Managerial Economic
Topic 1
Nature and Scope of Managerial Economics
Q-1 Managerial Economics is often said to help the business student integrate the Knowledge gained in other courses. How is this integration accomplished?
Ans: Managerial economics may be defined as the " The application of economic theory and the tools of decision science to examine how an organization can achieve its aims or objectives most efficiently"
(1) Relationship to economic theory
Study of economics is made from two perspectives
(a) Macro economic (b) Micro economics
In macro economics we study the economy as a whole. In this type of analysis we discuss about national income, inflation, unemployment etc.
In micro economics we discuss about the individual units of the economy like individual and market demand, consumer behavior and equilibrium of firm. In managerial economics the theories about firm are the most important because decision are made about the functioning of firms. Beside theory of firm, information about the behavior of consumer is also important for estimation of demand for the product of the firm. As firm operates in economy therefore changes in structure and nature of economy is also important for managerial decision making. We can, therefore say, that economic theories are very important for managerial decision making.
(2) Relationship to decision science
The decision sciences like mathematical tools and econometric techniques are important for deriving information about the market data interpretation and for taking accurate decision. Market date collection, demand analysis, cost calculation and profit estimations are very much based upon decision science.
Therefore " Managerial economics" refers to the application of economic theory and decision science tools to find the optimal solution to managerial decision problems
Note Students must explain various topics of economics and explain relation with IT and International business
BY MIAN USMAN
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