Managerial economics is a branch of economics that studies how businesses produce, distribute and consume resources, goods and services. Managerial economics -- together with financial economics, microeconomics and macroeconomics -- constitutes the backbone of economics as it is taught in business schools. It is possible to distinguish certain characteristics, or features, of managerial economics.
The theory of managerial economics is based both on microeconomics, which studies how individual households and firms behave, and macroeconomics, which is concerned with the "big picture" and analyzes gross domestic product, employment, interest rates and other macro variable. The basic presumptions of managerial economics is that economic agents, such as employers, employees and customers, act rationally. Managerial economics is linked to such disciplines as mathematics, statistics, finance, strategic planning, accounting and marketing.
Managerial economics uses different tools to help businesses manage their operations more effectively and efficiently. Among those tools are managerial accounting, managers' reports, management theory and industry data (information about competitors against which to benchmark the company's performance).
Managerial economics is a pragmatic study. Even though the discipline features a sound theoretical foundation, it is still primarily concerned with practical questions of how to cut costs, increase sales and boost returns to shareholders.
Managerial economics is designed to help managers at all levels make rational and effective decisions concerning the operations of the business. The study gives answers to questions such as how to increase efficiency of manufacturing processes, improve quality of products, cut greenhouse gas emissions, increase differentiation of the product range as well as how to set prices to maximize sales and profits.
- "Managerial Economics"; Ivan Png and Dale Lehman; 2007
- Cengage Learning: Managerial Economics
- Photo Credit Corporate Building image by Bobby4237 from Fotolia.com
The Characteristics of Management Accounting
Management accounting is a process through which a company prepares reports for the top management. The company bases its major executive decisions...
Characteristics of a Good Management Information System
Management information systems (MIS) is an organized approach to gathering information from company operations and making a strategic management decision. Developing ...
What Are the Characteristics of Labor in Economics?
What Are the Characteristics of Labor in Economics?. In economics, labor is one of the factors of production, the others being land,...
Objectives of Managerial Economics
Objectives of Managerial Economics. Managerial economics is a method to analyze goods or services and make business decisions from the analysis. This...
Characteristics of Laissez-faire Management
The management process includes planning, organizing, leading and controlling both production and personnel. Some managers approach these responsibilities according ...
How Is Managerial Economics Related to Finance?
Managerial economics uses statistical and mathematical modeling to help corporate finance managers make optimal decisions as to how to apply scarce financial...
Role of a Managerial Economist
Managerial economics, or business economics, is a division of microeconomics that focuses on applying economic theory directly to businesses. The application of...