Scopes and Fundamental concept of managerial economics

Scopes

I. Managerial economics- Is it positive or normative:

II. Area of study:

1. Demand analysis and forecasting:

· Forecasting sales.

· Manipulating demand.

2. Cost and production analysis

3. Pricing decisions, policies and practices

4. Profit management

5. Capital management

6. Linear programming and theory of games.

III. Profit: The central concept in managerial economics:

IV. Optimization:

V. Relationship of managerial economics with other disciplines:

1. Managerial economics and micro economics.

2. Managerial economics and macroeconomics.

3. Managerial economics and mathematics.

4. Managerial economics and statistics:

5. Marshaling of quantitative data

6. Empirical Testing

7. Theory of probability

8. Managerial economics and accounting.

9. Managerial economics and operations research.

Fundamental concept of managerial economics

1. Opportunity cost principle

2. Incremental cost and revenue principle

3. Time perspective and Equi-marginal principle

Introduction to managerial economics; Definition and Common Features

Definition

“Managerial economics is concerned with business efficiency”. – Professor Small

“Managerial economics is the use of economic modes of thoughts to analyse business situation.”  - Mcnair and Meriam

Common Features in the definitions

1. Managerial economics is concerned with decision making of economic nature

2. Managerial economics is goal oriented, it aims at maximum achievement of objectives and how decisions 

should be made by the manager to achieve the goal.

3. Managerial economics is pragmatic as it deals with matters according to their practical significance.

4. Managerial economics applies quantitative techniques to business. 

 Factors Influenced in decision making other than economic factors

1. Human

2. Behavioral

3. Technological

4. Environmental