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Managerial Economics

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It generally refers to the integration of the economic theory with business practices. Where economics provides the tools to explain the relationship between demand, supply, price, competition, etc. In total managerial economics applies this knowledge to the management of business.

 

Below are the definitions given by different experts-

Prof , Spencer Sigelman – Managerial economics deals with "integration of economic theory with business practice for the purpose of facilitating decision making and forward planning by management.

 

Prof. Hague – ME is concerned with using logic of economics mathematics & statistics to provide effective ways of thinking about business decision problems.

 

Prof. Joel Dean – "The Purpose of ME is to show how economic analysis can be used in formulating business polices."

 

Based on above definitions we can conclude that –

  • Economic theory provides the basis for the decision making process.
  • Not only economic theory but mathematics and statistics can also help in decision making.
  • Based on the theories and analysis, a attempt is made to arrive at some decision.

 

There are numerous problems that cab be resolved through this process like:

  • To fix the product price
  • What should be the size of the plant to be installed for this much production?
  • What training and at what level it should be imparted to the trainees and the staff?

 

In all economics solve issues and enable a firm to achieve its objective and grow further.

 


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