Download Managerial Economics

Unit - 1
Managerial economics is concerned
with the application of economic
principles and methodologies to
the decision process with in the
organization .it seeks to establish
rules and principles to facilitate the
attainment
of
the
desired
economic goals of management.” –
Douglas
Decision making
 Decision making - It is the process of selecting best
out of alternative opportunities open to the firm.
Characteristics of M. E.
 Micro in nature
 Based on the Theory of Markets and
Private Enterprise
 Goel-Oriented
 Normative in nature
 Macro analysis
Scope of M.E.
 Theory of Demand
 Theory of production
 Analysis of market-structure and
pricing
 Profit
Analysis
and
profit
Measurement
 Theory of capital and Investment
decisions
Why do managers need to know managerial
economics (Significance)
 Better management of resources
 Helps in decision making and forward planning
 Helps in understanding International Trade
 Helps in understanding various policies and
working of govt.
 Goal of maximum profit
 Economic forecast
Nature of M.E.
Economics as a Science :
It is a systematic body of knowledge based
on certain principles, capable of general
application,
which
describes
the
relationships between a set of given causes
and their effects. This knowledge is
obtained
through
the process of
observation, experimentation and testing.
It involves:
 Systematic body of knowledge
 Scientific inquiry and observation
 Experimentation
 Universal truths
Economics
as
an
Art
An art is system of rules for
the attainment of a given
end.
-Keynes