.
This document defines key concepts in cost accounting and cost management. It discusses how cost accounting provides information for both management and financial accounting by measuring and reporting costs. It also describes different types of costs like direct, indirect, fixed and variable costs. Finally, it summarizes standard costing and analysis of variance, which are techniques used to evaluate actual performance against pre-established cost standards.
Activity Based Costing (ABC) is a costing method that assigns overhead costs to products and services based on their use of activities. It arose due to limitations in traditional cost accounting methods. ABC assigns costs to activities first and then to products based on their use of each activity. This provides more accurate product costs compared to traditional methods that use blanket overhead rates. ABC involves identifying activities, assigning costs to activities, determining cost drivers for each activity, calculating activity costs rates, and assigning activity costs to products. It helps eliminate non-value added activities and supports better decision making. However, implementing an ABC system can be expensive and complex.
This document defines key economic terms and discusses the scope and relationships between managerial economics, microeconomics, macroeconomics, and other relevant disciplines. It can be summarized as follows:
1. Managerial economics applies microeconomic principles to help businesses make decisions by analyzing costs, revenues, demand, and market structures. It is related to but more limited in scope than microeconomics.
2. Managerial economics draws from both microeconomic and macroeconomic theory to aid in forecasting and understanding the broader economic context. It is also informed by decision theory, operations research, mathematics, and statistics.
3. Accounting information is crucial for managerial economics and decision-making, as the language of business
Educaterer India is an unique combination of passion driven into a hobby which makes an awesome profession. We carve the lives of enthusiastic candidates to a perfect professional who can impress upon the mindsets of the industry, while following the established traditions, can dare to set new standards to follow. We don't want you to be the part of the crowd, rather we like to make you the reason of the crowd.
Today's Effort For A Better Tomorrow
It includes important Definitions of economics and managerial economics. Also includes related topics like Micro and Macro Economics, objectives of a firm and various profit maximization models.
The document discusses different theories of cost, including traditional and modern theories. Under traditional theory, costs are categorized as total, average, and marginal in both the short-run and long-run. Total cost equals total fixed cost plus total variable cost. Average cost depends on average fixed and average variable cost. Marginal cost is the change in total cost from producing one additional unit. In the long-run, all costs are variable. Modern theory proposes cost curves are L-shaped rather than U-shaped as traditionally thought.
This document provides an overview of marginal costing. It defines marginal costing as a technique that differentiates between fixed and variable costs to determine the effect of changes in volume or output on profit. Marginal cost is defined as the additional cost of producing one more unit. The key features, assumptions, and advantages of marginal costing are outlined, including how it is used for decision making, cost control, and determining profitability. Formulas for calculating break-even point, margin of safety, and other metrics using marginal costing are also presented.
What is profit , types of profit, theories of profitarvind saini
in this report, it discuss about major role of profit , its types and various theories of profit to understand the principles of accounting. and how it helps to understand the various techniques to understand it
This document provides an overview of economic concepts and analysis for business. It defines key terms like microeconomics, macroeconomics, positive and normative economics, short run and long run analysis, and partial and general equilibrium. It also discusses production possibility frontiers and the basic assumptions of economics. Managerial economics is introduced as the application of economic principles to managerial decision making within an organization. The roles of scarcity, opportunity cost, margins, and discounting in economic analysis are outlined. Finally, the document compares how capitalist, socialist, and mixed economies approach solving economic problems.
Macroeconomics is the study of the behavior and performance of the economy as a whole. It deals with aggregate economic quantities such as output, income, employment, and prices. Macroeconomics analyzes economy-wide phenomena like growth, recessions, inflation, and the impact of fiscal and monetary policy. The goal of macroeconomics is to promote full employment, stability, and economic growth on a national scale.
Relationship of Managerial Economics with other disciplines,Difference betwee...Pooja Kadiyan
This document provides an overview of key concepts in managerial economics. It discusses the relationship between managerial economics and other disciplines like economics, operational research, accountancy, mathematics, statistics, psychology, and management theory. Microeconomics studies individual actors in markets while macroeconomics looks at whole economies. The document outlines differences between micro and macroeconomics. Finally, it explores important economic concepts used in managerial decision making, including incremental concepts, time perspective, discounting, opportunity costs, equimarginal principle, contribution concept, and negotiation principle.
Macroeconomics deals with the aggregate or total level of key economic variables for an entire economy, such as output, consumption, investment, employment, and prices. It examines unemployment, inflation, and output growth. The document provides definitions and explanations of these macroeconomic concepts as well as the scope and importance of macroeconomics in understanding national economies and formulating policy.
