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    Fundamental concepts of managerial economics?

    What are the fundamental concepts of managerial economics?

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    manu3 is offline Senior Member manu3 is on a distinguished road
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    Re:Fundam ental concepts of managerial economics?

    hi dear
    Managerial Economics can be defined as amalgamation of economic theory with business practices so as to ease decision-making and future planning by management. Managerial Economics assists the managers of a firm in a rational solution of obstacles faced in the firmís activities. It makes use of economic theory and concepts. It helps in formulating logical managerial decisions. The key of Managerial Economics is the micro-economic theory of the firm. It lessens the gap between economics in theory and economics in practice. Managerial Economics is a science dealing with effective use of scarce resources. It guides the managers in taking decisions relating to the firmís customers, competitors, suppliers as well as relating to the internal functioning of a firm. It makes use of statistical and analytical tools to assess economic theories in solving practical business problems.
    Study of Managerial Economics helps in enhancement of analytical skills, assists in rational configuration as well as solution of problems. While microeconomics is the study of decisions made regarding the allocation of resources and prices of goods and services, macroeconomics is the field of economics that studies the behavior of the economy as a whole (i.e. entire industries and economies). Managerial Economics applies micro-economic tools to make business decisions. It deals with a firm.

    The use of Managerial Economics is not limited to profit-making firms and organizations. But it can also be used to help in decision-making process of non-profit organizations (hospitals, educational institutions, etc). It enables optimum utilization of scarce resources in such organizations as well as helps in achieving the goals in most efficient manner. Managerial Economics is of great help in price analysis, production analysis, capital budgeting, risk analysis and determination of demand.Managerial economics uses both Economic theory as well as Econometrics for rational managerial decision making. Econometrics is defined as use of statistical tools for assessing economic theories by empirically measuring relationship between economic variables. It uses factual data for solution of economic problems. Managerial Economics is associated with the economic theory which constitutes ďTheory of FirmĒ. Theory of firm states that the primary aim of the firm is to maximize wealth. Decision making in managerial economics generally involves establishment of firmís objectives, identification of problems involved in achievement of those objectives, development of various alternative solutions, selection of best alternative and finally implementation of the decision.The following figure tells the primary ways in which Managerial Economics correlates to managerial decision-making.


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    Vandana is offline Senior Member Vandana is on a distinguished road
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    Re: Fundam ental concepts of managerial economics?

    Managerial economics involves applying mathematical and statistical equations to help managers find the most optimal allocation of limited resources. Analysts analyze the data from the results of previous decisions to predict or forecast future decisions. A classic example is analyzing data associated with customer buying habits and behavior patterns to predict what customers will buy in the future. To accomplish this, according to the website Reference for Business, "managerial economics uses a wide variety of economic concepts, tools and techniques in the decision-making process." These concepts, tools and techniques can be organized under three primary categories referred to as the theory of the firm, the theory of consumer behavior and the theory of market structure and pricing.

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    monika srivastava is offline Senior Member monika srivastava is on a distinguished road
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    Re: Fundamental concepts of managerial economics?

    Hello Friend...

    Managerial economics is a study of application of managerial skills in economics,more over it help to find problems or obstacles in the business and provide solution for those problems.problems may be relating to costs,prices,forecasting the future market,human resource management,profits etc. Managerial economics involves applying mathematical and statistical equations to help managers find the most optimal allocation of limited resources. Analysts analyze the data from the results of previous decisions to predict or forecast future decisions. A classic example is analyzing data associated with customer buying habits and behavior patterns to predict what customers will buy in the future. To accomplish this, according to the website Reference for Business, "managerial economics uses a wide variety of economic concepts, tools and techniques in the decision-making process." These concepts, tools and techniques can be organized under three primary categories referred to as the theory of the firm, the theory of consumer behavior and the theory of market structure and pricing.

    Nature of Managerial Economics:
    Following points constitute nature of managerial economics

    1. Micro Economics
    2.
    Theory of the firm
    3.
    Managerial Economics is Pragmatic (practical in outlook)
    4.
    Managerial economics is normative
    5.
    Using inputs from Macroeconomics
    6.
    It is concerned with Normative Economics
    Scope of managerial economics:


    Operational issues

    1.
    Resource Allocation
    2.
    Demand Analysis and Forecasting
    3.
    Cost and Production Analysis
    4.
    Pricing Decisions, Policies and Practices
    5.Profit Management
    6.
    Capital Management
    7.
    Strategic Planning
    Environmental or external issues

    ∑ Economic Environment:
    . Social environment
    ∑ Political Environment
    ∑ Technological Environment
    ∑ International environment

    Thanks

    Monika Srivastava

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    Sheryl Dinshaw is offline Senior Member Sheryl Dinshaw is on a distinguished road
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    Re: Fundamental concepts of managerial economics?

