Unit - 1

Managerial economics is concerned with the application of economic principles and methodologies to the decision process with in the organization.it seeks to establish rules and principles to facilitate the attainment of the desired economic goals of management.” – Douglas

Decision making Decision making - It is the process of selecting best out of alternative opportunities open to the firm.

Characteristics of M. E. Micro in nature Based on the Theory of Markets and Private Enterprise Goel-Oriented Normative in nature Macro analysis

Scope of M.E. Theory of Demand Theory of production Analysis of market-structure and pricing Profit Analysis and profit Measurement Theory of capital and Investment decisions

Why do managers need to know managerial economics (Significance) Better management of resources Helps in decision making and forward planning Helps in understanding International Trade Helps in understanding various policies and working of govt. Goal of maximum profit Economic forecast

Nature of M.E. Economics as a Science : It is a systematic body of knowledge based on certain principles, capable of general application, which describes the relationships between a set of given causes and their effects. This knowledge is obtained through the process of observation, experimentation and testing.

It involves: Systematic body of knowledge Scientific inquiry and observation Experimentation Universal truths

Economics as an Art An art is system of rules for the attainment of a given end. -Keynes