Managerial economics is simply Applied Microeconomics.
Managerial economics applies economic theory and methods to business and administrative decision making. As a result of its application of the tools and techniques of economic analysis to solve managerial problems, managerial economics links traditional/conventional economics with the decision sciences (eg statistical estimation, forecasting, and optimization) as important tools for managerial decision making.
Managerial economics deals with the application of microeconomic reasoning to real world decision – solving problems faced by private, public and not for profit institutions. Managerial economics extracts from microeconomic theory those concepts and techniques that enable a decision maker to select strategic direction, to allocate efficiently the resources of the organization and to respond effectively to tactical issues.
All managers seek to identify the alternative means of achieving given objectives and then to select the alternative that accomplishes the objectives in the most resource efficient manner, taking into account the constraints and the likely actions and reactions of interdependent rival decision makers.
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