This document discusses the concepts of cost and revenue and how they relate to profit maximization for firms. It defines key cost concepts like fixed vs variable costs, historical vs replacement costs, and private vs social costs. Cost is determined by factors like plant size, output level, input prices, productivity, technology, and management efficiency. In the short run, total costs increase with output while average costs initially decrease and then increase due to limitations on varying fixed costs. Maximizing profit requires increasing revenue and decreasing costs.
1) The business cycle refers to periodic fluctuations in economic activity between periods of expansion and contraction.
2) It involves four phases - prosperity, peak, downturn/recession, and recovery.
3) Various theories have been proposed to explain the business cycle, including the monetary, psychological, innovation, and Keynesian theories.
4) Keynes argued that decreases in aggregate demand are the primary cause of depression and unemployment. Investment can be used to increase aggregate demand and reduce downturns in the short run.
Managerial Economics- Introduction,Characteristics and ScopePooja Kadiyan
This document provides an introduction to the scope of managerial economics. It defines managerial economics as the integration of economic theory with business practice to facilitate decision-making. The key areas covered in the scope of managerial economics include microeconomic analysis of the firm, acceptance and use of macroeconomic variables, a normative approach, and an emphasis on case studies. Microeconomics is applied to operational issues like production, costs, pricing, and investment. Macroeconomics is applied to the business environment, including factors like government policies, foreign trade, and the overall economic system.
This document provides an overview of business economics. It begins by defining economics and differentiating between traditional economics and business economics. Key concepts in business economics are then outlined, including demand analysis, cost-benefit analysis, and profit maximization. The document also discusses how business economics relates to other disciplines like accounting, mathematics, and statistics. Finally, fundamental concepts in business economics are defined, such as the incremental concept, time perspective concept, and opportunity cost concept.
This document provides an introduction to managerial economics. It defines economics as the study of human economic activity and wealth. It discusses microeconomics as the study of individual consumers and firms, and macroeconomics as the study of aggregate economic activity in a country. Managerial economics bridges traditional economics theory and real business practices by providing tools to help managers make competent decisions. It operates within the constraints of macroeconomic conditions and suggests prescriptive actions to optimally solve problems given a firm's objectives. The scope of managerial economics includes decisions around product selection, production methods, pricing, promotion, and location from an operational and environmental perspective.
pricing theory and procedure, pricing policies and practicesupamadas
This document discusses various pricing theories and methods. It begins by defining price and exploring the relationship between supply and demand under perfect competition. It then examines pricing under different market structures - monopoly, oligopoly and monopolistic competition. It describes key characteristics of each market type. Finally, it outlines several common pricing methods used by firms, including cost-plus pricing, marginal cost pricing, target return pricing, and pricing strategies for new products like price skimming and penetration pricing.
Responsibility accounting is a system of dividing an organization into similar units, each of which is to be assigned particular responsibilities. These units may be in the form of divisions, segments, departments, branches, product lines and so on. Each department is comprised of individuals who are responsible for particular tasks or managerial functions. The managers of various departments should ensure that the people in their department are doing well to achieve the goal. Responsibility accounting refers to the various concepts and tools used by managerial accountants to measure the performance of people and departments in order to ensure that the achievement of the goals set by the top management.
Responsibility accounting, therefore, represents a method of measuring the performances of various divisions of an organization. The test to identify the division is that the operating performance is separately identifiable and measurable in some way that is of practical significance to the management. Responsibility accounting collects and reports planned and actual accounting information about the inputs and outputs of responsibility centers.
The document discusses production possibility diagrams (PPDs), also known as production possibility frontiers (PPFs). It explains that a PPF shows the maximum combinations of two goods or services an economy can produce given limited resources. The PPF is normally drawn as a concave curve to the origin to reflect diminishing returns. Points on the curve represent efficient production combinations, while inside points are inefficient as resources are underutilized. Shifts in the PPF can occur due to changes in resources, technology or productivity.
1. Managerial economics draws from several disciplines including economics, management, accounting, mathematics, statistics, operations research, and decision theory. It aims to apply theories from these fields to help solve real-world business problems.
2. Managerial economics is rooted in microeconomic theories but also uses tools from macroeconomics. It also incorporates developments from management theory and accounting techniques related to costs, revenues, and financial decision-making.
3. Mathematics, statistics, and operations research provide quantitative tools to help managerial economists optimize costs and profits, predict demand, and make effective decisions under uncertainty. Computer science also supports data analysis and business operations.
