Managerial Economics

Managerial Economics

“Managerial Economics is economics applied in decision

making. It is a special branch of economics bridging the gap between abstract theory and

managerial practice.” – Haynes, Mote and Paul.

Nature of Managerial Economics• Decision making and Forward planning• Process of selecting one from alternative

resources and establishing plans for future• Problem of choice arise• Objective is to attain maximum profit• Business manager make best possible plan

based on past experience.• Deals with number of concepts i.e. profit,

demand, cost, pricing, production, competition etc.

ScopeA. INTERNAL/ OPERATIONAL 1. Demand analysis and forecasting

2. Cost analysis

3. Pricing Decision

4. Profit analysis

5. Capital Budgeting

6. Production and Supply analysis

B. External/ Environmental

Characteristic of Managerial Economics• It is micro economics in character• Body of economic concepts and principles• It is Pragmatic• It is normative rather than positive• Macro economics is also useful to managerial

economics• Management oriented

Differences between Economics and Managerial Economics