UNIT 1 MEANING AND IMPORTANCE OF MANAGERIAL ECONOMICS

UNIT - 1 MEANING AND IMPORTANCE OF MANAGERIAL ECONOMICS

MANAGERIAL ECONOMICS Managerial Economics is the integration of economic theory with business practice for the purpose of facilitating decision making and forward planning by the management. ECONOMIC THEORY BUSINESS PROBLEMS MANAGERIAL ECONOMICS (Decision making)

FEATURES ØNew discipline & recent origin. ØHighly specialized & separate branch. ØBranch of Micro economics. ØIt’s a normative science, goal oriented & prescriptive science.

ØIts more realistic and pragmatic. ØScience of decision-making. ØIts both conceptual & metrical. ØUse macro economic concept like National income, inflation, trade cycle etc.

SCOPE ØObjectives of a firm. ØDemand analysis and Forecasting. ØProduction and cost analysis. ØPricing decisions, Policies and Practices. ØProfit Management. ØCapital Management.

ØLinear Programming & Theory of Games. ØMarket Structure & conditions. ØStrategic Planning.

IMPORTANCE ØProvides guidance for identification of key variable in decision-making. ØHelps executives to understand various managerial problems. ØProvides various concepts, technical skills, toolbox of analysis & techniques of thinking to solve business problems.

ØIts both a science & an art. ØHelps executives to become more responsive, realistic & competent. ØHelps in optimum use of scarce resources.

ØHelps in attaining industry leadership, market share expansion and social responsibilities etc. ØHelps firm in forecasting economic variables. ØHelps in understanding the various external factors & forces which affects business decision.

FUNCTIONS ØDecision Making ØForward Planning