Managerial Economics Assignment help online 2020

Managerial Economics: It is the branch of education that deals with the application of

various theories of different branches of economics i.e. macroeconomics and microeconomics,

in business management. The subject gained popularity when it was first discovered and

published as a book in the year 1951 by Joel Dean. It is a perfect blend of business management

studies and economics, working in order to solve problems occurring in a firm and making

decisions accordingly.

Business Management: This involves managing a firm by analyzing its various steps,

planning, and taking decisions on how to run the firm efficiently, keeping in mind the

internal and external factors.

Economics: This is a branch of study which works mainly on how to effectively use the

scarce resources having alternative uses.

In Managerial Economics a person is taught about how to manage a firm with scarce

resources and allocating them to their best use. The manager needs to keep in mind the

company’s competitors, suppliers, producers and also the external conditions of the

economy.

Nature of Managerial Economics

In order to have complete knowledge about Managerial Economics assignment help , we need to first

understand some of its basis characteristics listed below:

a) Managerial Economics involves Art: The manager needs to have creative skills as

well as the ability to think logically on how to put resources to their best use and

make the best out of it for the betterment of the firm.

b) Managerial Economics as a Science: It is a science that involves decision making

about alternative uses of scarce resources. Same as the field of science the

conclusions are drawn from observation and continuous testing.

c) Managerial Economics as micro-economics: Similar to micro-economics, it involves

decision making at the level of an individual product or firm keeping in mind the

internal factors.

d) Managerial Economics involves macro-economics: For the better functioning of a

firm in the whole economy, certain aspects of macro-economic are required to be

considered while making decisions.

e) Managerial Economics is Pragmatic: It requires for a person to have a logical and

critical approach towards the problems faced by the firm.

f) Managerial Economic is Multi-Disciplinary-Disciplinary: It involves the use of

various tools from different disciplines for example; accounting, statistics,

marketing etc.

g) Managerial Economics is Dynamic: It involves interactions with humans as

producers, suppliers, resources therefore it is mandatory to cope up with different

personalities of people. Sometimes in order to do this, managerial economics tend to

manipulate itself over time.

Types of Managerial Economics

a) Liberal: In free play of market economy, customer demand plays a very vital role.

Thus, in order to avoid any sort of failures, the managers should keep in mind

the concept of liberal demand of customers.

b) Radical: Along with customer satisfaction, profit maximization should also be

considered important. In order to achieve that, the manager is required to have a

radical approach towards business problems.

c) Normative: It involves having a practical approach based on real life experiences,

towards administrative decisions like cost management, advertisement etc.

Principles of Managerial Economics

To run a business successfully, the manager needs to have complete knowledge about

some important principles of managerial economics mentioned below.

MARGINAL AND INCREMENTAL PRINCIPLE: The main motive of this principle is profit

maximization. According to this, a decision is said to be rational if the objective of the firm

is to increase profits. This can happen in either of the scenarios;

~ when the total revenue of the firm increases more than the total cost,

~ when the total revenue of the firm decreases less than the total cost .

OPPORTUNITY COST PRINCIPLE: This refers to the cost at which one resource is used at

the place of another alternative for example; the opportunity cost of gain of Good-A, means

loss of Good-B. The manager must decide wisely about the resources to be used in the

process of production.

TIME PERSPECTIVE PRINCIPLE: While planning on taking a decision, the manager must

separately evaluate its both; short term and long term impacts on the business. A decision

taken for progress in short run might take a disastrous turn in the long run. Therefore, both

the aspects should be studied properly.

Scope of Managerial Economics

Understanding the scope of managerial economics is the core for running a business effectively

in the long run. This can be understood clearly with the help following practices.

a) Demand Analysis and Forecasting: During the process of production, keeping in mind the

demand of the product in present as well as future is very important as the profits to be

earned by the firm and its performance depends upon this. Analyzing the demand and

forecasting helps the manger in planning about the output levels of the firm.

b) Capital Management: Large amount of money is used on firm’s expenditure and

investment. The manager needs to think critically about where to invest the money and on

what products or assets the expenditure should be incurred.

c) Profit Management: Firms are set with an aim of profit maximization. This largely

depends on the decision of setting the price of the product, investing money, cost of the

inputs etc., that prove out to be beneficial for the firm in the long run.

d) Cost and Production Analysis: Profits of a firm largely depend upon the cost of inputs

used in the process of production. Low cost of inputs lead to an increase in firm’s profits.

Therefore, it is very crucial to set the costing budget and according to the quality of product

and resources available for firm’s production.

e) Pricing decisions, Policies and Practices: Once the product is ready for sale, deciding its

right price keeping in mind the internal (cost of production) and external (demand and

supply) factors is extremely necessary as it holds a major share in a firm’s revenue. Setting

up a correct pricing policy can help the firm in achieving great heights whereas not doing

so might lead to its elimination.

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