Role of a Managerial Economist
One of the principal objectives of any management in its decision-making process is to determine the key factors, which will influence the business over the period ahead. In general, these factors can be divided into two categories:
- External
- Internal
The external factors lie outside the control of management because they are external to the firm and are said to constitute business environment. The internal factors lie within the scope and operations of a firm and hence within the control of management, and they are known as business operations. To illustrate, a business firm is free to take decisions about what to invest, where to invest, how much labour to employ and what to pay for it, how to price its products, and so on. But all these decisions are taken within the framework of a particular business environment, and the firm’s degree of freedom depends on such factors as the government’s economic policy, the actions of its competitors and the like.
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