This document defines key concepts in cost accounting and cost management. It discusses how cost accounting provides information for both management and financial accounting by measuring and reporting costs. It also describes different types of costs like direct, indirect, fixed and variable costs. Finally, it summarizes standard costing and analysis of variance, which are techniques used to evaluate actual performance against pre-established cost standards.
Activity Based Costing (ABC) is a costing method that assigns overhead costs to products and services based on their use of activities. It arose due to limitations in traditional cost accounting methods. ABC assigns costs to activities first and then to products based on their use of each activity. This provides more accurate product costs compared to traditional methods that use blanket overhead rates. ABC involves identifying activities, assigning costs to activities, determining cost drivers for each activity, calculating activity costs rates, and assigning activity costs to products. It helps eliminate non-value added activities and supports better decision making. However, implementing an ABC system can be expensive and complex.
This document defines key economic terms and discusses the scope and relationships between managerial economics, microeconomics, macroeconomics, and other relevant disciplines. It can be summarized as follows:
1. Managerial economics applies microeconomic principles to help businesses make decisions by analyzing costs, revenues, demand, and market structures. It is related to but more limited in scope than microeconomics.
2. Managerial economics draws from both microeconomic and macroeconomic theory to aid in forecasting and understanding the broader economic context. It is also informed by decision theory, operations research, mathematics, and statistics.
3. Accounting information is crucial for managerial economics and decision-making, as the language of business
Educaterer India is an unique combination of passion driven into a hobby which makes an awesome profession. We carve the lives of enthusiastic candidates to a perfect professional who can impress upon the mindsets of the industry, while following the established traditions, can dare to set new standards to follow. We don't want you to be the part of the crowd, rather we like to make you the reason of the crowd.
Today's Effort For A Better Tomorrow
Managerial economics applies economic theory and quantitative techniques to solve business problems. It bridges the gap between abstract economic theory and practical business decision-making. The scope of managerial economics includes demand and supply analysis, production analysis, pricing analysis, capital budgeting, and risk analysis. The role of the managerial economist is to assist with tasks like demand forecasting, market analysis, pricing and investment policies, and advising management on economic issues.
Managerial economics refers to the application of economic theory and tools of decision-making to business management. It helps integrate economics with business practices to facilitate optimal decision-making and planning. Managerial economics draws from microeconomics, macroeconomics, mathematical economics, econometrics, and other business disciplines. It is relevant for production planning, pricing decisions, capacity expansion planning, and human resource management. Managerial economics provides frameworks to analyze demand, costs, and guide profit-oriented decision-making.
managerial economics presentation examination research ppt slideshareJackap NB
Managerial economics provides tools and concepts from economic theory to analyze business problems and guide managerial decision-making. It bridges the gap between economic theory and business practice by applying microeconomic principles and quantitative methods to operational and strategic issues faced by managers. Some key aspects covered include demand analysis, production and cost analysis, pricing policies, and capital budgeting. The goal is to help managers optimize organizational performance and decision-making under conditions of uncertainty.
Managerial economics provides tools and concepts from economic theory to analyze business problems and guide managerial decision-making. It bridges the gap between abstract economic theory and practical business operations. The key goals of managerial economics are to help managers make optimal operational and strategic decisions through analyzing factors like demand, costs, pricing, profits, and the external business environment.
The document discusses the objectives of business firms. It states that the conventional view is that profit maximization is the sole objective of businesses. However, other objectives exist as well, such as maximizing sales revenue, growth rate, or manager's utility. The document then focuses on profit as a key business objective. It defines accounting profit versus economic profit, with economic profit accounting for implicit opportunity costs. The objectives of business incubators are also outlined, which aim to support startups and increase survival rates through various resources and services.
Managerial economics applies economic theory and quantitative methods to business administration problems. It bridges economic theory and business practice for facilitating managerial decision-making and planning. Managerial economics uses concepts from microeconomics and integrates economic theory with management principles. It helps managers make optimal decisions regarding production, pricing, inputs, profits, investments, and forecasting through tools like demand analysis, cost-benefit analysis, and quantitative modeling. Managerial economics draws from disciplines like accounting, finance, statistics, mathematics, and operations research.
This document provides an overview of Managerial Economics Unit 1. It defines managerial economics and explains its key concepts, techniques, and applications. Specifically:
1) Managerial economics applies microeconomic analysis to business decision-making. It helps managers make informed decisions in complex, uncertain environments.
2) The document outlines the scope and techniques of managerial economics, including demand analysis, production theory, and capital investment.
3) Managerial economics equips managers to optimize resource allocation, maximize profits, and achieve organizational objectives using economic principles.
