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Understanding Managerial Economics Basics

Managerial economics, synonymous with business economics, applies economic principles to business management and decision-making. It focuses on understanding human behavior in relation to resource scarcity and the need for rational decision-making to optimize outcomes. The discipline emphasizes the allocation of resources and making informed choices to achieve maximum returns with minimal resources.

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11 views1 page

Understanding Managerial Economics Basics

Managerial economics, synonymous with business economics, applies economic principles to business management and decision-making. It focuses on understanding human behavior in relation to resource scarcity and the need for rational decision-making to optimize outcomes. The discipline emphasizes the allocation of resources and making informed choices to achieve maximum returns with minimal resources.

Uploaded by

christyalexpanicker
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© All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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1.

MEANING OF MANAGERIAL ECONOMICS In management studies, the terms ‘Business Economics’


and ‘Managerial Economics’ are often synonyms. Both the terms, however, involve ‘economics’ as a
basic discipline useful for certain functional areas of business management. Economics is the study
of men as they live, behave, move and think in the ordinary business of life. Economics in essence
pertains to an understanding of life’s principal preoccupation. It is a religion of the day-in living for
the want satisfying activity. Economics, as a social science, studies human behaviour as a relationship
between numerous wants and scarce means having alternative uses. Economics is a logic of choice. It
teaches the art of rational decision-making, in economising behaviour to deal with the problem of
scarcity. Economics is of significant use in modern business, as decision-making is the core of
business, and success in business depends on right decisions. A firm or business unit faces the
problem of decision-making in the course of alternative actions, in view of the constraint set by given
resources, which are relatively scarce. Managerial economics is essentially applied economics in the
field of business management. It is the economics of business or managerial decisions. It pertains to
all economic aspects of managerial decision making. Managerial economics, in particular, is the study
of allocation of resources available to a business firm or an organisation. Business or managerial
economics is fundamentally concerned with the art of economising, i.e., making rational choices to
yield maximum return out of minimum resources and efforts, by making the best selection among
alternative courses of action

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