MEANING Managerial Economics is the integration of economic

MEANING: Managerial Economics is the integration of economic theory with business practice for the purpose of facilitating decision making, forward planning by management.

Characteristics /Features/Nature of Managerial Economics: Micro-Economic in nature. Pragmatic. Related to Normative Economics. Conceptual in Nature. Utilizes some theory of Macro-Economics. Problem solving in Nature. Managerial Economics deals with the application of Economics. • Interdisciplinary. • Study of Allocation of Resources. • •

Role/Scope of Managerial Economics: • • • Demand Analysis. Supply Analysis. Forecasting. Pricing Decisions & Policies. Cost And Production Analysis. Profit Management. Analysis of Production Environment. Capital Management. Allied Disciplines.

Objectives/Goal of a Firm • • Profit Management. Firm value Maximization. Sales maximization. Size maximization. Long term Survival. Management Utility Maximization. Satisfying. Other non-profit objectives.

Economic Theory: • • • Opportunity cost principle. Incremental cost principle. Principle of Time Perspective. Discounting Principle Equi-Marginal principle.

Responsibilities Of Managerial Economist: • • • Objectives must Coincide with business. Enhance ability of a Firm. Make Accurate Forecast. Is a member of full Status. Bring Synthesis of policies. Alert management in case of Error. Establish and maintain contacts with the consumers. Enlarge area of certainty. Discharge role Successfully. Contribute Significantly.

Divisions of Economics • • • Production. Consumption. Exchange. Distribution. Public Finance.

Difference between Managerial Economics and Economics Managerial Economics • Involves application of economics of a firm. • Macroeconomic in nature. • Deals with firm only. • Normative Science. • Deals with practical aspects. Economics • Deals with body of principles. • • Micro & Macroeconomic in nature. Deals with individuals & Firm. Both Normative & Positive Science. Deals with Theoretical Aspects.

Definition: • According to Hanson, Demand is the quantity of a commodity that will be purchased for a particular price

Determinants of Demand: • • Price of a Commodity. Price of related goods. Income of the consumer. Distribution of wealth. Taste & Preference. Government policies/Tax rate. State Of Business. Population growth.