ECONOMIC FOR

MANAGERS

TOPIC:- Illustrate the scope of managerial economics in the real

world scenario. Explain how managerial economics solve the
fundamental economics questions and problems faced by the business
during the current pandemic scenario

SUBMITTED TO SUBMITTED
BY
DR.Bijith George Abraham Aneef Samad
SUBMITTED ON MBA(2021-2023)

11-11-2021
 INTRODUCTION

Businesses need to make crucial decisions on

a day to day basis. These decisions can be
about an investment opportunity, a new
product, a new competitor or the direction of
a company. For such important decisions,
businesses need to rely on experts. These
experts come from the background of
Managerial Economics. Managerial
Economists get to sit at the table with the
executives, rather than be a part of the
executive branch of the company. They are
the experts who provide monetary value to
the different opportunities and then urge the
company to proceed. 
Throughout history, monetary economics has
tried to answer the simple questions What
value does money hold in a society? It is
simple today, but in the ancient days, money
had no inherent value. This was changed
when ships started to sail across the world
and trade began. Now, merchants devised a
way of credit and exchange in order to
facilitate trade. Ever since monetary
economics has tried to understand the
purchasing power of money and linking it to
interest rates and economic activities

What is Managerial Economics?

Managerial economics is a stream of

management studies that emphasizes primarily
solving business problems and decision-
making by applying the theories and principles
of microeconomics and macroeconomics. It is
a specialized stream dealing with an
organization’s internal issues by using various
economic theories. Economics is an
indispensable part of any business. All the
business assumptions, forecasting, and
investments are derived from this single
concept. This is managerial economics
meaning in a nutshell.

Scope of Managerial Economic in

real world scenario:
Managerial economics is commonly used to
deal with various business problems within
organizations. Both micro and
macroeconomics have an equal effect on the
organization and its working. The points
which follow illustrate its significance:
Micro-economy Applied to operational
matters
The various theories or principles of
microeconomics used to solve the internal
problems of the organization arising in the
course of business operations are as follows:
 Demand Theory: Demand Theory
emphasizes the behavior of the consumer
towards a product or service. This takes
into account the customers’ desires,
expectations, preferences, and conditions
to enhance the manufacturing process.

 Decisions on Production and Production

Theory: This theory is primarily
concerned with the volume of production,
process, capital and labor, costs involved,
 etc. It aims to optimize production to meet
customer demand.

 Market Structure Pricing Theory and

Analysis: It focuses on assessing a
product’s price taking into account the
competition, market dynamics, production
costs, optimizing sales volume, etc.

 exam and management of profit: the

companies are operating for assets hence
they always aim to maximize profit. It also
depends on demand from the market, input
costs, level of competition, etc.

 Decisions on capital and investment

theory: Capital is the most important
business element. This philosophy takes
priority over the proper distribution of the
resources of the company and investments
in productive programs or initiatives to
boost operational performance.
Macro-Economics Applied to Business
Environment
Any organization is greatly affected by the
environment in which it operates. The
business climate can be defined as:
 Economic environment: A country’s
economic conditions, GDP, government
policies, etc. have an indirect effect on the
company and its operations.

 Social environment: The society in which

the organization, like employment
conditions, trade unions, consumer
cooperatives, etc., functions also affects it.
 Political environment: a country’s
political system, whether authoritarian or
democratic; political stability; and attitude
towards the private sector, impact the
growth and development of the
organization.

Management economics is an important

method for assessing the company’s priorities
and objectives, the organization’s current role,
and what the management can do to fill the
void between the two.
 Business Economist: They deal with
various sectors and companies and their
main role is to serve as an intermediary
between the corporate and the outside
world.

 Asset Manager: They deal with different

sectors and businesses and their main role
is to act as an intermediary between the
corporate and the outside world.

 Credit and risk manager: We analyze

the company’s financial details and
calculate the associated default risk to help
both the lender and the buyer.

 Market Analyst: A Market Analyst

analyses the market so that their employers
can make a better decision with respect to
product launching or rendering services.
 Operations Manager: From output to
review of statistics to educating new staff,
an Operations Manager manages all day-
to-day activities in the company and needs
to make sure that the organization runs at
an optimal level.

 Economic services of India: You will

complete M.Sc. And MA. in economics
with marks of at least 55 percent before
appearing in the Indian Economic Service
Exam. The age range is from 21-30 years.
The test is administered by UPSC.

 Public sector Banking Services: Reserve

Bank of India also recruits banking-sector
economists through their own various
recruitment exams. The age limit is 21-28
years.

 Private and foreign banks: A holder of

an Economics degree can try for both
private and foreign banks. The Banking
job categories are branch managers, clerks,
 economic analysts, planning and
development officers, etc.

 Agencies Worldwide: Experienced and

famous economists in a well-known
international organization such as the
World

How Managerial Economics Helps

Business During This Current
Pandemic Secnario:

Many workers and potential shoppers

sequestered themselves in the early days of
the COVID-19 pandemic, which had a
momentous impact on the global economy, as
well as that of the United States. In the U.S.,
for example, retail sales plunged in April
2020 before recovering in July.
 On top of that, data from the Federal Reserve
showed the worst dip in manufacturing output
since the 1940s, although it has since
rebounded.

Of course, that sudden drop in demand had a

disastrous effect on employment. The national
unemployment rate climbed as high as 14.8%
in April 2020 before dropping to 6.2% in
February 2021. By July 2021, it had dropped
to 5.4%. Additional estimates indicated more
than 25.7 million workers were affected by
the pandemic. This figure included those
whose hours or compensation were cut and
those who were completely unemployed,
among others.
Those economic shockwaves were felt from
Beijing to Madrid, creating a drag on the
world economy that hasn't been seen for
decades. In Jan. 2021, the International
monetary fund (IMF) forecast that the global
economy had contracted by 3.5% in 2020—
the worst slide in recent memory. However,
the IMF envisioned a robust recovery in 2021
and 2022, with worldwide growth of 5.5% and
4.2%, respectively. The Congressional Budget
Office forecasts that the U.S. economy will
grow by 7.4% in 2021.

The Role of Government

Intervention

In an ideal scenario, legislatures and

Central banks  use the power of the
purse to help mitigate an economic
crisis. The U.S. passed several
rounds of stimulus legislation. In
March 2020, U.S. lawmakers passed
a $2 trillion stimulus bill,
the Coronavirus Aid, Relief and
Economic Security (CARES) Act ,
to blunt the economic impact of the
global coronavirus pandemic.
 CONCLUSION

In conclusion, Managerial
economics plays a significant role in
business organizations. It isvery
much effective to the management
in decision making and forward
planning in relationto the internal
operations of a business, as it gives
clear understanding of market
conditions aswell as analytical tools
through which the competitions
prevailing in the markets can
bestudied, at the same time the
market behaviour can be predicted.
It enables to analyse theinformation
about the business environment in
which a business is managed .In this
 way,managerial economics
contributes to the profitable growth
of a business and effective solutions
of business problems by changing
the economic scenario in to the
feasible business opportunities for
business organizations. It thus
enables managers to optimize
business decisions involving them in
the activity of forward planning
effectively and efficiently.