CHARACTERISTICS OF MANAGERIAL ECONOMICS
Managerial Economics refers to that branch of economics which is related with the application of various laws, theories and methods of economics to the business decision-making by the business manager. The following are the Characteristics of Managerial Economics:
CHARACTERISTICS OF MANAGERIAL ECONOMICS
MICRO IN NATURE
Managerial Economics is mainly micro in nature. Economics has two main branches: Micro Economics and Macro Economics. Micro economics deals with the problem of individuals while Macro Economics deals with the problems at the level of whole economy.
Managerial Economics is the study of business decisions at the level of the firm which makes it micro in nature.
ACCORDING TO SK DEO
“Managerial economics is the application of the economic theory, particularly of micro-economic theory, to solve the practical problems.”
MACRO ANALYSIS
Managerial Economics is closely related with the macro analysis. The decision making of a business firm is affected by the business environment factors like:
- Monetary Policy
- Fiscal Policy
- Aggregate Demand and Aggregate Supply
- Trade cycles
- General Price Level etc.
So the managerial economist must also possess the knowledge about the macro business environment. He must analyse the business environment properly to make good decisions.
NORMATIVE IN NATURE
Managerial economics is Normative in nature. It answers the question “WHAT OUGHT TO BE?” It suggests how the business manager should achieve the specific goals of his business by making appropriate business decisions. It also helps to evaluate the business decisions in the long run through value judgements. So it is normative in nature.
PRAGMATIC AND PRACTICAL
ACCORDING TO THE HAYNES
“Managerial Economics is pragmatic. It is concerned with the analytical tools that are useful, that have proven themselves in practice, or that promise to improve decision-making in future.”
Managerial Economics uses the theories, methods and laws of the economics and apply them to solve the real business problems. It also helps in evaluating the various alternatives and improving the decision making in the future.
MULTI DISCIPLINARY
Managerial Economics is the application of Micro Economics and Macro Economics. However the scope of macroeconomics includes various topics from many other subjects like Mathematics, Statistics, Operations Research, Accountancy, Theory of management etc. This makes the managerial economics a multi-disciplinary subject.
CONCEPTUAL AND METRICAL
Managerial Economics is both conceptual and metrical. It outlines, the conceptual framework to understand, analyse and solve the decision making problems of any business. It also makes the use of various quantitative techniques from various subjects to solve the problems of any business. In this way it is both conceptual and metrical.
THEORY OF FIRM
Managerial Economics is mainly based on the ‘Theory of firms’ and ‘Theory of markets’.
BASED MAINLY ON ECONOMIC CONCEPTS
Managerial Economics consists mainly of economic concepts that are related to the problems of any business and whose understanding helps in the achievement of various business goals. The important economic concepts related to Managerial Economics are Demand, Production, Cost, Revenue, Market Structure, Price, Profit, Capital, Foreign Trade, economic Policy, Employment, Saving, Investment etc.
