Managerial economics

introduction to managerial economics

1. MANAGERIAL ECONOMICS Under The Guidance Of - Dr.N.Babitha Thimmaiah Assistant Professor Dept of MBA

2. Presented By BHANUPRASad

3. INTRODUCTION TO MANAGERIAL ECONOMICS Managerial economics is the study of how scare resources are directed most efficiently to achieve managerial goals. It is a valuable tool for analyzing business situations to take decisions . According to Prof. Evan J Douglas defines Managerial Economics as “ Managerial Economics is concerned with the application of economics principles and methodologies to the decision making process within the firm or organizations under the conditions of uncertainty ”.

4. Nature Of Managerial Economics Micro economics in nature. Pragmatic. Conceptual in nature. Problem solving in nature. Study of allocation of resources. Interdisciplinary.

5. Scope Of Managerial Economics Demand analysis and forecasting. Cost and production analysis. Pricing decision, polices and practices. Profit management. Capital management. Analysis of business environment. Allied disciplines.

6. Demand analysis and Forecasting:- Accurate estimation of demand is an important basis of managerial decision making. Estimation of future sales facilitates management for scheduling the production and employing resources. It will be helpful for management to maintain its market position and profit-base. Cost and production analysis:- Cost estimation is very useful for taking management decisions and various factors which effects the cost estimation should be given due consideration for planning purpose. Pricing decision, Polices and Practices:- Price gives income to the firm and it constitutes the most important field of managerial economics. It covers various concepts such as price determination in various market forms, pricing policies, pricing method, differential pricing, productive and price forecasting.

7. Profit Management:- Earning maximum profit is the main objective of a business firm. Due to variation in costs and revenue and element of uncertainty about profits always exist. Analysis of Business Environment:- The working and performance of any business firm is effected by the various environmental factors. Therefore, in decision-making process environmental factors are considered by managers.

8. Capital Management:- Capital management implies planning and control of capital expenditure because it involves a large sum and more over the problems in disposing the capital assets are so complex. Allied disciplines:- The concepts which are helpful for the management in decision making are qualitative in nature. Therefore, for determining the relationship between the economic variables, mathematical tools are generally used.

9. Relationship Of Managerial Economics With Other Disciplines The relationship of managerial economics with other objectives are as follows:- Managerial economics and statistics. Managerial economics and mathematics. Managerial economics and accounting. Managerial economics and operations research. Managerial economics and theory of decision making. Managerial economics and economics.

10. Uses Of Managerial Economics

11. Limitations Of Managerial Economics

12. Fundamental Principles Of Managerial Economics Opportunity cost principle Incremental principle Time perspective principle Discounting principle Marginal principle Eqi-marginal principle Scarcity principle Risk and uncertainty principle

13. Significance Of Managerial Economics

14. Production decision:- supply of goods and service for sales in a market to satisfy consumer wants it done through the production. Inventory decision:- the amount of the goods, raw material is requiring fir the meeting of demand very important. Cost decision:- in business decisions cost structure, reduction cost and cost control plays an important role. Marketing decision:- the marketing executive must take decisions about target market, market positioning product development communications and promotions. Investment decision:-any investment decision, the problems of risks and wrong estimation are very essential. Personal decision:- the service of large number of personnel are required in an organization. These personnel are appointed as various post.

15. Role Of Managerial Economist Following roles are Internal factor. External factor. Specific function.

16. Internal Factor The managerial economist can help the management in decision making regarding the internal operation of the firm in respect of such problems as cost structure, price, investment decision, expansion of business etc… Some of the important relevant question in this connection, are as follows.. What Will be the reasonable sales and profit targets for the next year? What should be the Production Schedule for the coming year?

17. External Factor The external factor are not in control of the management, the firm has no control on the external factor. Because they are operating outside the firm. These factor create the business environment and include price, national income and outputs, government policies , international Certain relevant question relating to this factor are…. What are the present trends in national and international economics? What are the expectations about the price and availability of Raw-material?

18. Specific Function The various specific function which are performed by the managerial economist for the business management and management consultant are as follows. Sales forecasting. Market research. Analysis of competing firms. Pricing In different industry. Surveying different markets. Comparative analysis of projects.

19. A managerial economist helps the management by using his analytical skills and highly developed techniques in solving complex issues of successful decision-making and future advanced planning. Managerial Economist Dr. Manmohan Singh Dr. Amartya Sen

20. Responsibilities Of Managerial Economist To make reasonable profits on capital employed. Successful forecasts. Knowledge of sources of economic information’s. His status in the firm .

21. Difference Between Managerial Economics And Economics Basis of difference Meaning Scope Feature Deal with Concerned with Discuss Decision making

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