This document provides an overview of Managerial Economics Unit 1. It defines managerial economics and explains its key concepts, techniques, and applications. Specifically:
1) Managerial economics helps business managers make informed decisions in complex and changing environments.
2) It applies microeconomic analysis and quantitative techniques to business-related problems.
3) Managerial economics is useful for decisions related to risk, production, pricing, capital budgeting, and more.
This document provides an overview of Managerial Economics 1, including definitions of managerial economics, its techniques and applications. It discusses the meaning and scope of managerial economics, explaining that it applies microeconomic analysis to business decision-making. The document outlines the key areas of demand analysis, production theory, price theory, profit theory and capital investment that fall within the scope of managerial economics. It also notes that managerial economics helps managers make informed decisions in complex and uncertain business environments.
This document provides an overview of Managerial Economics 1, including definitions of managerial economics, its techniques and applications. It discusses the meaning and scope of managerial economics, explaining that it applies microeconomic analysis to business decision-making. The document outlines the key areas of demand analysis, production theory, price theory, profit theory and capital investment theory. It also notes that managerial economics uses both microeconomic and some macroeconomic concepts to help managers make informed decisions.
This document provides an overview of managerial economics. It defines managerial economics as the application of microeconomic analysis and quantitative methods to business decision making. The key aspects covered include the meaning and definitions of managerial economics, its relationship to economics and business management, its characteristics as a pragmatic and normative discipline, and its scope in areas like demand analysis, cost analysis, production, pricing, profit, and capital management. Decision making in managerial economics involves applying economic principles to solve problems related to a business's internal and external environments under conditions of uncertainty.
Managerial economics applies economic theory and quantitative methods to business administration to help managers make optimal decisions about allocating resources. It combines economics, statistics, and mathematics to model problems and facilitate decision-making. As a microeconomic and applied field, it examines how firms make production, pricing, and investment choices. The managerial economist supports management by analyzing internal operations and external factors, conducting research, and advising on issues like pricing, investment, production, and responding to economic trends. The goal is optimal resource use and business performance.
Managerial Economics: Concept of Economy, Economics, Microeconomics, Macroeconomics. Nature and Scope of Managerial Economics, Managerial Economics and decision-making Concept of Firm, Market, Objectives of Firm: Profit Maximization Model, Economist Theory of the Firm, Cyert and March’s Behavior Theory, Marris’ Growth Maximisation Model, Baumol’s Static and Dynamic Models, Williamson’s Managerial Discretionary Theory.
Business economics is the study of applying economic theory and tools of analysis to operational and strategic decision making by managers of private firms. It uses microeconomic and macroeconomic concepts to help managers solve problems related to demand analysis, production costs, pricing, investment decisions, and risk under conditions of uncertainty. The scope of business economics is wide, covering both internal issues related to operations that can be addressed using microeconomics, as well as external environmental factors analyzed using macroeconomic tools.
Managerial economics applies economic theory and techniques to managerial decision-making. It helps managers evaluate resource allocation, determine optimal product mix and output levels, set prices, and respond to economic conditions. The scope of managerial economics is narrower than traditional economics as it focuses on microeconomic problems faced by individual firms, including demand and cost analysis, pricing, profit maximization, and adapting plans to the business environment.
Managerial Economics and its basic aspects are discussed in this Slideshare. Managerial Economics is the application of Economic Theory to managerial practice – here you will be introduced to its other aspects as well as how it helps in the growth and target achievement of an organization.
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About managerial economics and financial analysis gpPUTTU GURU PRASAD
This document provides an introduction to managerial economics and financial analysis. It discusses how managerial economics can help business managers make informed decisions in complex and changing business environments. Managerial economics uses tools from microeconomics and other fields to help with decisions around production, pricing, capital budgeting, and managing risk. Some key applications of managerial economics techniques include risk analysis, production analysis, pricing analysis, and capital budgeting. The document emphasizes that managerial economics can be applied to both profit-seeking businesses and nonprofit organizations to help optimize the use of limited resources.
Unit1.4_Introduction to BE_14.03.2022.pptxBLAKSHMIPATHI
This document provides an overview of business economics and managerial economics. It defines managerial economics as the integration of economics theory with business practice to facilitate decision-making. Managerial economics provides tools and techniques to analyze problems and make efficient decisions. It draws from areas like production, finance, and decision theory. Managerial economists analyze market conditions, forecast trends, and help businesses achieve objectives like profit maximization. They play an important role in gathering information, decision-making, and forward planning.
