Managerial Economics

MDU – MBA – 1st SEM. – JAN 2004

MANAGERIAL ECONOMICS

UNIT – 1

Q1. What is Managerial Economics? Discuss the characteristics and

scope of managerial economics. How does economic theory con-

-tribute to managerial decision ?

Ans. Economics is a social science, which studies human behavior

in relation to optimizing allocation of available resources to achieve the given ends .

The application of economic science is all

pervasive .More specifically economic laws and tools of economic

analysis are applied a great deal in the progress of business deci-

sion making . This has led to the emergence of a separate branch

of study called Managerial Economics .

“Managerial Economics is the study of eco-

-nomics theories, logic and tools of economic analysis that are

used in the process of business decision making . Economic theory

and technique of economic analysis are applied to analyze business

problems , evaluate business options and opportunities with a view

to arriving at appropriate business decision . Managerial economic

is thus constituted as that part of economic knowledge , logic ,

theories and analytical tools that are used for rational business

decision making .

Economics through ,variously defined is ess-

-entially the study of logic , tools and techniques of making opti-

-mum use of the available resources to achieve the given ends. Economics thus provides analytical tool and technique that managers need to achieve the goals of the organization they manage .

Baumaol has pointed out there main contributions of economic theory to business. First one of the most important !Unexpected End of Formula

things which the economic theories can contribute to the manage-

-ment science is building analytical models which help to recog-

-nize the structure of managerial problems ,...