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Managerial economics is the "application of the economic concepts and economic analysis to the problems of formulating rational managerial decisions".[1] 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. As such, it bridges economic theory and economics in practice.[2] It draws heavily from quantitative techniques such as regression analysis, correlation and calculus.[3] If there is a unifying theme that runs through most of managerial economics, it is the attempt to optimize business decisions given the firm's objectives and given constraints imposed by scarcity, for example through the use of operations research, mathematical programming, game theory for strategic decisions,[4] and other computational methods.[5]
Managerial decision areas include:
Almost any business decision can be analyzed with managerial economics techniques, but it is most commonly applied to:
At universities, the subject is taught primarily to advanced undergraduates and graduate business schools. It is approached as an integration subject. That is, it integrates many concepts from a wide variety of prerequisite courses. In many countries it is possible to read for a degree in Business Economics which often covers managerial economics, financial economics, game theory, business forecasting and industrial economics.
Managerial economics to a certain degree is prescriptive in nature as it suggests course of action to a managerial problem. Problems can be related to various departments in a firm like production, accounts, sales, etc.
Demand refers to the willingness to buy a commodity. Demand, here, defines the market size for a commodity i.e. who will buy the commodity. Analysis of the demand is important for a firm as its revenue, profits, income of the employees depend on it.[8] Demand>> willingness and able to purchase. We have the will and power to purchase anything is demand. Not only willing or only ability to purchase something called demand. information technology
1. http://www.edushareonline.in/Management/eco%20new.pdf 2.http://www.swlearning.com/economics/hirschey/managerial_econ/chap01.pdf
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