Difference between economics and managerial economics

Paper presentation made by MADDALI LAXMI SWETHA, MBA (HR)

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1. DIFFERENCE BETWEEN ECONOMICS AND MANAGERIAL ECONOMICS Maddali Laxmi Swetha, MBA (hr) http://maddaliswetha.blogspot.com/

2. THE TERM ECONOMICS DEFINE AS The word 'economics' comes from two Greek words, 'eco' meaning home and 'nomos' meaning accounts. Economics is that branch of knowledge which studies the processes through which the resource which are scarce in nature are allocated to satisfy the unlimited wants of the people. In other words, the economics of the individual agent's decisions about resources is referred to as microeconomics, while macroeconomics studies the interactions in the economy as a whole.

3. WHAT IS MANAGERIAL ECONOMICS? Managerial economics is a branch of economics which deals with the application of the economic concepts, theories, tools, and methodologies to solve practical problems in a business these business decisions not only affect daily decisions, also affects the economic power of long-term planning decisions. In other words, managerial economics is a combination of economics theory and managerial theory. It helps the manager in decision-making and acts as a link between practice and theory. It is sometimes referred to as business economics and is a branch of economics that applies microeconomic analysis to decision methods of businesses or other management units.

4. MANAGERIAL ECONOMICS DEFINITIONS Managerial economics is the integration of economic theory with business practice for the purpose of facilitating decision-making and forward planning by management – Spencer and Siegelman Managerial economics is the use of economic models of thought to analyze business situations – Mc Nair and Meriam Managerial economics is the application of economic theory and methodology to business administration practice – Brigham and Pappas

5. NATURE OF ECONOMICS The nature of economics deals with the question that whether economics falls into the category of science or arts. Various economists have given their arguments in favour of science while others have their reservations for arts. Economics as a Science: 1) It involves a systematic collection of facts and figures. 2) it is based on the formulation of theories and laws. 3). It deals with the cause and effect relationship. Economics as an Art: It is said that “knowledge is science, action is art.” Economic theories are used to solve various economic problems in society. Thus, it can be inferred that besides being a social science, economics is also an art.

6. NATURE OF MANAGERIAL ECONOMICS Close to micro economics Operates against the backdrop of macro economics Normative statements Prescriptive actions Applied in nature Offers scope to evaluate each alternative Interdisciplinary

7. DIFFERENCE BETWEEN ECONOMICS AND MANAGERIAL ECONOMICS The traditional Economics has both micro and macro aspects whereas Managerial Economics is essentially micro in character. Economics is both positive and normative science but the Managerial Economics is essentially normative in nature. Economics deals mainly with the theoretical aspect only whereas Managerial Economics deals with the practical aspect.

8. DIFFERENCE BETWEEN ECONOMICS AND MANAGERIAL ECONOMICS Economics studies human behavior on the basis of certain assumptions but these assumptions sometimes do not hold good in Managerial Economics as it concerns mainly with practical problems. Under Economics we study only the economic aspect of the problems but under Managerial Economics we have to study both the economic and non-economic aspects of the problems.

9. DIFFERENCE BETWEEN ECONOMICS AND MANAGERIAL ECONOMICS Economics studies principles underlying rent, wages, interest and profits but in Managerial Economics we study mainly the principles of profit only. Managerial Economics studies the activities of an individual firm or unit. Its analysis of problems is micro in nature, whereas Economics analyzes problems both from micro and macro point of views.

10. DIFFERENCE BETWEEN ECONOMICS AND MANAGERIAL ECONOMICS Sound decision-making in Managerial Economics is considered to be the most important task for the improvement of efficiency of the business firm; but in Economics it is not so. The scope of Managerial Economics is limited and not so wide as that of Economics.

11. POINTS TO BE NOTED It is obvious that Managerial Economics is very closely related to Economics but its scope is narrow as compared to Economics. Managerial Economics is also closely related to other subjects, viz., Statistics, Mathematics and Accounting.

12. THANK YOU Paper presentation made by MADDALI LAXMI SWETHA, MBA (HR) Maddali Swetha Blog - http://maddaliswetha.blogspot.com/ https://in.linkedin.com/in/maddali-swetha https://twitter.com/maddali_swetha E-Mail ID: [email protected]