Managerial economics

• Managerial economics is a stream of management studies that emphasizes primarily on solving business problems and decision making
• managerial economics is a specialized stream dealing with an organization's internal issues using various economic tools.
• Managerial economics derives all the business assumptions, forecasting, and investments.
• Art and science means management requires a lot of critical and logical thinking and analytical skills to make decisions or solve problems.
• Art and science means finding economics as a source of research because it includes applying different economic concepts, techniques, and methods to solve business problems.
• Microeconomics deals with problems relevant to a single entity rather than the economy as a whole.
• Macroeconomics focuses on the external world rather than on individual problems. It evaluates the market dynamics, economic changes, and government policies.
• Multidisciplinary means that it uses many tools and principles that belong to different disciplines such as accounting, finance, statistics, mathematics, etc.
• Prescriptive or normative discipline means to introduce corrective steps, economics aims at achieving the objective and solve specific issues or problems
• Management oriented serves as an instrument in managers hand to deal effectively with business-related problems and uncertainties.
• Management oriented allows for setting priorities, formulating policies, and making successful decisions.
• Pragmatic is the means of being and sensible or making sense when making decisions.
• Pragmatic requires the solution of the entity to be realistic, rational, practical, applicable, and it should be in the right side.
• Liberal managerialism means that a market is a democratic space where people make their choices and decisions.
• Liberal managerialism states that the managers must function according to the customers' demand and market trends otherwise; this can lead to business failures.
• Normative Managerialism states that administrative decisions are based on experiences and practices of real life.
• Radical managership means managers have to have a creative approach to business concerns like making decisions to improve the current situation or circumstance.
• Radical managership is the concentration of the need and satisfaction of the consumer rather than just the maximization of income.
• Nature of Managerial Economics

  1. Art and science
  2. Multidisciplinary
  3. Microeconomics
  4. Macroeconomics
  5. Prescriptive or normative discipline
  6. Management Oriented
  7. Pragmatic
• Concepts of Managerial Economics

  1. Liberal Managerialism
  2. Normative Managerialism
  3. Radical Managership
• Managerial economics applies microeconomic theory to analyze individual firms and industries while macroeconomics focuses on national economies.
• Managerial Economics is an applied field which deals with the application of economic principles, concepts, theories, models, tools and techniques to solve problems encountered by businesses and organizations.
• Humans face trade-offs means to make decisions, people have to choose or determine whether to choose the different options available or not.
• Price of opportunity states that each decision involves a cost of opportunity, which is the cost of those options we let go of while choosing the most appropriate one.
• Feel fair about the margin means that people typically think about the margin or income they receive before investing in a specific project with their money or resources.
• People respond to stimulus states that decisions to be made highly depend on incentives related to a product, service, or activity.
• Negative incentives discourage people, while positive incentives encourage them.
• PRINCIPLES OF MANAGERIAL ECONOMICS

  1. Principles of how people decide
  2. Principles of how people interact
  3. Principles on how economy works.
• Principles of how people decide

  1. Humans face tradeoff
  2. Price of opportunity
  3. Feel fair about the margin
  4. People respond to stimulus
• Trade could better anyone states that trade is a way to share, wherein everyone gets an opportunity to offer the good products or services they make and buy the products or services that other people are good at manufacturing.
• Markets usually represent a good organized economic activity wherein markets serve as a means of customer and product interaction.
• Governments may often boost the performance of the market means that during the time of adverse market conditions or for the benefit of the society, the government intervenes in business operations.
• Principles of how people interact

  1. Trade could better anyone
  2. Markets usually represent a good organized economic activity
  3. Governments may often boost the performance of the market
• The standard of living of a country depends on its capacity to generate goods and services states that companies must be productive enough to products products and services to develop a country's economy.
• Prices increase when the government printing lots of money, suppose surplus money is available to citizens, and their capacity to spend increases. Eventually, it would lead to a rise in demand. Inflation takes place when the manufacturers are unable to satisfy market demands.
• Society faces a short-term correlation between unemployment and inflation states that the government introduces numerous economic policies to reduce unemployment.
• Principles on how economy works

  1. The standard of living of a country depends on its capacity to generate goods and services.
  2. Prices increase when governments print lots of money.
  3. Society faces short-term correlation between unemployment and inflation
• Demand theory is one of the core theories of microeconomics
• demand is the quantity of goods or services that consumers are willing or able to buy at a given price and at a given time.
• demand is the quantity of goods or services that consumers are willing or able to buy at a given price and at a given time.