Session II

Conception of Managerial Economics 1

 Managerial Economics-
Meaning

“Application of economic theory and tools of analysis of

decision science to examine how an organization can
achieve its objectives most efficiently”
-
Salva
tore

2
Meaning

Spencer and Siegelman: “… Integration of economic theory

with business practice for the purpose of facilitating
decision making and forward planning by management”

Evan Douglas: “Application of economic principles and

methodologies to the decision-making process within the
firm or organization…under conditions of uncertainty”

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Conceptualization of ME

4
Users of Managerial
Economics

Thank you sir

I learned many
economic
concepts from
you. It’s
helping me a
lot
Economist
Manager

5
Nature
□Microeconomics
□Normative economics
□Uses theory of firm
□Takes the help of macroeconomics
□Aims at helping the management
□A scientific art
□Prescriptive rather than descriptive

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Scope of ME
 Theory of demand
 Demand Analysis
 Demand Theory
 Theory of production
 Variable factor of production
 F i xe d factor of production
 Theory of exchange or price
theory
 Theory of profit
 Theory of capital and
investment
 Environmental issues
 Business cycles
 Industrial policy of the
country
 Tra d e and fiscal policy of the
country
 Taxati on policy of the country
 P r i c e and labour policy
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