MANAGERIAL ECONOMICS ,
NATURE AND SCOPE OF
MANAGERIAL ECONOMICS
UNIT – 1
KMBN102 – MANAGERIAL ECONOMICS
BY – PRACHI JAIN (MBA )
INTRODUCTION
• Managerial Economics gain its importance due to
managerial problem faced.
• It gain its importance on 1951 when a book named
“Managerial Economics “ is published by Joel Dean.
MEANING
• Managerial economics is a combination of economic tools which
we can use in a business organization for management purpose.
• Economics provide various Tools ,Techniques and Methods for
Management purpose that is why it is called as Managerial
Economics.
• Managerial Economics = Economics theory + Business
organization
DEFINATION OF MANAGERIAL ECONOMICS
D.C. Hague describes Managerial Economics as
“ A fundamental academic subject which seeks to
understand and analyse the problems of business decision
making”
MC Nair and Meriam describes
“Managerial Economics is the use of economic modes of
thoughts to analyse business situation”
NATURE OF MANAGERIAL ECONOMICS
• Managerial Economics is an application of Economics tools for making
scientific decision making to solve managerial problems.
• Hence, managerial economics is a science applied to decision making.
• It concentrate more on the method of reasoning.
• Managerial economics will concentrate on decision process, decision
models and decision variables for firm.
• In simple words, Managerial Economics is “Economics applied in
decision making”.
NATURE OF MANAGERIAL ECONOMICS
POSITIVE ECONOMICS NORMATIVE ECONOMICS
• Positive Economics is a fact • Normative Economics is a
based economics just deal with opinion based economics deals
“What is” and does not pass any with “ What should be” and pass
value judgements. value based judgements.
• For example : manufacturing of • For example : government
wines and cigarettes should reduce its tax rate to
increase tax collection.
MANAGERIAL ECONOMICS AS A NORMATIVE
ECONOMICS
• It is right to say that managerial economics is a normative
economics as it follows the system of normative
economics.
• Managerial Economics refers the “What should be done “ ,
pass value based and norm- based judgements to achieve
the goals of the firm.
SCOPE OF MANAGERIAL ECONOMICS
• Demand analysis and forecasting
• Cost and production analysis
• Inventory management
• Advertisement
• Sales promotion
• Pricing Decision , policies and practices
• Profit management
• Capital management
• Analysis of business environment
• Economic policies of government
