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Managerial Economics

Introduction: Every day managers make many decisions that affect the survival prospects of their firm. These include deciding how much of a particular product to produce, what price to charge for that product, hiring additional workers, how much effort should be invested in developing new products or improving the production process, and what amount should be bid in an auction. An understanding of economic concepts can improve such decision making within a firm.ß Acs Zoltan and Daniel Gerlowski writing in Financial Practice and Education note that managerial economics courses in most business schools blend topics from microeconomics and the decision sciences in recognition of the firm's role as a production and decision unit. As competition becomes more complex, the transaction and coordinating costs of economic activity are becoming an increasingly more important part of the management and decision making process. The authors suggest that managerial economics should move away from its exclusive focus on the firm as a production unit, and toward a model in which the firm is a transacting and coordinating unit (Acs & Gerlowski 125).

Managerial economics is concerned with the application of economic principles and methodologies to business decision problems. Managerial economics links economic concepts with quantitative methods to develop vital tools for managerial decision making. The basic concepts of managerial economics are derived mainly from microeconomic theory, which studies the behavior of individual consumers, firms, and industries. Loren Williams writing in Business Economics explains that microeconomics deals with the following issues

choosing revenue-maximizing prices,

allocating resources amongst competing product lines,

allocating distribution across multiple markets,

allocating production across differing technologies,

establishing price and quantity to equate marginal revenue with marginal cost ...

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Managerial Economics. (1969, December 31). In LotsofEssays.com. Retrieved 01:29, March 19, 2024, from https://www.lotsofessays.com/viewpaper/1694092.html