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Meaning of organizational conflict
Characteristics of organizational conflict
Reasons for organizational conflict
Level of conflict
Level of performance
This document discusses various techniques for resolving organizational conflicts, including domination, third party negotiation, confrontation, effective communication, structural reforms, and maintaining a healthy climate and culture. It provides details on each technique, such as using domination through separation, forcing, or voting. Third party negotiation can utilize arbitration, mediation, conciliation, or consultation. Confrontation is a rare method used when parties are rigid. Effective communication minimizes ambiguities. Structural reforms can modify the organizational structure. Finally, a healthy climate and culture can promote cooperation.
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Introduction to managerial economics
1. INTRODUCTION OF
MANEGERIAL ECONOMICS
Dr. Smriti Mathur
Assistant Professor
Babu Banarasi Das University, Lucknow
PhD (Commerce), UGC NET (Commerce)
M.Com (Applied Economics)
2. What Managerial Economics is all about?
Nature and Scope of Managerial Economics
Role and Responsibilties of a Managerial
Economist
C
O
N
T
E
N
T
S
1
5
4
3
2
Objectives of the Firm
Relationship with other subjects
3. Managers A manager is a person who directs resources to achieve a stated goal.
This definition includes all individuals who
(1) direct the efforts of others, including those who delegate tasks
within an organization such as a firm, a family, or a club;
(2) purchase inputs to be used in the production of goods and services
such as the output of a firm, food for the needy, or shelter for the
homeless; or
(3) are in charge of making other decisions, such as product price or
quality.
4. Introduction:
Factors
contributing to
the emergence
of Managerial
Economics
Growing complexity of
the business
environment and
decision making
Increasing application of Economic Logic,
concepts, theories and tools of economic
analysis in the process of Business Decision
making
Rapid increase in demand for
professionally trained managerial
manpower with good knowledge of
Economics
In management studies, the terms ‘Business Economics’ and ‘Managerial Economics’ are often synonyms. Both the
terms, however, involve ‘economics’ as a basic discipline useful for certain functional areas of business management.
Managerial Economics has emerged as a separate branch of Economics. The emergence of managerial economics can
be attributed to following factors-
5. Introduction to Managerial Economics
• Managerial Econoimics as a subject gained popularity in th USA after the publication of the book “Managerial
Economics” by Joel Dean in 1951.
• Main problems faced by a business firms are:
The choice of a product to be produced or services to be rendered
Decision about price and output of the product so as to maximise profits or attain desired goals.
What methods or techniques of production are to be used in the production process.
How much advertisement expenditure is to be incurred for promoting the sales of their products.
Long term decisions pertaining to production
Long term decisions related to investment or Capital Expenditure.
• The science of economics is concerned with the allocation of scarce resources to alternative uses so as to
achieve maximum possible satisfaction of the people. The management science is concerned with the
allocation of scarce resources at the disposable of the firm.
• Managerial economics is an application of microeconomics and its supportive quantitative methods (drawn
from mathematics and statistics) in the decision-making process for managers who are in pursuit of
recognizing and utilizing the optimal treatments and solutions to managerial problems and issues in order to
reach a certain level of efficiency in achieving the firm’s objectives.
6. Definitions of Managerial Economics
Definitions
According to Spencer .nd Siegelman
“The integration of economic theory with business practice for the purpose of facilitating decision-
making and forward planning by management”.
According to Mansfield
"Managerial economics provides a link between economic theory and decision sciences in the
analysis of managerial decision making”
According to TJ. Webster
"Managerial economics is the synthesis of microeconomic theory and quantitative methods
to find optimal solutions to managerial decision-making problems”
According to Prof. Evan J Douglas
‘Managerial economics’ is concerned with the application of economic principles
and methodologies to the decision making process within the firm or organisation
under the conditions of uncertainty”
7. Descriptive and Prescriptive Role of Managerial Economics
• The descriptive approach is concerned with positive economics. It is concerned with what was, is, and will be in actuality,
with a certain degree of objectivity and regardless of any subjective positions. It considers the given conditions and
circumstances, investigates any causes and effects, formulates theories and designs models, and predicts what might
happen and what would change, and in what direction, all in a reasonable of neutrali.
• On the other hand, the prescriptive approach adopts a normative stand. It is based on subjective views and value
judgment. It is all about “what ought to be” from a certain perspective. Outcomes, therefore, are deemed to be presented
as good or bad.
• Economics is basically considered a descriptive and positive science.
• Positive economic analyses of many contentious issues can appear to be harsh just because they are deliberately separated
from any value judgment and sentimental consideration. Examples of these issues are rent control, minimum wage,
welfare system, housing subsidies, comprehensive healthcare, and many more. Just like economics, managerial economics
is essentially a positive science where managers are not suppose make their decisions on the basis of their sentiments.
