Managerial Economics and Financial Analysis
Common for all B.Tech Students
Economics is deals with money or money oriented activities.
According to M N Nair’s and Meram “Managerial economics consist of the use of
economic modes of thought to analyses business situations”
According to Haynes “Managerial economics is economics applied in decision making”.
Nature of managerial economics
The following points specify the nature of managerial economics.
Managerial economics is confined only to a part of business
management: Managerial economics is confined only to a part of business
management but it is not directly concerned with the managerial problems
involving control, implementation, and other management strategies.
Managerial economics mainly relies on the sound framework of
traditional economics and decision science: Managerial economics mainly
relies on the sound framework of traditional economics and decision science in
analyzing the problems in a business. It mainly relies on the application of
economic principles and methodologies for business decision making.
Managerial economics is mainly microeconomics in nature: Micro
economics is that branch of economics which deals with the individual units or
sections of an economy. As managerial economics is mainly concerned with
analyzing and finding optimal solution to the problems of decision-making in a
business firm, it is essentially micro economic in nature.
Managerial economic is pragmatic: It is a practical subject. It
prevents the abstract issues of economic theory and incorporates complications
that are not covered by the economic theory in order to analyze the situation in
which manager take decisions
Managerial economic falls into normative economics: Economics
can be classified into two broad categories namely positive and normative.
Positive economics describes ‘what is’ i.e., observed economic phenomenon.
The statement “Poverty in India is very high” is an example of positive
economics. Normative economics describes ‘what ought to be’ or ‘what should
be’ differentiates the ideal from the actual. The statement “people who earns
more income should pay more income tax than people who earn low income” is
an example of normative economics.
K . Arjun Goud