This document provides an introduction to managerial economics. It defines managerial economics as the integration of economic theory with business practice to facilitate managerial decision making. It discusses how managerial economics uses economic analysis and modes of thought to analyze business situations and formulate policies. The document also outlines some key characteristics of managerial economics, its importance in business decision making, and the roles and responsibilities of managerial economists in areas like forecasting, market research, and production scheduling. Finally, it discusses concepts like decision making, optimization, and marginal analysis that are important tools in managerial economics.
2. Introduction of economics:
Economics is the study of men as they
live,behave,move and think in ordinary
business life.
It is the study of how society uses its
scarce resources.
3. Managerial Economics:
Managerial Economics is the study of
allocation of resources available to a
business firm or an organisation.
ME generally refers to the integration of
economic theory with business practice.
4. Managerial Economics means the
application of economic theory to the
problem of management.
Itrelates to the managerial decision making
in achieving a business goal by using the
given business resources in the most
effective manner.
5. Definition:
“Managerial economics is the Integration
of economic theory with business practices
for the purpose of facilitating decision
making and forward planning by
management”
-Spencer and Siegelman
6. Cont..
“Managerial Economics is the use of
Economic modes of thoughts to analyse
business situation”
-Mc Nair and Meriam
“The Purpose of Managerial Economics is
to how Economic analysis can be used in
formulating policies.”
-Jeal Dean
7. Nature/Charateristics or features
of ME:
Is Essentially Microeconomic in nature;
Is Pragmatic
Belongs to normative Economics
i.e.Besides being Descriptive,it is also
prescriptive.
Is Conceptual in nature
Utilizes some theories of Macroeconomics
Is problem solving in nature.
8. Importance/Significance of ME:
Reconciling Traditional Theoretical
concepts to the actual business behaviour
and conditions
Incorporates useful Ideas from other
Desciplines
9. Helps in reaching a variety of business
decisions in a complicated Environment
Build competent managers
Coordinate with different departments
Helps in attainment of social and economic
welfare
10. Roles/Functions and
responsibilities of managerial
Economist:
Analysis of External Factors
Analysis of internal factors
Specific functions
-Sales forecasting
-Market Research
-Economic analysis of
competing firms
-Production and inventory schedule
etc.
11. Responsibilities:
To make Reasonable Profits on capital
Employed
Successful Forecasts
Knowledge of sources of economic
Informations
His status in the firm
12. Managerial economics and
decision making:
A Decision is simply a selection from two
or more courses of action.
The essence of an Economic is the solution
to an economic problem.
When two or more alternative courses of
economic action are available,there is the
problem of choice – The Economic
Problem.
13. Optimization:
Optimization is the act of choosing the best
alternative out of all the available ones.
IT describes how decisions or choice
among alternatives are taken or should be
made.
It is important in efficiently managing an
enterprise’s resources and thereby
maximizing shareholder wealth.
14. Optimization is a point which is either
maximum or minimum.
It helps in making decision