They are supposed to observe data and trends and use a scientific approach to predict consequences of their actions.
• The other dimension of their positive approach is that all decisions and actions can be tested empirically either by research
or by plain experience. However, managerial economics does have its own prescriptive side too, especially when it comes
to the issues in which managers and decision makers in general find themselves at a position in which they have to use
their own value judgment and personal positions when only gut feelings can be the determinant.
8. Figure shows how managerial economics acquires its essential identity through the contributions of three components:
(1) Quantitative economics,
(2) the scientific procedure of decision making, and
(3) the related functional fields.
Source: Allahbeeb, Moffitt, Managerial Economics: A Mathematical Approach, 2013, pg. no. 4.
9. Quantitative Economics
The quantitative approach would provide many technical tools such as numerical analysis, statistical estimation,
mathematical optimization, econometrical models, forecasting procedures, game-theoretic scenarios and
simulations, information system schemes, and linear programming. Economic theory, especially microeconomics,
provides the foundation for marginal analysis, theory of consumer choice, theory of the firm, industrial
organization and behavior, and theory of public choice and policy.
Micro Economics
Demand theory, analysis of cost
and production, theory of
determination of price and
output under different market
structures
Mathematics Techniques
Optimization techniques such
as differential callas, linear
programming etc.
Macro Economics
Consumption theory,
investment demand, the
general price level and Business
Cycles
Statictics
Measures of Central tendancy,
Measures of Dispersion,
Correlation, Regression, trend
projections, least square.
10. Managerial Decision Making
Decision making is crucial for running a business enterprise which faces a large number of problems requiring
decisions. Problems which requires decisions to be made by managers includes which product to be produced,
what price to be charged, what quantity of the product to be produced, how much investment expenditure to be
incurred etc. Following chart portays the decision making process -
Source: Ahuja H. L., Managerial Economics, 9e, pg. no. - 9.
11. Relationship of Managerial Economics with other subjects
Economics
Managerial Economics is economics
applied to decision making. It is a special
branch of economics, bridging the gap
between pure economic theory and
managerial practice.
Theory of Decision Making
The theory of decision making is
relatively a new subject that has
a significance for managerial
economics. In the process of
management such as planning,
organising, leading and
controlling, decision making is
always essential. Decision
making is an integral part of
today’s business management.
Mathematics
Mathematics has helped in the development of economic theories
and now mathematical economics has become a very important
branch of economics. Mathematical approach to economic theories
makes them more precise and logical.
Operations Research
The basic purpose of the approach is to
develop a scientific model of the system which
may be utilised for policy making.
Accounting
Managerial economics is closely related to
accounting. It is recording the financial
operation of a business firm. A business is
started with the main aim of earning profit.
Capital is invested / employed for purchasing
properties such as building, furniture, etc
and for meeting the current expenses of the
business.
Statistics
Statistics is a very useful science for business execu-
tives because a business runs on estimates and
probabilities. Statistics supplies many tools to
managerial economics. Suppose forecasting has to be
done. For this purpose, trend projections are used.
Similarly, multiple regression technique is used. In
managerial economics, measures of central tendency
like the mean, median, mode, and measures of
dispersion, correlation, regression, least square,
estimators are widely used.
12. Nature of
Managerial
Economics
Micro
Economics
Uses
Macro
Economics
Multidi
sci-
plinary
Prescript
ive /
Normati
ve
Managem
ent
Oriented
Pragmati
c
Art and
Science
Nature of Managerial Economics
Art and Science: Managerial economics requires a lot of logical thinking and
creative skills for decision making or problem-solving. It is also considered to be
a stream of science by some economist claiming that it involves the application
of different economic principles, techniques and methods, to solve business
problems.
Micro Economics: In managerial economics, managers generally deal with the
problems related to a particular organisation instead of the whole economy.
Therefore it is considered to be a part of microeconomics.
Uses Macro Economics: A business functions in an external environment, i.e. it
serves the market, which is a part of the economy as a whole.
Multi-disciplinary: It uses many tools and principles belonging to various
disciplines such as accounting, finance, statistics, mathematics, production,
operation research, human resource, marketing, etc.
Prescriptive / Normative Discipline: It aims at goal achievement and deals with
practical situations or problems by implementing corrective measures.
Management Oriented: It acts as a tool in the hands of managers to deal with
business-related problems and uncertainties appropriately. It also provides for
goal establishment, policy formulation and effective decision making.
