The term managerial economics was coined by Joel Dean, in 1951 Joel Dean wrote a book titles Managerial Economics. As the term implies, managerial economics is economics applied in business management. The purpose of the managerial economics is to show how economics analysis can be used in formulating business policies
Definition of Managerial Economics:
Let us examine some of the important definitions of managerial economics. According to Mc Nair and Meriam, "Managerial economics consists of the use of economics modes of thought to analyze business situations."price theory in the service of business executives."
A popular and widely accepted definition of managerial economics came from Milton Spencer and Louis Siegelman. They defined managerial economics as. "managerial economics is the intergration of economics theory with business practice for the purpose of facilitating decision making and forward planning by management." All these definitions emphasize the essential character of managerial economics as the application of economics principles and tools in business. From these definitions we can derive the essential characteristics of managerial economics
Characteristics of Managerial Economics:
The characteristics of managerial economics can be summarized as follows:
Managerial economics is essentially micro economic in character:Managerial economics is essentially a study of the firm.
Though essentially micro economics it also relies on macro economics:Since business firms exist in the macro economy, macro economics issues impact business. For instance, businesses are impacted by business cycles. Therefore, managerial economics studies macro economics issues also
It is pragmatic: Pure economics is theoretical. Managerial economics is practical.
It is normative: Economics theory deals with 'what is'. Managerial economics is concerned with norms like 'what ought to be'. Therefore, it is normative
It is management oriented:Since managerial economics is the intergration of economic theory with business practice. it is oriented
Managerial economics is multi-disciplinary: Managerial economics incorporates many disciplines like economics, management, statistics, mathaematics, planning etc. Therefore, it is multi-disciplinary
Definition of Managerial Economics:
Let us examine some of the important definitions of managerial economics. According to Mc Nair and Meriam, "Managerial economics consists of the use of economics modes of thought to analyze business situations."price theory in the service of business executives."
A popular and widely accepted definition of managerial economics came from Milton Spencer and Louis Siegelman. They defined managerial economics as. "managerial economics is the intergration of economics theory with business practice for the purpose of facilitating decision making and forward planning by management." All these definitions emphasize the essential character of managerial economics as the application of economics principles and tools in business. From these definitions we can derive the essential characteristics of managerial economics
Characteristics of Managerial Economics:
The characteristics of managerial economics can be summarized as follows:
Managerial economics is essentially micro economic in character:Managerial economics is essentially a study of the firm.
Though essentially micro economics it also relies on macro economics:Since business firms exist in the macro economy, macro economics issues impact business. For instance, businesses are impacted by business cycles. Therefore, managerial economics studies macro economics issues also
It is pragmatic: Pure economics is theoretical. Managerial economics is practical.
It is normative: Economics theory deals with 'what is'. Managerial economics is concerned with norms like 'what ought to be'. Therefore, it is normative
It is management oriented:Since managerial economics is the intergration of economic theory with business practice. it is oriented
Managerial economics is multi-disciplinary: Managerial economics incorporates many disciplines like economics, management, statistics, mathaematics, planning etc. Therefore, it is multi-disciplinary
