Profit Maximization or Profit Management The purpose of each producer and the business firm is to maximize profit. An inventory refers to a stock of raw materials which a firm keeps. As a managerial economist, he must do something more than routine management to earn profit.
In fine, managerial economics is a branch of normative economics that draws from descriptive Nature and scope of managerial ecomnocies and from well established deductive patterns of logic. The buying of goods, sale of goods, payment of cash, receipt of cash and similar dealings are called business transactions.
It is concerned with what decisions ought to be made. The sales forecast acts as a link between the external uncontrollable factors and the internal controllable factors and Nature and scope of managerial ecomnocies intimately related to general economic activity. Managerial Economics for administration of organization Managerial economics helps the management in decision making.
It is, therefore, also called prescriptive economics. The experimental methods are of limited use to managerial economics. Similarly, multiple regression technique is used.
The problem of choice arises because resources at the disposal of a business unit land, labour, capital, and managerial capacity are limited and the firm has to make the most profitable use of these resources.
Many a time comparison has to be made between the changes and results which are due to changes in time, frequency of occurrence, and many other factors.
In decision making, cost estimates are very essential. An organisation requires the services of a large number of personnel. The theory of competitive equilibrium is entirely based on axiomatic method.
With interventions from the World Trade Organisation WTOgalloping movement towards full convertibility of the local currency, increasing pressure to enhance trade, development of market blocs — all come under the purview of managerial economics, for, these issues directly affect business environment.
Production is an economic activity which supplies goods and services for sale in a market to satisfy consumer wants thereby profit maximisation is made possible.
Therefore, It also involves short-term and long-term pricing policies. An element of cost uncertainty exists because all the factors determining costs are not always known or controllable.
Managerial economics helps in decision-making as it involves logical thinking. Economist are interested in the efficient use of scarce resources hence they are naturally interested in business decision problems and they apply economics in management of business problems.
Managerial Economics has components of micro economics Managers study and manage the internal environment of the organization and work for the profitable and long-term functioning of the organization.
It provides the basis for the empirical testing of theory. Positive versus Normative Economics: Statistics supplies many tools to managerial economics.
To some extent, the descriptive method is also concerned with the interpretation of data. Since the descriptive method wants to relate causality of the collected facts, it is necessary for it to make comparisons between one situation with the other and among different aspects of the same situation.
Managerial economics is supposed to enrich the conceptual and technical skill of a manager. Conclusion Thus, The areas of managerial economics are now going through a developing phase and many of these students are there.
He should be ready to undertake special assignments with full seriousness.
Apart from the above studies, the managerial economist has to perform certain specific functions. Hence, decisions on investment are to be taken with utmost caution and care by the executive.
In science any conclusion is arrived at after continuous experimentation.The nature and scope of managerial economics includes taking a managerial problem and suggesting a course of action to solve the problem. The problems include anything related to the managerial process of a business, such as account management, production and inventory or.
Nature of Managerial Economics Managers study managerial economics because it gives them insight to reign the functioning of the organization.
If manager uses the principles applicable to economic behaviour in a reasonably, then it will result in smooth functioning of the organisation.
Managerial Economics deals with allocating the scarce resources in a manner that minimizes the cost. As we have already discussed, Managerial Economics is different from microeconomics and macro-economics.
Managerial Economics has a more narrow scope - it is actually solving managerial. Oct 09, · Managerial Economics; Management; Nature and Scope of Managerial Economics | Micro Economics | Macro Economics; Introduction to Managerial Economics- Jan 04, · Managerial Economics: Definition, Nature, Scope Managerial economics is a discipline which deals with the application of economic theory to business management.
It deals with the use of economic concepts and principles of business decision mi-centre.com: MBA Ocean. A. Scope of Managerial Economics: It is not yet clear as it is a developing science. Even then the following fields fall under Managerial Economics: 1.
Demand Analysis and Forecasting 2. Cost and Production Analysis 3. Pricing D.Download