It deals with a firm. The use of Managerial Economics is not limited to profit-making firms and organizations. But it can also be used to help in decision-making process of non-profit organizations hospitals, educational institutions, etc. It enables optimum utilization of scarce resources in such organizations as well as helps in achieving the goals in most efficient manner.
Managerial Economics is of great help in price analysis, production analysis, capital budgeting, risk analysis and determination of demand. Managerial economics uses both Economic theory as well as Econometrics for rational managerial decision making. See our User Agreement and Privacy Policy. See our Privacy Policy and User Agreement for details. Role of Managerial Economics in Decision Making. The SlideShare family just got bigger.
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Upcoming SlideShare. Like this presentation? Why not share! Embed Size px. Start on. Show related SlideShares at end. WordPress Shortcode. Related to any of the resource, after selecting an option, make plans about production along with the implementation of prices and materials to that specific option, both forward planning and decision making could work together.
Every business enterprise is directly influenced by certain conditions based on the future and allows the changes in the business environment by generating the outcome with the complexities of business decisions.
For a business executive, any information related to the future costs, sales or profit is not available. So, the decision making should be done on the basis of past data or the approximated future data. This decision should be carried out efficiently as the economic theory consists of value and relevancy in production, cost, demand and price dealing.
It helps in increasing the understanding of the concepts based on the managerial economics that could be helpful for business manager so that it could be applied to the economic principles of the business by appreciating the accuracy and impact of certain external factors that are in relation with the business. The economics, managerial economics and the micro-economics of the firm are related to the theory which can be applied to the business.
Its main objective is to solve different problems of the business by analyzing variant business situations and the factors that contributes in a environment in which the business operates.
Managerial economics is defined as the combination of economic theory with the practice of business so that the forward planning and decision making could be facilitate by the management of the organization. It has the huge capacity to serve various purposes that can be useful for managers for decision making by exhibiting some kind of relation with the internal environment.
It mainly focuses on the economic theory development of the firm or an organization by enabling the process of decision making in terms of sales and profits. It also allows taking decisions about appropriate productions and inventory policies that could be served for the future purposes. The branch of economics is applied in the analysis of all type of business decisions made in the firm or an organization. It undertakes the production and risk analysis that can be act useful for defining the efficiency of the production.
Reducing their bad influence and giving benefit to the good effect. Managerial Economics guides managers to adjust to suit the external conditions of the business. Managerial Economics creates an economic model for managers to inspire their use in business. In order to maximize production and maximum profit, at least cost can be paved.
Thus, Business economics only tells how to manage everything in a way that everything should be corrected in order to maximize profits. Business economics has a very important role and role in doing all this work in business decisions. Managerial Economics inspires managers to operate the business in such a way that the path of maximum economic welfare is paved.
Inside the business, managerial economics has a very big role because it handles that business. Shows the right path to every member of the business, and also gives the right direction of what his duty and job. It is the job of managerial economics to say how much to spend in business and how to spend those expenses so that it can get more profit at lower costs and increase business growth.
Inside any business, managerial economics tells us how to distribute the profits and invest in where to make the business more profitable in the coming time and more growth in the business field. Managerial Economics provides useful tools for managers in measuring the efficiency of the business firm. Managerial Economics plays big salient features and significance of managerial economics In Choosing Right Decisions in helping business in many ways.
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