Definition nature and scope of managerial economics
In this model, the final demand is treated as exogenously determined and the input-output technique is used to find out the levels of activity in the various sectors of the economic system. Demand Analysis and Forecasting 3.
Nature and scope of managerial economics ppt
Scope of Marginal Economics 6. This is all described in this area. Sales decision is concerned with how much to produce and sell for maximising profit. Scientific method alone can bring about confidence in the validity of conclusions. Several acts are performed to attain the objectives quantitative techniques are also used in decision making. They are considered basic because they affect the whole organisation. The scope of managerial economics is so wide that it embraces almost all the problems and areas of the manager and the firm. He should indulge in market survey, a product preference test, an advertising effectiveness study and marketing research. Among the social sciences, economics is the most advanced in terms of theoretical orientations. One right, non-negotiable and 4. The application of managerial economics is inseparable from consideration of values, or norms for it is always concerned with the achievement of objectives or the optimisation of goals. The business executive has to make the rational allocation of available resources at his disposal. By making the best possible forecasts, the management can follow a more closely course of business planning. In this context, it is essential for the managerial economist to engage in model building. Thus, under the assumptions of cost-average marginal cost expansion and variable costs, 2.
Full competition2. Thus we see that a firm has uncertainties to rock on with. But managerial theory deals with a study of only profit theories. Managerial decisions are based on the flow of information.
The nature of the assumptions and benefits, 3. He should be held in the confidence of the management. He must be alert to new developments both economic and political in order to appraise their possible effects on business. Therefore, there was not much known for its area.
The main topics covered under cost and production analysis are production function, least cost combination of factor inputs, factor productiveness, returns to scale, cost concepts and classification, cost-output relationship and linear programming. He has a significant role to play in assisting the management of a firm in decision making and forward planning by using specialised skills and techniques.
Queueing is a particular application of the statistical decision theory. Operations research which is closely related to managerial economics is mathematical in character.
Nature of managerial economics with diagram
Thus macro-economics is aggregative economics. Firms have only limited resources at their disposal which they must utilise to make profit. As mentioned above, the managerial economist has an important role to play. Computer is a fast electronic calculating machine capable of absorbing, processing, integrating, relating and producing the resultant output information within a short span of time. Managerial Economics and Economics: Managerial Economics has been described as economics applied to decision making. Linear programming deals with those programming problems where the relationship among the variables is linear. This goes on the daily routine work of the business. In this model, the final demand is treated as exogenously determined and the input-output technique is used to find out the levels of activity in the various sectors of the economic system. Others Which does not come into the study area of managerial economics? Hence, decisions on investment are to be taken with utmost caution and care by the executive. It refers to a procedure or mode of investigation by which scientific and systematic knowledge is acquired.
Decision making is a process and a decision is the product of such a process.
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