23-11-2012, 01:15 PM
Managerial Economics
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Concept of Managerial Economics :-
Managerial Economics is known as business economics, micro economics, economics enterprise, applied economics and managerial analysis.
Definitions:-
“ The purpose of Managerial Economics to show how economic analysis can be used formulating business policies.”
Meaning of Managerial Economics
Managerial Economics refers the integration of economy theory with business practices. It deals with application of economy principles to the problem of business firm. It modify or reformulates already existing economic model to suit the specific problem of the business firm. It help to solve real complex of business firm.
Nature of Managerial Economics
1] Fundamental Academic Subject :-
It is an academic subject that deserve a series and scientific treatment. As science involve generalization, law and prediction.
2] Economic Rationale of Business Administration :-
It concerned with the administration of business. It applies the economic theory and methodology in practices, so the decision is tested on the basis of economic reasoning.
3] Allocation of Resources:-
Optimum utilization of resources is the one of major challenged which is faced by the managerial economics. As the resource are limited so managerial economics assist to business firm to use maximum utilization of resources and gain ultimate satisfaction.
4] Theory of Firm :-
Managerial Economics is concerned with the theory of firm in economy. Classical economist propounded the theory of firm which can be explained under :-
i] To maximize long term profit.
ii] To work rationally.
iii] A firm is a transformation unit.
vi] Production and Price decision.
Responsibility of Managerial Economist
1] To Measure the Increase in the Earning Capacity of a Firm :
A managerial economist has a great responsibility to achieve an object of earning maximum profit. If he does not do this property, the capacity of a firm can not be utilized fully and the firm can not achieve its objects. Therefore manager should continue his efforts in increasing the earning capacity the firm.
2] To Make Successful Forecasting :-
By analyzing all the internal and external factors and by assessing their impact in profitability and working of the firm. Managerial economist must forecast or predict for the prosperous future of the firm.