    Hi frnd,

    Managerial economics involves applying mathematical and statistical equations to help managers find the most optimal allocation of limited resources. Analysts analyze the data from the results of previous decisions to predict or forecast future decisions. A classic example is analyzing data associated with customer buying habits and behavior patterns to predict what customers will buy in the future. To accomplish this, according to the website Reference for Business, "managerial economics uses a wide variety of economic concepts, tools and techniques in the decision-making process." These concepts, tools and techniques can be organized under three primary categories referred to as the theory of the firm, the theory of consumer behavior and the theory of market structure and pricing.

    • [h=2]Theory of the Firm[/h]
      • Theory of the firm deals with the primary decision motive of a firm which is to make a profit. The profit motive is the goal of all decisions. Of course, to make a profit, the firm must provide a product or service that consumers want to buy, treat employees well, satisfy demands of stockholders and meet the demands of society, such as environmental concerns. Some of these are competing concerns, such as how environmental concerns could curtail production objectives. So, under this theory, a firm must weigh the pros and cons and come up with the optimal solution.

      [h=2]Theory of Consumer Behavor[/h]
      • Theory of consumer behavior involves consumer buying habits. Many factors feed this theory such as income, demographics and socioeconomic issues. While a firm's focus is to maximize profit, consumers' primary objective is to maximize the utility of satisfaction, such as purchasing and consuming the maximum amount of goods for the minimum amount of dollars.

      [h=2]Theory of Market Structure and Pricing[/h]
      • When companies seek to maximize profits, they must consider the competitive market structure. There are four basic market structures: perfect competition, monopolistic competition, oligopoly and monopoly. Each of these identify the level of competition that exist in a given market. Competition affects pricing and the amount of profit companies can make by entering a market.

      [h=2]Application[/h]
      • Using these theories and the formulations that economists have come up with based on them, managerial economics can be applied to any business within any industry. Companies can integrate their own customer buying habits and behavior data into the applicable formulation and get useful decision-making results. The results can help decision makers determine the most optimal allocation of scarce resources in finance, marketing, inventory management and production.

      [h=2]Application Example[/h]
      • Wal-Mart has a very sophisticated supply chain where managers have to make purchase decisions regarding thousands of suppliers and the decision variables vary per location. This is an "allocation of capital resources problem" they have to address and solve on a daily basis, and managerial economics concepts and analytical tools play a critical role. To address it, Wal-Mal collects data each time a customer checks out at the retail counter. It uses this data to determine customer buying habits and behavior patterns. This data is then fed into optimization, statistical and forecasting models associated with managerial economics, and the results are used by purchasing managers to help them determine how much inventory to purchase per location. In addition, the managers can use the results to optimize and forecast exactly when they should have the inventory on hand to minimize the amount of inventory sitting in warehouses, thus saving inventory overhead cost.


  6. #6
    monika srivastava is offline Senior Member monika srivastava is on a distinguished road
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    Re: Fundamental concepts of managerial economics?

    Hello Friend......

    Managerial economics involves applying mathematical and statistical equations to help managers find the most optimal allocation of limited resources. Analysts analyze the data from the results of previous decisions to predict or forecast future decisions. A classic example is analyzing data associated with customer buying habits and behavior patterns to predict what customers will buy in the future. To accomplish this, according to the website Reference for Business, "managerial economics uses a wide variety of economic concepts, tools and techniques in the decision-making process." These concepts, tools and techniques can be organized under three primary categories referred to as the theory of the firm, the theory of consumer behavior and the theory of market structure and pricing.

  7. #7
    monika srivastava is offline Senior Member monika srivastava is on a distinguished road
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    Re: Fundamental concepts of managerial economics?

    Hello Friend....

    1.Explain and apply marginal economic analyses to making decisions2.Calculate the slope (incremental change) of both linear and nonlinear functions mathematically and graphically
    3.Derive and interpret a linear equation for an economic relationship
    4.Understand and apply rules of exponents to economic problems
    5.Explain and apply time value of money concepts to decisions having long-run impacts
    6.Understand how microeconomic concepts are important factors in making good decisions
    7.Apply mathematical slopes to economic problems

  8. #8
    monika srivastava is offline Senior Member monika srivastava is on a distinguished road
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    Re: Fundamental concepts of managerial economics?

    Hello Friend....
    Managerial economics is the science of directing scarce resources to manage cost
    effectively. It consists of three branches: competitive markets, market power, and
    imperfect markets. A market consists of buyers and sellers that communicate with each
    other for voluntary exchange. Whether a market is local or global, the same managerial
    economics apply.
    A seller with market power will have freedom to choose suppliers, set prices, and
    use advertising to influence demand. A market is imperfect when one party directly
    conveys a benefit or cost to others, or when one party has better information than
    others.

    Scarcity exists. People face trade-offs.
    The cost of something is what you give up to get it (
    Rational people think at the margin.
    People respond to incentives.
    Trade can make everyone better off.

