Pricing Decisions, Policies and Practices

Pricing is a very important area of Managerial Economics. In

fact, price is the ness of the revenue of a frm and as such
the success of a business frm largely depends on the
correctness of the prices decisions taken by it. The important
aspects dealt ith under this area are !" Price Determination
in various Market #orms, Pricing methods, Di$erential
Pricing, Product"line Pricing and Price #orecasting.
Proft Management
%usiness frms are generally organi&ed for the purpose of
making profts and, in long run, profts provide the chief
measure of success. In this connection, an important point
orth considering is the element of uncertainty e'iting about
profts because of variations in costs and revenues hich, in
turn, are caused by torso both internal and e'ternal to the
frm. If knoledge about the future ere fact, proft analysis
ould have been a very easy task. (oever, in a orld of
certainty, e'pectations are not alays reali&ed so that proft
planning and measurement constitute the di)cult are of
Managerial Economics. The important acts covered under
this area are !" *ature and Measurement of Proft, Proft
Testing and Techni+ues of Proft Planning like %reak"Even
,nalysis.
-apital Management
.f the various types and classes of business problems, the
most comple' and able some for the business manager are
likely to be those relating to the frm/s investments.
0elatively large sums are involved, and the problems are so
comple' that their disposal not only re+uires considerable
time and labour but is a term for top"level decision. %rie1y,
capital management implies planning and trolls of capital
e'penditure. The main topics dealt ith are !" -ost of -apital,
0ate return and 2election of Pro3ect.
The various aspects outlined above represent the ma3or
uncertainties hich a ness frm has to reckon ith, vi&.,
demand uncertainty, cost uncertainty, price certainty, proft
uncertainty, and capital uncertainty. 4e can, therefore,
conclude the sub3ect matter of Managerial Economic consists
of applying economic cripples and concepts toards
ad3usting ith various uncertainties faced by a ness frm.