(MANAGERIAL ECONOMICS)
UNIT 1
Definition
Managerial economics’ is concerned with the application of economic principles
and methodologies to the decision-making process within the firm or
organization under the conditions of uncertainty”.
Features of Managerial economics
It is concerned with Decision-making of economic nature
It is microeconomic in character
It is largely uses that body of economic concepts & principles, which is known
as the “theory of the firm”
It is both conceptual and metrical, it includes theory with measurement
It is goal oriented and prescriptive
Nature of Managerial economics
1) Resource allocation: The resources are scares with alternative uses.
Managers need to use these limited resources wisely. Each resource has several
uses. It is the manager who decides with his knowledge of economics that which
one relevant use of the resource.
2) Managerial Economics has a component of microeconomics: Managerial
economics deals with the problem faced by the individual organization such as
demand for its product, price, and output determination of the organization,
available substitute and complementary goods supply of inputs and raw
material, target or prospective consumers of its products, etc.
3) Managerial Economics has components of macroeconomics: All
organizations are affected by the external environment of the economy in which
such as government policies, general price level, income, and employment levels
in the economy, exchange rate, balance of payment, etc. these aspects are
related to macroeconomics.
4) Managerial Economics is Dynamic in Nature: Managerial economics deals
with human-being such as human resources, consumers, producers, etc. The
nature and attitude differ from person to person. Managerial economic also
change itself over a period of time.
Importance of Managerial Economics:
, 1) Demand Analysis and Forecasting:
2) Cost of Production Analysis:
3) Profit Management:
4) Capital Management:
5) Business Environment Analysis:
What are Economic Problems? Why do economic problems arise?
Human wants are unlimited, when one want is satisfied the other one crops
Up, the resources to satisfy these wants are limited. This is called economic
Problem.
1. Unlimited wants
2. Limited Resources
3. Alternative uses of resources
The central of the economy?
There are basically three major problems of an economy:-
1. What to produce? – Two types of goods: 1 Producer goods, 2 Consumer
goods.
2. How to produce? – Two types of methods: 1 Labour-intensive, 2 Capital-
intensive.
3. For whom to produce? – Divided into three classes: 1 Upper Class, 2 Middle
Class, 3 Lower Class.
How is managerial economics linked with other disciplines or fields of study?
1- Microeconomics Theory– Managerial economics deals with the problem
faced by the individual organization such as demand for its product, price, and
output determination of the organization, available substitute and
complementary goods supply of inputs and raw material, target or prospective
consumers of its products, etc.
2- Macroeconomics Theory – All organizations are affected by the external
environment of the economy in which such as government policies, general
price level, income, and employment levels in the economy, exchange rate,
balance of payment, etc. these aspects are related to macroeconomics.
3- Operation Researches, 4- Statistics, 5- Management Theory and Accounting
–
UNIT 1
Definition
Managerial economics’ is concerned with the application of economic principles
and methodologies to the decision-making process within the firm or
organization under the conditions of uncertainty”.
Features of Managerial economics
It is concerned with Decision-making of economic nature
It is microeconomic in character
It is largely uses that body of economic concepts & principles, which is known
as the “theory of the firm”
It is both conceptual and metrical, it includes theory with measurement
It is goal oriented and prescriptive
Nature of Managerial economics
1) Resource allocation: The resources are scares with alternative uses.
Managers need to use these limited resources wisely. Each resource has several
uses. It is the manager who decides with his knowledge of economics that which
one relevant use of the resource.
2) Managerial Economics has a component of microeconomics: Managerial
economics deals with the problem faced by the individual organization such as
demand for its product, price, and output determination of the organization,
available substitute and complementary goods supply of inputs and raw
material, target or prospective consumers of its products, etc.
3) Managerial Economics has components of macroeconomics: All
organizations are affected by the external environment of the economy in which
such as government policies, general price level, income, and employment levels
in the economy, exchange rate, balance of payment, etc. these aspects are
related to macroeconomics.
4) Managerial Economics is Dynamic in Nature: Managerial economics deals
with human-being such as human resources, consumers, producers, etc. The
nature and attitude differ from person to person. Managerial economic also
change itself over a period of time.
Importance of Managerial Economics:
, 1) Demand Analysis and Forecasting:
2) Cost of Production Analysis:
3) Profit Management:
4) Capital Management:
5) Business Environment Analysis:
What are Economic Problems? Why do economic problems arise?
Human wants are unlimited, when one want is satisfied the other one crops
Up, the resources to satisfy these wants are limited. This is called economic
Problem.
1. Unlimited wants
2. Limited Resources
3. Alternative uses of resources
The central of the economy?
There are basically three major problems of an economy:-
1. What to produce? – Two types of goods: 1 Producer goods, 2 Consumer
goods.
2. How to produce? – Two types of methods: 1 Labour-intensive, 2 Capital-
intensive.
3. For whom to produce? – Divided into three classes: 1 Upper Class, 2 Middle
Class, 3 Lower Class.
How is managerial economics linked with other disciplines or fields of study?
1- Microeconomics Theory– Managerial economics deals with the problem
faced by the individual organization such as demand for its product, price, and
output determination of the organization, available substitute and
complementary goods supply of inputs and raw material, target or prospective
consumers of its products, etc.
2- Macroeconomics Theory – All organizations are affected by the external
environment of the economy in which such as government policies, general
price level, income, and employment levels in the economy, exchange rate,
balance of payment, etc. these aspects are related to macroeconomics.
3- Operation Researches, 4- Statistics, 5- Management Theory and Accounting
–
