Managerial Economics Textbook

About Managerial Economics Textbook

This app offers an Introduction to Managerial Economics course. Students explore the types of market forces that affect business, including market conditions, supply and demand, and competitive pressures. Students learn what to do with scarce resources and other challenges and build business strategies for long-term growth.

Students can also study overall managerial fundamentals with courses such as Financial Decision Making for Leaders (BabsonX), Economics and Policy in Bio-Based Economics (WageninginX), or Managerial Accounting and Corporate Control (IUX). This type of course introduces students to the principles of economic policy, the decision-making process from multiple perspectives, and how economic analysis helps lead companies.

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 firm's 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 firm's 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 the 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 the relationship between economic variables. It uses factual data for solutions of economic problems. Managerial Economics is associated with the economic theory which constitutes “Theory of Firm”. The theory of firm states that the primary aim of the firm is to maximize wealth. Decision making in managerial economics generally involves the establishment of the firm's objectives, identification of problems involved in the achievement of those objectives, development of various alternative solutions, selection of best alternative and finally implementation of the decision.