Pragmatic: It is a practical and logical approach towards the day to day business
problems.
13. Scope of Managerial Economics
Demand Analysis and Forecasting
A major part of managerial decision making depends on accurate estimates of
demand. A forecast of future sales serves as a guide to management for
preparing production schedules and employing resources. It will help
management to maintain or strengthen its market position and profit base.
Production and cost analysis
A firm’s profitability depends much on its cost of production. A wise
manager would prepare cost estimates of a range of output, identify
the factors causing are cause variations in cost estimates and choose
the cost-minimising output level, taking also into consideration the
degree of uncertainty in production and cost calculations.
Strategic Planning
Strategic planning provides a long-term goals and objectives and selects the
strategies to achieve the same. . The perspective of strategic planning is
global. strategic planning has given rise to be new area of study called
corporate economics
Pricing and Competitive Strategy
Pricing decisions have been always within the preview of managerial
economics. Price theory helps to explain how prices are determined under
different types of market conditions. Competitions analysis includes the
anticipation of the response of competitions the firm’s pricing, advertising and
marketingstrategies.
Resource Allocation
Managerial Economics is the traditional economic theory that is concerned
with the problem of optimum allocation of scarce resources. Marginal
analysis is applied to the problem of determining the level of output, which
maximizes profit. In this respect linear programming techniques has been
used to solve optimization problems
Capital or Investment decisions
Capital is the foundation of business. Lack of capital may result in small size of
operations. Availability of capital from various sources like equity capital, institutional
finance etc. may help to undertake large-scale operations. Hence efficient allocation
and management of capital is one of the most important tasks of the managers.
Operational
Issues
The scope of managerial economics refers to its area of study. It is comprised of economics concepts, theories
and tools of analysis that can be applied in the process of business decision making to analyse business
problems, to evaluate business options, to assess the business prospects, with the purpose of finding
appropriate solution to business problems and formulating business policies for future. The scope of managerial
economics covers two areas of decision making 1. Operational or Internal issues 2. Environmental or External
issues.
Operational issues refer to those, which are within the business organization and they are under the control of
the management. Following are the operational issues of Managerial Economics:
14. Environmental or External Factors refer to general economic, social and political
atmosphere within which the firm operates.
Economic Environment
The type of economic system in the country.
a. The general trends in production, employment, income, prices,
saving and investment. b. Trends in the working of financial
institutions like banks, financial corporations, insurance
companies c. Magnitude and trends in foreign trade; d. Trends in
labour and capital markets; e. Government’s economic policies
viz. industrial policy monetary policy, fiscal policy, price
policy etc.
Political Environment
The Political environment refers to the nature of state
activity, chiefly states’ attitude towards private
business, political stability etc.
Social Environment
The social environment refers to social structure as
well as social organization like trade unions,
consumer’s co-operative etc.
Scope of Managerial Economics
15. Role of Managerial Economicsts
• Analysis of Business Operations:
The managerial economist can help in the management in making decisions
regarding the internal operations of a firm. Managerial economists play an
important role in managing management in the following areas -
Determining the budget of profit and sales volume in the coming years.
For the Future Purpose, the quantity of production quantity should be
determined by the goods schedules and stock policy.
In the next years, what changes should be made in the price policy and
wage policy?
What is the firm’s credit policy in the future, and what are the changes in
it?
In the upcoming years, the business should be expanded and contracted,
if yes, how much?
How many installed capacity should be used in the future. and how much
of the instruments should be applied, that the tools can be used?
What steps should be taken to cut costs?
How much cash will be available in the quarter of the coming year, half-
yearly. and suggest how to reduce the deficiency and how to use
excessive, etc.
16. Role of Managerial Economicsts
• Analysis of External factors:
The prime duty of a managerial economist is to make extensive study of the
business environment and external factors affecting the firm's interest. The
managerial economist can continue his studies by advising continuous study
and comprehensive analysis of these factors and tell the highest
management in making policies necessary adjustments.
In what markets, what are the demands and how the market of the firm’s
products is likely to be?
What are the trends of the national economy and the international
economy? And what are the chances of change soon?
What is the state of the business cycle and what will be its appearance
and speed soon?
What is the probability of the supply of raw materials and the price? And
what are the possibilities they have soon?
Determination of future demand and price related possibilities of the
built route.
What is the cost and availability of creditworthiness in the future?
What are the prospects of changes in future economic policies and
controls?
How is the competition event or the possibility of growth in business in
the future?
What are the prospects of the availability and cost of fuel or power?
