Managerial Economics An Introduction By: Malik Abrar Altaf Lecturer Management SM Iqbal Business School

In managerial economics, the emphasis is upon the firm, the environment in which the firm finds itself, and the decisions which individual firms have to take.

The Definition and Scope of Managerial Economics Objectives: 1. The subject matter of Managerial Economics 2. The analytical approach used in Managerial Economics

DEFINITIONS Douglas - “Managerial economics is .. the application of economic principles and methodologies to the decision-making process within the firm or organization.” Pappas & Hirschey - “Managerial economics applies economic theory and methods to business and administrative decision-making.” Salvatore - “Managerial economics refers to the application of economic theory and the tools of analysis of decision science to examine how an organisation can achieve its objectives most effectively.”

Howard Davies and Pun-Lee Lam - “It is the application of economic analysis to business problems; it has its origin in theoretical microeconomics.”

These Definitions Cover a Number of Different Approaches 1. Analysis based on the theory of the firm. 2. Analysis based upon management sciences. 3. Analysis based upon industrial economics .

International Economics Structure Economics Macroeconomics Microeconomics “Sector” economics Money, finance, banking Labor economics Economics of IT and EC Managerial economics International Economics Regional Economics Economic Development

Managerial decision problems Product price and output Make or buy Production technique Internet strategy Advertising media and intensity Investment and financing Economic concepts Theory of consumer behaviour Theory of firm Theory of market structures and pricing Decision making tools Numerical analysis Statistical analysis Forecasting Game theory Optimisation Managerial Economics Use of economics concepts and decision making tools to solve managerial decision problems Optimal solutions

Why managerial Economics A powerful “analytical engine”. A broader perspective on the firm. what is a firm? what are the firm’s overall objectives? what pressures drive the firm towards profit and away from profit. The basis for some of the more rigorous analysis of issues in Marketing and Strategic Management.