09B Importance of Managerial Economics.ppt

8/16/2019 09B Importance of Managerial Economics.ppt

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Managerial Economics – Importancein Business Decision Making

King’s College

King's College, MBA - 2015 1


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Importance

Managerial economics plays a significant role in thebusiness organizations. It is very much effective to themanagement in decision making and forard planningin relation to the internal operations of a business as itgives clear understanding of market conditions as ellas analytical tools through hich the competitionsprevailing in the markets can be studied! at the sametime the market behavior can be predicted.

It enables to analyze the information about thebusiness environment in hich a business is managed.It is meant to undertake systematic course of businessplans by making possible forecasts.

"ing#s $ollege! MB% & '(1) '


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Importance contd.. Managerial economics contributes to the profitable groth of

business and effective solutions of the business problems bychanging the economic scenario into the feasible businessopportunities for business organizations hile enabling managersto optimize business decisions as ell as involving them in the

activity of forard planning efficiently. In the conte*t of globalization! privatization! liberalization and a

highly competitive and dynamic performance of orldide scenarioof economic activities! it helps in identifying various business andmanagerial problems! their causes and conse+uences! and

suggests various policies and programs to overcome suchproblems. It helps the business e*ecutives to become much moreresponsive! realistic and competent to face theever changing challenges in the modern business orld.

"ing#s $ollege! MB% & '(1) ,


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Importance can be highlightedin point basis as-

elpful in managing scarce resource efficientlyin the society

elpful in formulating economic policy hich

are meant for promoting efficiency inproduction and elfare of the people

elps estimate individual as ell as marketdemand and supply

E*tremely important in making profit for a firmby shoing ay out to calculate various typesof elasticity.

"ing#s $ollege! MB% & '(1) /


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Importance contd..

0seful in overall forecasting of theeconomic activities! and demandforecasting by using various methodslike +uantitative! barometric! input&output analysis etc.

%nalyzes economies and diseconomies

of scale by estimating productionfunction in different time span.

"ing#s $ollege! MB% & '(1) )


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Importance contd..

ighly useful in analyzing various typesof costs – their nature! profit ma*imizingoutput level and optimum level of

marginal cost and marginal revenue.

elpful in identifying e+uilibrium level of

price and output in various markets likeperfect competition! monopoly!monopolistic competition and oligopoly.

"ing#s $ollege! MB% & '(1)


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Importance contd.. E*tremely important in identifying and

analyzing risks and uncertainty involved ininvestment! helpful in selecting beneficial

pro2ect by performing various calculations like345! I66! $oefficient of 5ariation 7$58 etc.

elpful for any firm to earn profit by makingright investment decision ith the help 4ayoffmatri*! and other various methods during riskand uncertainty.

"ing#s $ollege! MB% & '(1) 9


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Importance contd..

:n top of this elpful to figure out very important issues like

;hat to produce $onsumer

09B Importance of Managerial Economics.ppt

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