What will be the prospects and speed of change in the future of national
income and what will be the change in the production and demand of the
firm?
• Other functions of Managerial Economists:
Surveying different markets.
Predicting the industry’s total demand for business.
Analyzing pricing in different industries, finding a suitable solution to the
problem.
Analysis of valuables and actions in competitive firms.
Evaluation and analysis of capital projects in productive work.
Determination of production schedules and goods tables in the industry.
Making various appropriation decisions available financial instruments.
Analysis of agriculture, industry, transportation or other development
work.
Analyze the development of the economy.
Comparative analysis of projects.
Forecasting external conditions affecting a professional firm.
17. Responsibilities of Managerial Economicsts
A Managerial economist plays a very significant role in decision-making and forward planning. But,to serve his role
successfully, he must thoroughly recognize his responsibilities, some of which arefollowing:-
To increase the profitability of the Firm: An economist has a responsibility to earn profit forthe firm by taking right
decision about investment, production, sale and market research.
To make Accurate and Successful Forecast: It is a responsibility of an economist to makesuccessful research and use past
data to find out the expected sales in future and the trend insales.
To maintain relations with Experts: The important responsibility of a managerial economist isto provide solution to
complex business problems, for this purpose he must establish and maintain the relations with such experts of different
fields who can provide their service to the firm as andwhen required.
To aware availability of Resources: A managerial economist should be aware of locations andsituations of the specific
markets, by which he should be able to provide the resources of firm’soperation quickly at reasonable price.
To Simplifying the decision making process: The management has to take many decisions in itsday-today functioning. It is
the main responsibility of a managerial economist to make the decisionmaking process as simple as possible so that quick
and correct decision could be taken promptly.
Responsibility to minimize risk: Minimizing risk is another responsibility to the economist. Itcan be done by minimizing
future uncertainty by knowing about all the prospective facts present inthe market. To minimize risk successful forecasting
and right decisions are needed
18. Objectives of Managerial Economics
A. Profit Maximisation
• Economic Profit = Total Revenue – Total Economic Cost (Firms try to
maximise this profit in their decision making). Thus, π =TR-TC
• The simple profit maximising model of the firm provides very useful
guidelines for the decision making by the firm with regard to efficient
resource management. Thus, any business decision by a firm will
increase its profits if the following conditions prevail:
It brings about increase in TR more than increase in costs
It causes increase in revenue, costs remain unchanged
It reduces cost more than it reduces revenue
It reduces cost, revenue remaining the same.
• But, this model has two important limitations:
It does not incorporate time dimension in decision making process of
the firm
It does not analyse the firm’s behaviour under conditions of risk and
uncertainty.
19. B. Value Maximising Model of the Firm
• This model is also known as shareholders wealth maximisation
model .
• Modern theory of the firm assumes that primary objective of
the firm or their managers is to maximise value of wealth or
shareholders wealth.
• Value of the firm is measured by calculating present value of
cash flows of profits of the firm over a no. of years in the
future.
• Constrained Optimisation: In making efficient and optimum
decisions regarding pricing level of output, production method,
costs, manager of the firm work under several constraints. So,
decision making by a firm to maximising profits or value of the
firm is called as Constrained Optimisation.
Legal Constraint: relate to laws such as minimum wage act,
company act etc. The society imposes these constraints on the
firm to modify behaviour so as to make them consistent with
overall social objectives.
Input Constraints: relate to limited availability of essential
physical inputs.
Financial Constraints: relate to financial resources it is able to
raise.
20. Other
Objectives
of Firms
Sales Revenue Maximization
Maximization of Firm's Growth Rate
Maximization of Managerial Utility Function
Baumol has proposed maximization of sales revenue as an
alternative to profit maximization objective. According to him,
sales maximization leads to enhancement of prestige,
reputation, perks of managers, strengthen competitive spirit of
the firm etc.
Marris proposed maximization of firm’s balanced growth rate as
an objective of the firm. Manager seeks to maximize the size of
the firm. Maximization of size of the firm depends on the
maximization of its growth rate.
Williamson focused on maximization of marginal utility function.
According to him, instead of maximizing profit, the managers of
modern corporations seek to maximize their own utility
function subject to a minimum level of profit.
21. What managerial economics is all about? Managerial Economics has both descriptive and
prescriptive roles. Explain.
Explain how managerial economics acquires its essential identity?
Explain the various steps in management decision making process.
What is the nature and scope of managerial economics?
Discuss the roles of managerial economists in modern business management.
Specify the important responsibilities of a managerial economists.
Explain briefly profit maximizing model of the firm.
Explain value maximization theory of the firm.