    Markets are usually a good way of organising economic activity.
    A country's standard of living depends on its ability to produce goods and services.
    Inflation is caused by governments printing money.

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    Vandana is offline Senior Member Vandana is on a distinguished road
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    Re: Fundamental concepts of managerial economics?

    Fundamental concepts of managerial economics:


    There are five fundamental concepts of managerial economics that hepls the management of a business firm to make correct decisions:
    1.incremental concept
    2.time perspective concept
    3.discounting concept
    4.oppurtunity cost concept
    5.equi-marginal concept


    these fundamental concepts are tha basic economic tools or principles for the entire gamut of managerial economics.

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    Neha is offline Senior Member Neha is on a distinguished road
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    Re: Fundamental concepts of managerial economics?

    hello friend,managerial economics help to teach the economics aspects related to the managerial activities.So the aspects related to the management of the companies and the economics are covered in it.Following are the aspects under managerial aspects
    1. Scope of Managerial Economics and other disciplines,
    2. Basic economics concepts in decision-making
    3. Distinction between Micro and Macroeconomics.
    4. Demand analysis: Types, determinants, elasticity, demand function, demand forecasting
    5. Concept of cost and its types, cost output relationship in short and long period supply curve. Iso-quant curves, Indifferences curves.
    6. Pricing analysis: Market structures, price determination under different market situations, price discrimination, selling costs, products differentiation, Various pricing methods, transfer pricing, break even analysis, profit planning.
    7. National income analysis: Techniques of social accounting. Theories of income ,output and employment.
    8. Concepts and causes of trade cycles. Measures to control trade cycles.

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    kumaripalugulla is offline Junior Member kumaripalugulla is on a distinguished road
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    Re: Fundamental concepts of managerial economics?

    Hello dear,

    Managerial economics involves applying mathematical and statistical equations to help managers find the most optimal allocation of limited resources. Analysts analyze the data from the results of previous decisions to predict or forecast future decisions. A classic example is analyzing data associated with customer buying habits and behavior patterns to predict what customers will buy in the future. To accomplish this, according to the website Reference for Business, "managerial economics uses a wide variety of economic concepts, tools and techniques in the decision-making process." These concepts, tools and techniques can be organized under three primary categories referred to as the theory of the firm, the theory of consumer behavior and the theory of market structure and pricing.

    Thank you

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    Amit Ahujaa is offline Junior Member Amit Ahujaa is on a distinguished road
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    Re: Fundamental concepts of managerial economics?

    These are the fundamentals Concepts of Managerial economics :

    1.Explain and apply marginal economic analyses to making decisions2.Calculate the slope (incremental change) of both linear and nonlinear functions mathematically and graphically
    3.Derive and interpret a linear equation for an economic relationship
    4.Understand and apply rules of exponents to economic problems
    5.Explain and apply time value of money concepts to decisions having long-run impacts
    6.Understand how microeconomic concepts are important factors in making good decisions
    7.Apply mathematical slopes to economic problems.
    Good Luck.

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    Reddy.anil is offline Junior Member Reddy.anil is on a distinguished road
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    Re: Fundamental concepts of managerial economics?

    [h=1]HI,

    Fundamental concepts of managerial economics?[/h]





    Best Answer
    1 .principle of opportunity.
    2. principles of incremental cost and revenue.
    3.principles of time perspective.
    4.principles of discounting.
    5.equi- marginal principles.
    6.Optimisation.

    Thanks,

  14. #14
    Unregistered Guest

    Re: Fundamental concepts of managerial economics?

    difference between micro economics and macro economics

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    rozi is offline Junior Member rozi is on a distinguished road
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    Re: Fundamental concepts of managerial economics?

    hi

    Fundamental concepts of managerial economics.

    Managerial economics is a study of application of managerial skills in economics,more over it help to find problems or obstacles in the business and provide solution for those problems,
    These concepts, tools and techniques can be organized under three primary categories referred to as the theory of the firm
    Study of Managerial Economics helps in enhancement of analytical skills.

    Wish you good luck...............

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    masterpiece is offline Junior Member masterpiece is on a distinguished road
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    Re: Fundamental concepts of managerial economics?

    Managerial economics means the branch of science in which we studied regarding the economic value and financial conditions of Market.

    The main goal of managerial economics is to concentrate on the following points:and they are--: Demanand of the market
    Demand of an individuals,
    Law of market,
    Factors affecting economic conditions,
    etc..........

    This is a very interesting subjects for all and also very valuable as it provide a large number of informations about the consumers.

    Points which are covered under Managerial ecomics are listed as below--->>

    1.Resource Allocation
    2.Demand Analysis and Forecasting
    3.Cost and Production Analysis
    4.Pricing Decisions, Policies and Practices
    5.Profit Management
    6.Capital Management
    7.Strategic Planning

    Hope it helps you:

    Good Luck

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